Company Overview - Presidio Property Trust is an internally managed, diversified real estate investment trust (REIT) with holdings in model home properties, office, industrial, and retail properties [5] - The company leases model homes to homebuilders in states including Arizona, Illinois, Texas, Wisconsin, and Florida, while its office, industrial, and retail properties are primarily located in Colorado, with additional properties in Maryland, North Dakota, Texas, and Southern California [5] - Presidio owns approximately 6.5% of the outstanding common stock of Conduit Pharmaceuticals Inc., a clinical-stage life science company [5] Recent Offering - Presidio Property Trust announced the closing of its public offering of 109,054 shares of its 9.375% Series D Cumulative Redeemable Perpetual Preferred Stock at a price of $16.00 per share, resulting in gross proceeds of approximately $1.74 million before deducting underwriting discounts and offering expenses [2] - A shelf registration statement related to the Series D Preferred Stock was filed with the SEC on April 26, 2024, and was declared effective on May 17, 2024 [3] Investor Relations - The Benchmark Company, LLC acted as the sole bookrunning manager for the offering [1] - For more information, investors can contact Presidio's Investor Relations through provided email and telephone details [7][8]

SAN DIEGO, May 29, 2024 (GLOBE NEWSWIRE) -- Presidio Property Trust, Inc. (NASDAQ: SQFT; SQFTP; SQFTW) ("Presidio" or the "Company"), an internally managed, diversified real estate investment trust ("REIT"), has announced that Conduit Pharmaceuticals Inc. (NASDAQ: CDT, CDTTW) ("Conduit"), of which the Company owns approximately 6.3%, is expected to be added to the Russell 2000 Index effective at the open of US equity markets on Monday, July 1, 2024, as part of the annual reconstitution of the Russell stock ...

Exhibit 99.2 >> KI v Trust Pror Shea Center Highlands, CO SUPPLEMENTAL FINANCIAL INFORMATION As of March 31, 2024? FORWARD-LOOKING STATEMENTS This presentation contains "forward-looking statements" within the meaning of the federal securities laws that involve risks and uncertainties, many of which are beyond our control. Our actual results could differ materially and adversely from those anticipated in such forward-looking statements as a result of certain factors, including those set forth in the Quarterl ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________________ FORM 10-Q ___________________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period from _____ to _____ 001-34049 (Commission file ...

Real Estate Assets and Transactions - The company owns or has an equity interest in 758,175 rentable square feet of Office/Industrial Properties, 65,242 rentable square feet of Retail Properties, and 110 Model Home Properties as of December 31, 2023[460] - The company acquired 40 Model Home Properties for $21.9 million in 2023, consisting of $6.6 million in cash payments and $15.3 million in mortgage notes[474] - The company recognized a gain of approximately $5.4 million from the sale of 31 model homes for $17.5 million in 2023[475] - The company acquired 31 Model Home Properties for $15.6 million in 2022, consisting of $4.8 million in cash payments and $10.8 million in mortgage notes[467] - The company recognized a gain of approximately $3.2 million from the sale of 22 model homes for $11.7 million in 2022[468] - The company disposed of World Plaza for approximately $10.0 million in 2022, recognizing a loss of approximately $0.3 million[466] - No acquisitions or sales of retail, office, or industrial properties occurred during 2023, leading to expected decreases in gross revenues from these assets in 2024[510] - The company expects to see activity in sales of commercial real estate assets in the near future[510] - Model home assets made up 35% of total real estate assets as of December 31, 2023, up from 28% in 2022, contributing approximately 23% of total revenue[510] Capital Market Activities - The company sponsored a SPAC that raised $132,250,000 in capital investment and owned approximately 23.49% of the issued and outstanding stock upon the initial public offering[476] - The company owned approximately 6.3% of Conduit's common stock immediately following the business combination with Conduit Pharma[472] - The company loaned $1.0 million to Murphy Canyon in 2023, which was repaid in full on the date of the business combination with Conduit Pharma[478] - The company recorded a $40.3 million gain from deconsolidation of Murphy Canyon, including $34.1 million from remeasurement of retained investment and $6.2 million from deconsolidation of assets/liabilities[522] - If all Common Stock Warrants were exercised at $5.00 per share, the company would receive $10 million and issue 2,000,000 additional shares[538] - If all Series A Warrants were exercised at $7.00 per share, the company would receive $101.2 million and issue 14,450,069 additional shares[540] Cap Rates and Market Trends - REIT implied and private transaction-based cap rate spread was 170 bps, and REIT implied and private appraisal-based cap rate spread was 216 bps as of the third quarter of 2023[480] - Industrial sector cap rates peaked at 6.39% in September 2023, then declined to 6.24% in January 2024, with San Antonio recording the highest cap rate at 8.72% and Atlanta the lowest at 4.57%[484] - Retail sector cap rates fluctuated significantly, reaching a high of 6.48% in December 2023 before declining in January 2024, with Phoenix at 8.01% and Nashville at 4.30%[485] - Office sector cap rates decreased to an average of 6.03% in January 2024 from 6.27% in December 2023, with Indianapolis recording the highest cap rate at 9.62% and Columbus the lowest at 4.65%[486] Financial Performance and Expenses - Rental operating costs increased by approximately $121,522 or 2% to $6.0 million for the year ended December 31, 2023, compared to $5.8 million in 2022[510] - General and administrative expenses increased by $0.6 million or 10% to $6.8 million in 2023, representing 38.5% of total revenue compared to 34.7% in 2022[512] - Interest expense on mortgage notes increased by $0.3 million or 6% to $5.0 million in 2023 due to higher mortgage debt and increased weighted average interest rate from 4.57% to 5.18%[514] - Income allocated to non-controlling interests decreased from $3.6 million in 2022 to $3.0 million in 2023 due to fewer model home sales (19 in 2022 vs 13 in 2023)[515] - Model Home segment revenue increased from 16.3% of total revenue in 2022 to 23.4% in 2023, while Office/Industrial decreased from 71.2% to 65.9%[519] - The material impact on office property expenses in 2023 was an impairment charge[510] Debt and Cash Flow - Total mortgage debt increased from $97.8 million in 2022 to $108.5 million in 2023, with $23.5 million in principal payments due in 2024[525] - Cash and cash equivalents decreased from $16.5 million in 2022 to $6.5 million in 2023, including restricted cash of $4.4 million and $3.7 million respectively[530] - Net cash from investing activities was $120.3 million in 2023 compared to cash used of $126.4 million in 2022, primarily due to $137 million distributed from Murphy Canyon Trust Account[532] Investments and Marketable Securities - Marketable securities held at a third-party broker totaled approximately $45.149 million as of December 31, 2023, measured at fair value using Level 1 market prices[503] - Investments in Conduit's common stock and warrants totaled approximately $18.3 million as of December 31, 2023, with a cost basis of approximately $7.5 million[503]

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________________ FORM 10-Q ___________________________________________________________ For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period from _____ to _____ 001-34049 (Commission f ...

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FORM 10-Q ___________________________________________________________ Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________________ For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period from _____ to _____ 001-34049 (Commission file N ...

[Part I. FINANCIAL INFORMATION](index=5&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, highlighting a decrease in total assets to $177.0 million and a net loss of $0.6 million for the quarter Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$176,974,428** | **$291,351,654** | | Real estate assets, net | $133,871,076 | $130,512,230 | | Cash, cash equivalents and restricted cash | $11,891,930 | $16,516,725 | | Investments held in Trust | $23,658,838 | $136,871,183 | | **Total Liabilities** | **$110,857,595** | **$108,097,447** | | Mortgage notes payable, total net | $99,549,560 | $96,898,699 | | SPAC Class A common stock subject to possible redemption | $16,501,755 | $130,411,135 | | **Total Equity** | **$49,615,078** | **$52,843,072** | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Account | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Total revenue | $4,121,491 | $4,573,141 | | Total costs and expenses | $4,873,184 | $4,506,389 | | **Net income (loss)** | **($608,459)** | **$380,190** | | Net loss attributable to Presidio Property Trust, Inc. common stockholders | ($1,530,988) | ($3,824,053) | | **Net loss per share (Basic & Diluted)** | **($0.13)** | **($0.32)** | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($1,628,129) | ($978,260) | | Net cash provided by (used in) investing activities | $109,551,682 | ($122,314,726) | | Net cash (used in) provided by financing activities | ($112,548,348) | $131,085,492 | | **Net (decrease) increase in cash** | **($4,624,795)** | **$7,792,506** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28unaudited%29) These notes detail accounting policies, real estate portfolio, mortgage debt of $100.4 million, and the significant redemption of 11.0 million SPAC shares - The company is an internally-managed REIT owning **12 commercial properties** and an interest in a SPAC as of March 31, 2023[27](index=27&type=chunk) - As the financial sponsor of Murphy Canyon Acquisition Corp. (SPAC), the company consolidated its financials; **11,037,272 SPAC shares** were redeemed in February 2023, reducing the trust account from **$137 million to $24 million**[37](index=37&type=chunk)[61](index=61&type=chunk)[100](index=100&type=chunk) Real Estate Portfolio Summary (as of March 31, 2023) | Property Type | Count/Square Feet | | :--- | :--- | | Office/Industrial Properties | 8 office buildings, 1 industrial property (756,823 sq ft) | | Retail Properties | 3 retail shopping centers (65,242 sq ft) | | Model Home Properties | 98 residential properties (295,017 sq ft) | - Total mortgage notes payable amounted to approximately **$100.4 million** as of March 31, 2023, with **$4.4 million** in principal payments due in the remainder of 2023[85](index=85&type=chunk)[88](index=88&type=chunk) - In Q1 2023, the company repurchased **386 shares** of Series D Preferred Stock for **$6,947** under its stock repurchase program[116](index=116&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the decrease in Q1 2023 total revenue to $4.1 million due to lease non-renewal and property sale, alongside increased G&A expenses and liquidity position - Total revenues decreased to **$4.1 million** in Q1 2023 from **$4.6 million** in Q1 2022, primarily due to a major lease non-renewal and property sale[154](index=154&type=chunk) - General & Administrative (G&A) expenses increased to **$2.0 million** in Q1 2023 from **$1.6 million** in Q1 2022, representing **47.7%** of total revenue[156](index=156&type=chunk) - As of March 31, 2023, the company held **$11.9 million** in cash, cash equivalents, and restricted cash, deemed sufficient for the next twelve months of operations, capital expenditures, and dividends[162](index=162&type=chunk)[165](index=165&type=chunk) Quarterly Dividends Declared Per Share | Stock Series | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Series A Common Stock | $0.022 | $0.105 | | Series D Preferred Stock (Total) | $0.58593 | $0.58593 | - Outstanding warrants, if fully exercised, could generate approximately **$111.7 million** in gross proceeds and result in the issuance of over **16.5 million** new common shares[179](index=179&type=chunk)[180](index=180&type=chunk)[182](index=182&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Presidio Property Trust, Inc. is exempt from providing disclosures under this item - The company is a smaller reporting company and is not required to provide disclosure pursuant to this item[185](index=185&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting - The Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer concluded that the company's disclosure controls and procedures were effective as of the period end[187](index=187&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended March 31, 2023[188](index=188&type=chunk) [Part II. OTHER INFORMATION](index=38&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no material legal proceedings during the period - No material legal proceedings were reported[189](index=189&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor related to the Inflation Reduction Act of 2022's 1% excise tax on stock repurchases has been identified, resulting in a $1,140,683 liability - A new risk factor involves the Inflation Reduction Act of 2022, imposing a **1% excise tax** on stock repurchases, potentially affecting Class A common stock redemptions[191](index=191&type=chunk) - A **$1,140,683** excise tax liability was recorded as of March 31, 2023, related to the redemption of **11,037,272 SPAC Class A Common Stock shares**[194](index=194&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered equity sales, repurchasing 386 shares of Series D Preferred Stock but no Series A Common Stock under its program - A stock repurchase program authorized on September 15, 2022, allows for up to **$6 million** of Series A Common Stock and up to **$4 million** of Series D Preferred Stock repurchases[195](index=195&type=chunk) Stock Repurchases for Q1 2023 | Stock Series | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Series A Common Stock | 0 | N/A | | Series D Preferred Stock | 386 | Not disclosed | [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - No defaults upon senior securities were reported[201](index=201&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures - No mine safety disclosures were reported[202](index=202&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) The company reported no other information - No other information was reported[203](index=203&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including SPAC-related notes and CEO/CFO certifications - Exhibits include a Form of Note for Murphy Canyon Acquisition Corp., CEO and CFO certifications (Sarbanes-Oxley Sections 302 and 906), and Inline XBRL documents[204](index=204&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________________ FORM 10-K (mark one) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES ACT OF 1934 For the fiscal year ended December 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number 000-53673 Presidio Property Trust, Inc. (Exact n ...

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and internal controls [ITEM 1. FINANCIAL STATEMENTS](index=5&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) This section provides unaudited condensed consolidated financial statements and detailed notes on the company's organization, accounting policies, and financial position [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section details the company's financial position, including assets, liabilities, and equity, as of September 30, 2022, and December 31, 2021 Condensed Consolidated Balance Sheets | Metric | Sep 30, 2022 (Unaudited) | Dec 31, 2021 | | :------------------------------------- | :----------------------- | :------------------- | | Total Assets | $288,622,798 | $161,196,763 | | Real estate assets, net | $126,786,906 | $138,064,936 | | Investments held in Trust | $135,706,687 | — | | Total Liabilities | $105,286,720 | $95,714,143 | | SPAC Class A common stock subject to possible redemption | $129,246,639 | — | | Total Equity | $54,089,439 | $65,482,620 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's revenues, expenses, and net income (loss) for the three and nine months ended September 30, 2022 and 2021 Condensed Consolidated Statements of Operations | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Revenue | $4,391,975 | $4,376,179 | $13,285,977 | $14,891,517 | | Total Costs and Expenses | $4,261,528 | $4,200,653 | $12,646,198 | $13,504,571 | | Interest expense - mortgage notes | $(1,382,120) | $(1,030,883) | $(3,485,693) | $(3,542,940) | | Gain on sales of real estate, net | $1,307,258 | $627,322 | $4,057,527 | $2,060,336 | | Net income (loss) | $351,175 | $(424,528) | $1,149,411 | $(903,866) | | Net loss attributable to Presidio Property Trust, Inc. common stockholders | $(1,302,039) | $(1,390,887) | $(5,956,304) | $(3,298,366) | | Basic & Diluted EPS | $(0.11) | $(0.13) | $(0.51) | $(0.33) | [Condensed Consolidated Statements of Changes in Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) This section presents the changes in the company's total equity, including net income (loss) and dividends, for the nine months ended September 30, 2022 Condensed Consolidated Statements of Changes in Equity | Metric | Dec 31, 2021 | Sep 30, 2022 | | :------------------------------------- | :----------- | :----------- | | Total Equity | $65,482,620 | $54,089,439 | | Net income (loss) (9 months) | N/A | $(828,486) (Q1), $(291,156) (Q2), $(763,753) (Q3) | | Dividends paid to Series A Common Stockholders (9 months) | N/A | $(2,857,081) | | Dividends to Series D Preferred Stockholders (9 months) | N/A | $(1,616,397) | | Remeasurement of SPAC Class A common stock subject to possible redemption (9 months) | N/A | $(4,734,793) | | Repurchase of Series A Common Stock, at cost (9 months) | N/A | $(277,696) | | Repurchase of Series D Preferred Stock, at cost (9 months) | N/A | $(84,386) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the company's cash flows from operating, investing, and financing activities for the nine months ended September 30, 2022 and 2021 Condensed Consolidated Statements of Cash Flows | Metric | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------------------- | :-------------------------- | :-------------------------- | | Net cash provided operating activities | $1,888,302 | $1,125,004 | | Net cash (used in) provided by investing activities | $(123,828,137) | $37,278,965 | | Investment of SPAC IPO proceeds into Trust Account | $(134,895,000) | — | | Proceeds from sales of real estate, net | $20,603,179 | $47,906,909 | | Net cash provided by (used in) financing activities | $125,806,821 | $(22,128,590) | | Proceeds from initial public offering of SPAC | $132,859,920 | — | | Net increase in cash equivalents and restricted cash | $3,866,986 | $16,275,379 | | Cash, cash equivalents and restricted cash - end of period | $18,569,075 | $27,816,296 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering various accounting policies and transactions [1. ORGANIZATION](index=10&type=section&id=Note%201.%20ORGANIZATION) The company is an internally-managed REIT owning commercial and model home properties, operating TRSs, and has engaged in recent capital-raising activities to support its liquidity - The Company is an internally-managed REIT, owning **12 commercial properties** and **82 model home properties**. It operates as a REIT for federal income tax purposes and uses TRSs for non-customary services and non-REIT qualifying assets[25](index=25&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk)[30](index=30&type=chunk) - The company completed a **one-for-two reverse stock split** of its Series A Common Stock on July 29, 2020[29](index=29&type=chunk) - In July 2021, the company issued **1,000,000 shares of Series A Common Stock**, warrants to purchase up to **2,000,000 shares**, and pre-funded warrants to purchase up to **1,000,000 shares**, raising capital for general corporate and working capital purposes[31](index=31&type=chunk) - In January 2022, the company distributed five-year listed Series A Warrants to Series A Common Stockholders, allowing purchase of one common share at **$7.00**, converting to **1/10 of a common share** at expiration if unexercised[34](index=34&type=chunk) - In June 2021, the company completed a secondary offering of **920,000 shares of 9.375% Series D Cumulative Redeemable Perpetual Preferred Stock**, generating approximately **$20.5 million** in net proceeds for general corporate and working capital purposes, including property acquisitions[35](index=35&type=chunk) - Management believes that existing working capital and the ability to refinance commercial and model home mortgages will fund operations for at least the next **twelve months**[38](index=38&type=chunk) [2. SIGNIFICANT ACCOUNTING POLICIES](index=14&type=section&id=Note%202.%20SIGNIFICANT%20ACCOUNTING%20POLICIES) The company's interim financial statements follow GAAP and SEC regulations, consolidating VIEs, classifying SPAC common stock as temporary equity, and valuing marketable securities at fair value - The company consolidates Murphy Canyon Acquisition Corp. (SPAC) as a Variable Interest Entity (VIE) due to its **23.5% equity ownership**, executive officer overlap, and significant influence over funding and initial business combination (IBC)[42](index=42&type=chunk)[64](index=64&type=chunk) - The company classifies SPAC common stock subject to possible redemption as temporary equity, outside of permanent equity, and recognizes changes in redemption value immediately[65](index=65&type=chunk)[66](index=66&type=chunk)[68](index=68&type=chunk) - Marketable securities are measured at fair value using Level 1 market prices, totaling approximately **$0.8 million** at September 30, 2022, down from **$1.5 million** at December 31, 2021[57](index=57&type=chunk) - The company adopted ASU No. 2020-06, simplifying accounting for convertible instruments, with no impact on financial statements. It is evaluating ASU No. 2016-13 (Credit Losses) and does not expect a material impact[71](index=71&type=chunk)[72](index=72&type=chunk) [3. RECENT REAL ESTATE TRANSACTIONS](index=19&type=section&id=Note%203.%20RECENT%20REAL%20ESTATE%20TRANSACTIONS) The company engaged in significant real estate transactions, acquiring 15 model homes and selling World Plaza and 25 model homes in 2022, alongside various acquisitions and dispositions in 2021 Recent Real Estate Transactions | Transaction Type | Period | Number of Properties | Value | Gain/(Loss) | | :--------------- | :----- | :------------------- | :---- | :---------- | | Acquisitions (Model Homes) | 9M 2022 | 15 | ~$8.1M | N/A | | Dispositions (Commercial) | 9M 2022 | 1 (World Plaza) | ~$10.0M | $(0.3M) loss | | Dispositions (Model Homes) | 9M 2022 | 25 | ~$13.5M | $4.3M gain | | Acquisitions (Model Homes) | 9M 2021 | 6 | ~$2.9M | N/A | | Acquisitions (Commercial) | 9M 2021 | 1 (Mandolin) | ~$4.9M | N/A | | Dispositions (Commercial) | 9M 2021 | 4 | ~$33.0M | $(0.7M) loss, $2.5M gain | | Dispositions (Model Homes) | 9M 2021 | 39 | ~$19.0M | $2.9M gain | [4. REAL ESTATE ASSETS](index=20&type=section&id=Note%204.%20REAL%20ESTATE%20ASSETS) The company's real estate portfolio as of September 30, 2022, comprised 8 office/industrial, 3 retail, and 82 model home properties, with total net assets decreasing due to the World Plaza sale - As of September 30, 2022, the company owned **8 office/industrial properties** (**756,112 sq ft**), **3 retail shopping centers** (**65,242 sq ft**), and **82 model home residential properties** (**253,124 sq ft**)[78](index=78&type=chunk) Real Estate Assets Net Value (in thousands) | Asset Category | Sep 30, 2022 (Net Value in thousands) | Dec 31, 2021 (Net Value in thousands) | | :------------------------------------- | :------------------------------------ | :------------------------------------ | | Presidio Property Trust, Inc. properties | $93,572,363 | $103,975,890 | | Model Home properties | $33,214,543 | $34,089,046 | | Total real estate assets and lease intangibles, net | $126,786,906 | $138,064,936 | - World Plaza was sold during the nine months ended September 30, 2022, and Grand Pacific Center is held for sale as of September 30, 2022[79](index=79&type=chunk)[80](index=80&type=chunk) [5. LEASE INTANGIBLES](index=21&type=section&id=Note%205.%20LEASE%20INTANGIBLES) Net lease intangible assets decreased to **$104,920** by September 30, 2022, primarily due to amortization, with future expenses projected for 2022 and 2023 Lease Intangibles Net Value | Lease Intangible Type | Sep 30, 2022 (Net Value) | Dec 31, 2021 (Net Value) | | :-------------------- | :----------------------- | :----------------------- | | In-place leases | $62,608 | $161,482 | | Leasing costs | $42,312 | $95,689 | | Above-market leases | $0 | $0 | | Total Lease Intangibles, net | $104,920 | $257,171 | Future Amortization Expense | Year | Future Amortization Expense | | :--- | :-------------------------- | | 2022 | $50,091 | | 2023 | $17,526 | | 2024 | $17,526 | | 2025 | $15,670 | | 2026 | $4,107 | | Thereafter | $0 | | Total | $104,920 | [6. OTHER ASSETS](index=22&type=section&id=Note%206.%20OTHER%20ASSETS) Total other assets decreased to **$3.9 million** by September 30, 2022, primarily due to reduced marketable securities and accounts receivable, with the company utilizing covered call options Other Assets | Other Asset Type | Sep 30, 2022 | Dec 31, 2021 | | :------------------------------------- | :----------- | :----------- | | Deferred rent receivable | $1,537,252 | $1,660,197 | | Prepaid expenses, deposits and other | $808,331 | $473,554 | | Investment in marketable securities | $819,144 | $1,514,483 | | Accounts receivable, net | $203,768 | $401,927 | | Deferred offering costs | $116,855 | $134,843 | | Total other assets | $3,892,377 | $4,658,504 | - The company owns common shares of **16 publicly traded REITs** and uses covered call options to increase total return, with a net fair value of **$819,144** as of September 30, 2022[86](index=86&type=chunk) [7. MORTGAGE NOTES PAYABLE](index=23&type=section&id=Note%207.%20MORTGAGE%20NOTES%20PAYABLE) Total net mortgage notes payable increased to **$94.1 million** by September 30, 2022, driven by new loans for Baltimore and Mandolin properties, with a weighted-average interest rate of **4.40%** Mortgage Notes Payable | Metric | Sep 30, 2022 | Dec 31, 2021 | | :------------------------------------- | :----------- | :----------- | | Mortgage Notes Payable, total net | $94,141,380 | $88,859,832 | | Presidio Property Trust, Inc. Properties (Subtotal) | $73,357,122 | $67,268,004 | | Model Home mortgage notes | $21,471,355 | $22,154,128 | | Weighted average interest rate (on outstanding debt) | 4.40% | 4.24% | - The mortgage note for 300 N.P. was paid in full on May 11, 2022. New mortgage loans were obtained for Baltimore (**$5.67 million**) and Mandolin (**$3.65 million**) properties[88](index=88&type=chunk)[87](index=87&type=chunk) Total Principal Payments | Year | Total Principal Payments | | :--- | :----------------------- | | 2022 (remaining) | $2,539,623 | | 2023 | $8,661,693 | | 2024 | $20,334,528 | | 2025 | $31,095,552 | | 2026 | $16,719,855 | | Thereafter | $15,477,226 | | Total | $94,828,477 | [8. NOTES PAYABLE](index=24&type=section&id=Note%208.%20NOTES%20PAYABLE) The company received a **$150,000** EIDL in August 2020 and refinanced intercompany promissory notes for Mandolin and Baltimore properties with third-party bank loans in 2022 - Received a **$150,000 EIDL** in August 2020, accruing **3.75% interest**, used for general corporate purposes related to COVID-19 economic injury[92](index=92&type=chunk) - Intercompany promissory notes for Mandolin (**$1.56 million**) and Baltimore (**$5.65 million**) properties were refinanced with third-party bank loans of **$3.7 million** and **$5.67 million**, respectively, in April and March 2022[94](index=94&type=chunk)[95](index=95&type=chunk) [9. COMMITMENTS AND CONTINGENCIES](index=24&type=section&id=Note%209.%20COMMITMENTS%20AND%20CONTINGENCIES) The company has tenant improvement obligations, monitors financial market risks, sponsored Murphy Canyon Acquisition Corp. (SPAC) which raised **$132.25 million** in its IPO, and committed to fund SPAC extensions - The company is obligated to fund tenant improvements and is not currently subject to material litigation or environmental liabilities[96](index=96&type=chunk)[97](index=97&type=chunk) - The company monitors financial market concerns including economic recession, COVID-19, interest rate increases, and geopolitical issues like the Russia-Ukraine conflict[98](index=98&type=chunk) - In January 2022, the company sponsored Murphy Canyon Acquisition Corp. (SPAC), which completed its IPO on February 7, 2022, raising **$132.25 million**. The SPAC aims to acquire real estate industry businesses (Proptech) with an enterprise value of **$300 million to $1.2 billion** within one year[99](index=99&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - The company, through its Sponsor, purchased **754,000 placement units** in the SPAC for **$7.54 million** and has committed to provide additional funds for SPAC extension payments if needed[101](index=101&type=chunk)[100](index=100&type=chunk) [10. STOCKHOLDERS' EQUITY](index=25&type=section&id=Note%2010.%20STOCKHOLDERS%27%20EQUITY) The company is authorized to issue **100 million** Series A Common and **1 million** Preferred shares, issued **920,000** Series D Preferred shares for **$20.5 million** in 2021, and initiated a new **$10 million** stock repurchase program in September 2022 - The company is authorized to issue up to **100,000,000 shares of Series A Common Stock** and **1,000,000 shares of Preferred Stock**[103](index=103&type=chunk)[112](index=112&type=chunk) - In June 2021, **920,000 shares of 9.375% Series D Cumulative Redeemable Perpetual Preferred Stock** were issued, generating approximately **$20.5 million** in net proceeds[104](index=104&type=chunk) - Series D Preferred Stockholders are entitled to cumulative cash dividends of **9.375% per annum** (**$2.34375 per share**), payable monthly. They have limited voting rights, primarily in cases of dividend default or adverse charter amendments[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) - The Series D Preferred Stock has a liquidation preference of **$25.00 per share** plus accumulated unpaid dividends and is redeemable by the company at **$25.00 per share** after June 15, 2026, or upon a Change of Control[108](index=108&type=chunk)[110](index=110&type=chunk) - In September 2022, the Board authorized a new stock repurchase program of up to **$6 million** for Series A Common Stock and up to **$4 million** for Series D Preferred Stock[116](index=116&type=chunk) Stock Repurchases (9M 2022) | Stock Repurchases (9M 2022) | Shares Repurchased | Average Price Per Share | Total Cost | | :-------------------------- | :----------------- | :---------------------- | :--------- | | Series A Common Stock | 161,605 | ~$1.72 | $277,885 | | Series D Preferred Stock | 3,933 | ~$21.42 | $84,386 | Common Stock Dividends Declared | Common Stock Dividends Declared | 9M 2022 | 9M 2021 | | :------------------------------ | :------ | :------ | | March 31 | $0.105 | $0.101 | | June 30 | $0.106 | $0.102 | | September 30 | $0.020 | $0.103 | | Total | $0.231 | $0.306 | Preferred Stock Dividends Declared | Preferred Stock Dividends Declared | 9M 2022 | 9M 2021 | | :--------------------------------- | :------ | :------ | | Total | $1.75779 | $0.69010 | - The company distributed Series A Warrants in January 2022, allowing holders to purchase one common share at **$7.00** for five years, with automatic conversion to **1/10 of a common share** at expiration if unexercised[119](index=119&type=chunk) [11. SHARE-BASED INCENTIVE PLAN](index=29&type=section&id=Note%2011.%20SHARE-BASED%20INCENTIVE%20PLAN) The company's restricted stock incentive plan, amended in May 2022 to increase available shares to **2.5 million**, had **577,563** non-vested shares outstanding as of September 30, 2022, with **$2.6 million** in future compensation expense - The 2017 Incentive Award Plan was amended in May 2022, increasing available shares for issuance from **1.1 million to 2.5 million**[124](index=124&type=chunk) Restricted Stock Activity | Restricted Stock Activity | Shares | | :------------------------ | :----- | | Balance at Dec 31, 2021 | 295,471 | | Granted | 402,839 | | Forfeited | (11,780) | | Vested | (108,967) | | Balance at Sep 30, 2022 | 577,563 | - Share-based compensation expense was approximately **$0.9 million** for the nine months ended September 30, 2022, with **$2.6 million** in future unrecognized compensation related to unvested shares[126](index=126&type=chunk) [12. SEGMENTS](index=29&type=section&id=Note%2012.%20SEGMENTS) The company operates in Office/Industrial, Model Home, and Retail segments, with total NOI decreasing to **$8.9 million** in 9M 2022, and capital expenditures and acquisitions totaling **$1.9 million** and **$8.1 million**, respectively - The company's reportable segments are Office/Industrial Properties, Model Home Properties, and Retail Properties, with performance evaluated based on Net Operating Income (NOI)[127](index=127&type=chunk)[128](index=128&type=chunk) Segment Net Operating Income (9 Months Ended Sep 30) | Segment NOI (9 Months Ended Sep 30) | 2022 | 2021 | Change | | :---------------------------------- | :--- | :--- | :----- | | Office/Industrial Properties | $5,639,018 | $5,860,871 | $(221,853) | | Model Home Properties | $2,048,936 | $2,422,444 | $(373,508) | | Retail Properties | $1,232,242 | $1,568,946 | $(336,704) | | Total Net Operating Income | $8,920,196 | $9,852,261 | $(932,065) | Capital Expenditures (9 Months Ended Sep 30) | Capital Expenditures (9 Months Ended Sep 30) | 2022 | 2021 | | :----------------------------------------- | :--- | :--- | | Acquisition of operating properties, net | $8,087,250 | $7,758,066 | | Capital expenditures and tenant improvements | $1,939,712 | $1,122,051 | | Total real estate investments | $10,026,962 | $8,880,117 | [13. SUBSEQUENT EVENTS](index=31&type=section&id=Note%2013.%20SUBSEQUENT%20EVENTS) Post-September 30, 2022, the company extended a loan agreement, acquired six model homes for **$3.2 million**, and its SPAC entered a Merger Agreement to acquire Conduit Pharmaceuticals Limited for **$650 million** - On October 12, 2022, the company's subsidiaries extended a loan agreement with First Horizon Bank through October 12, 2023, with the company guaranteeing up to **15%** of the outstanding principal, interest, and fees[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) - On October 20, 2022, the company acquired **six model homes** for approximately **$3.2 million** (**$1.0 million cash**, **$2.2 million mortgage loans**)[137](index=137&type=chunk) - On November 8, 2022, Murphy Canyon (SPAC) entered a Merger Agreement to acquire Conduit Pharmaceuticals Limited for **$650 million** in Murphy Canyon Class A common stock (**65,000,000 shares at $10.00 each**), subject to SEC registration and stockholder approvals[138](index=138&type=chunk)[139](index=139&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section offers management's analysis of financial condition and operations, covering forward-looking statements, COVID-19 impact, portfolio overview, transactions, detailed financial results, liquidity, and debt [Forward-Looking Statements](index=33&type=section&id=Forward-Looking%20Statements) This section identifies forward-looking statements and outlines various risks that could cause actual results to differ materially from projections - The report contains forward-looking statements, identifiable by words like "will," "may," "believe," "anticipate," "intend," "estimate," "expect," "should," "project," "plan," and similar expressions[9](index=9&type=chunk)[143](index=143&type=chunk) - Actual results could differ materially due to inherent risks in real estate investments, competition, demand for commercial space, tenant payment failures, challenging economic conditions, debt servicing ability, capital access, interest rate changes, uninsured losses, acquisition/disposition difficulties, reliance on third-party managers, COVID-19 impacts, and REIT qualification[10](index=10&type=chunk)[12](index=12&type=chunk)[143](index=143&type=chunk) [Outlook](index=33&type=section&id=Outlook%20(COVID-19%20Impact)) The company assesses COVID-19's impact on operations, expects future effects on leasing and valuations, and focuses on portfolio growth through capital from recent sales - The COVID-19 pandemic did not significantly impact operating results during 2021 or the nine months ended September 30, 2022[146](index=146&type=chunk) - The company negotiated lease amendments with financially distressed tenants, including rent deferral or abatement, but no new negotiations were initiated in the first three quarters of 2022[146](index=146&type=chunk) - The company expects future impacts on leasing activity and asset valuation due to COVID-19 but does not anticipate a material impact on real estate rental revenue and cash collections from existing deferrals[146](index=146&type=chunk) - The company is focused on growing its portfolio using capital from Series D Preferred Stock and Series A Common Stock sales in 2021, and the sale of World Plaza in March 2022[146](index=146&type=chunk) [OVERVIEW](index=34&type=section&id=Overview%20of%20Operations) The company is a diversified REIT with a portfolio of office, industrial, retail, and model home properties, geographically diversified and focused on acquiring stabilized assets - The company is an internally-managed, diversified REIT with primary holdings in office, industrial, retail, and triple-net leased model home properties[147](index=147&type=chunk) - As of September 30, 2022, the portfolio includes **8 office/industrial properties** (**756,112 sq ft**), **3 retail shopping centers** (**65,242 sq ft**), and **82 model home residential properties** (**253,124 sq ft**)[149](index=149&type=chunk) - Properties are geographically diversified across Colorado, North Dakota, Southern California, Texas, Maryland, Illinois, Texas, and Wisconsin[148](index=148&type=chunk) - The company acquires stabilized properties or those expected to stabilize within **two to three years** (**80% occupancy** for a full year or operating for three years)[148](index=148&type=chunk) - Most office and retail leases are **3-5 years** with annual rental increases; model homes are typically **2-3 year triple-net leases**[149](index=149&type=chunk) [SIGNIFICANT TRANSACTIONS IN 2022 AND 2021](index=35&type=section&id=Significant%20Transactions%20in%202022%20and%202021%20(Acquisitions%20%26%20Dispositions)) This section details the company's significant real estate acquisitions and dispositions in 2022 and 2021, including model homes and commercial properties Significant Real Estate Transactions | Transaction Type | Period | Number of Properties | Value | Gain/(Loss) | | :--------------- | :----- | :------------------- | :---- | :---------- | | Acquisitions (Model Homes) | 9M 2022 | 15 | ~$8.1M | N/A | | Dispositions (Commercial) | 9M 2022 | 1 (World Plaza) | ~$10.0M | $(0.3M) loss | | Dispositions (Model Homes) | 9M 2022 | 25 | ~$13.5M | $4.3M gain | | Acquisitions (Model Homes) | 9M 2021 | 6 | ~$2.9M | N/A | | Acquisitions (Commercial) | 9M 2021 | 1 (Mandolin) | ~$4.9M | N/A | | Dispositions (Commercial) | 9M 2021 | 4 | ~$33.0M | $(0.7M) loss, $2.5M gain | | Dispositions (Model Homes) | 9M 2021 | 39 | ~$19.0M | $2.9M gain | - Management does not expect the level of commercial property sales experienced over the last **24 months** to continue and aims to increase the commercial property portfolio with new acquisitions, despite challenges from elevated real estate prices and compressing capitalization rates[156](index=156&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=36&type=section&id=Critical%20Accounting%20Policies) No material changes to critical accounting policies have occurred since the December 31, 2021 Annual Report on Form 10-K - No material changes to critical accounting policies since the December 31, 2021 Annual Report on Form 10-K[158](index=158&type=chunk) [MANAGEMENT EVALUATION OF RESULTS OF OPERATIONS](index=36&type=section&id=Management%20Evaluation%20of%20Results%20of%20Operations) Management evaluates operating results based on cash flow generation for expenses and distributions, focusing on enhancing real estate value and reinvesting equity from property sales - Management evaluates operating results based on cash flow generation for operating expenses, general and administrative expenses, debt service, and stockholder distributions, giving less emphasis to non-cash charges like depreciation, amortization, and impairment[159](index=159&type=chunk) - The company focuses on increasing and enhancing the value, quality, and quantity of its real estate holdings, improving underperforming assets through re-leasing efforts, and selling properties lacking potential for value appreciation or cash flow to reinvest equity[160](index=160&type=chunk) [RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021](index=36&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20September%2030%2C%202022%20and%202021) This section analyzes the company's revenues, costs, and net income for the three months ended September 30, 2022 and 2021, highlighting changes in key financial metrics Results of Operations (3 Months Ended Sep 30) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | Change | % Change | | :------------------------------------- | :-------------------------- | :-------------------------- | :----- | :------- | | Total Revenues | $4.4M | $4.4M | $0M | 0% | | Rental Operating Costs | $1.4M | $1.4M | $0M | 0% | | General and Administrative | $1.5M | $1.5M | $0M | 0% | | Depreciation and Amortization | $1.3M | $1.3M | $0M | 0% | | Interest Expense - mortgage notes | $1.4M | $1.0M | $0.4M | 39% | | Gain on Sale of Real Estate Assets, net | $1.3M | $0.6M | $0.7M | 117% | | Income allocated to non-controlling interests | $1.1M | $0.4M | $0.7M | 175% | - The increase in mortgage interest expense is due to an increase in mortgage debt, which totaled approximately **$94.1 million** at September 30, 2022, compared to **$86.3 million** at September 30, 2021[166](index=166&type=chunk) [RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021](index=37&type=section&id=Results%20of%20Operations%20for%20the%20Nine%20Months%20Ended%20September%2030%2C%202022%20and%202021) This section analyzes the company's revenues, costs, and net income for the nine months ended September 30, 2022 and 2021, detailing changes and contributing factors Results of Operations (9 Months Ended Sep 30) | Metric | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | Change | % Change | | :------------------------------------- | :-------------------------- | :-------------------------- | :----- | :------- | | Total Revenues | $13.3M | $14.9M | $(1.6M) | (11%) | | Rental Operating Costs | $4.4M | $4.7M | $(0.3M) | (6%) | | General and Administrative | $4.3M | $4.4M | $(0.1M) | (2%) | | Depreciation and Amortization | $4.0M | $4.1M | $(0.1M) | (2%) | | Asset Impairments | $0M | $0.3M | $(0.3M) | (100%) | | Interest Expense - mortgage notes | $3.5M | $3.5M | $(0.0M) | (0%) | | Income allocated to non-controlling interests | $3.0M | $1.8M | $1.2M | 67% | - The decrease in total revenues is primarily related to the sale of **four commercial properties** and **44 model homes** during 2021, and the sale of World Plaza in March 2022[168](index=168&type=chunk) - G&A expenses included approximately **$0.3 million** in employee tax refunds from employee retention credits, offset by new formation, insurance, and operating costs related to Murphy Canyon (approximately **$0.8 million**)[170](index=170&type=chunk) [Geographic Diversification Tables](index=38&type=section&id=Geographic%20Diversification%20Tables) This section provides tables detailing the geographic diversification of the company's commercial and model home properties by number, square footage, and annual rent Commercial Properties Geographic Diversification | State (Commercial Properties) | No. of Properties | Approximate Square Feet | % of Square Feet | Current Approximate Annual Rent | % of Aggregate Annual Rent | | :---------------------------- | :---------------- | :---------------------- | :--------------- | :------------------------------ | :------------------------- | | California | 1 | 57,807 | 7.0% | $1,368,180 | 12.2% | | Colorado | 5 | 324,245 | 39.5% | $5,509,139 | 49.0% | | Maryland | 1 | 31,752 | 3.9% | $696,321 | 6.2% | | North Dakota | 4 | 397,050 | 48.3% | $3,335,210 | 29.7% | | Texas | 1 | 10,500 | 1.3% | $329,385 | 2.9% | | Total | 12 | 821,354 | 100.0% | $11,238,235 | 100.0% | Model Home Properties Geographic Diversification | Geographic Region (Model Home Properties) | No. of Properties | Aggregate Square Feet | % of Square Feet | Current Approximate Annual Rent | % Annual Rent | | :---------------------------------------- | :---------------- | :-------------------- | :--------------- | :------------------------------ | :------------ | | Midwest | 1 | 3,663 | 1.4% | $57,420 | 2.3% | | Northeast | 2 | 6,153 | 2.4% | $80,844 | 3.2% | | Southwest | 79 | 243,308 | 96.1% | $2,409,732 | 94.6% | | Total | 82 | 253,124 | 100% | $2,547,996 | 100% | [LIQUIDITY AND CAPITAL RESOURCES](index=39&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section outlines the company's anticipated liquidity sources, short-term needs, and confidence in funding operations and dividends for the next twelve months - Anticipated future liquidity sources include existing cash, cash flows from operations, refinancing, real estate sales, new borrowings, government aid, and equity/debt sales[177](index=177&type=chunk) - Cash and restricted cash totaled approximately **$18.6 million** at September 30, 2022[177](index=177&type=chunk) - Short-term liquidity needs include operating costs, debt service, tenant improvements, leasing commissions, and dividends. Future principal payments on mortgage notes for the remainder of 2022 total approximately **$2.5 million**, with **$2.2 million** related to model home properties[178](index=178&type=chunk) - The company believes cash on hand, cash flow from its portfolio, distributions from Model Home Partnerships, and 2022 property sales will fund operating costs, capital expenditures, and required dividends for at least the next **twelve months**[180](index=180&type=chunk) - The company authorized a new stock repurchase program in September 2022 for up to **$6 million** of Series A Common Stock and **$4 million** of Series D Preferred Stock[179](index=179&type=chunk) [Cash Equivalents and Restricted Cash](index=40&type=section&id=Cash%20Equivalents%20and%20Restricted%20Cash) This section details cash and restricted cash balances, noting **$1.0 million** allocated for capital expenditures and an expected **$1.1 million** restricted reserve for Q4 2022 Cash, Cash Equivalents and Restricted Cash | Metric | Sep 30, 2022 | Dec 31, 2021 | | :------------------------------------- | :----------- | :----------- | | Cash, cash equivalents and restricted cash | $18.6M | $14.7M | | Restricted cash | $4.9M | $4.7M | - Approximately **$1.0 million** of cash balance is intended for capital expenditures on existing properties[184](index=184&type=chunk) - The company expects to place approximately **$1.1 million** in a restricted reserve account during Q4 2022 due to the non-renewal of a major tenant whose lease expires on December 31, 2022[184](index=184&type=chunk) [Secured Debt](index=40&type=section&id=Secured%20Debt) This section details the company's secured debt for commercial and model home properties, including aggregate principal, number of collateralized properties, and weighted-average interest rates Secured Debt Overview (Sep 30, 2022) | Metric | Commercial Properties (Sep 30, 2022) | Model Home Properties (Sep 30, 2022) | | :------------------------------------- | :----------------------------------- | :----------------------------------- | | Aggregate Principal Amount | $73.4M | $21.5M | | Number of Properties Collateralized | 11 | 76 | | Weighted-Average Interest Rate | 4.53% | 3.95% | | Debt to Estimated Market Value | 59.8% | 56.2% | | Average Loan Balance per Home | N/A | ~$283,000 | - The company expects any new mortgages for property acquisitions in the near future to be at rates higher than its currently weighted average interest rate[186](index=186&type=chunk) [Cash Flows for the nine months ended September 30, 2022 and September 30, 2021](index=41&type=section&id=Cash%20Flows%20for%20the%20nine%20months%20ended%20September%2030%2C%202022%20and%20September%2030%2C%202021) This section summarizes the company's cash flows from operating, investing, and financing activities for the nine months ended September 30, 2022 and 2021 Cash Flow Summary (9 Months Ended Sep 30) | Cash Flow Category | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------------------- | :-------------------------- | :-------------------------- | | Operating Activities (Net Cash) | $1.9M | $1.1M | | Investing Activities (Net Cash) | $(123.8M) | $37.3M | | Financing Activities (Net Cash) | $125.8M | $(22.1M) | - The significant change in investing activities was primarily due to the **$134.9 million** investment of SPAC IPO proceeds into the trust account[188](index=188&type=chunk) - Financing activities were primarily driven by **$132.3 million** in proceeds from the public issuance of Murphy Canyon common stock[190](index=190&type=chunk) [Off-Balance Sheet Arrangements](index=42&type=section&id=Off-Balance%20Sheet%20Arrangements) This section details the company's off-balance sheet arrangements, specifically outlining various warrants outstanding, their exercise prices, and potential gross proceeds Warrants Outstanding (Sep 30, 2022) | Warrant Type | Shares Outstanding (Sep 30, 2022) | Exercise Price | Potential Gross Proceeds | | :-------------------------- | :-------------------------------- | :------------- | :----------------------- | | Common Stock Warrants | 2,000,000 | $5.00 | ~$10.0M | | Placement Agent Warrants | 80,000 | $6.25 | ~$0.5M | | Series A Warrants | 14,450,069 | $7.00 | ~$101.2M | [Inflation](index=42&type=section&id=Inflation) The company's leases generally include provisions for rent increases, and net lease agreements help mitigate exposure to rising property expenses due to inflation - Leases generally provide for limited rent increases (fixed, CPI-linked, or sales-volume-based), which are expected to result in rent increases over time[197](index=197&type=chunk) - Net lease agreements reduce the company's exposure to rising property expenses due to inflation, as tenants are responsible for these costs[198](index=198&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Presidio Property Trust, Inc. is exempt from providing specific quantitative and qualitative market risk disclosures - As a smaller reporting company, the registrant is not required to provide disclosure pursuant to this item[199](index=199&type=chunk) [ITEM 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) The company maintains effective disclosure controls and procedures, evaluated by management, including the CEO, CFO, and Chief Accounting Officer, as of September 30, 2022 - The company maintains disclosure controls and procedures designed for timely and accurate reporting of Exchange Act information[200](index=200&type=chunk) - Management, including the CEO, CFO, and Chief Accounting Officer, concluded that disclosure controls and procedures were effective as of September 30, 2022[201](index=201&type=chunk) [Changes in Internal Control over Financial Reporting](index=43&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred during the fiscal quarter ended September 30, 2022, nor were controls impacted by COVID-19 - No material changes in internal control over financial reporting occurred during the fiscal quarter ended September 30, 2022[202](index=202&type=chunk) - Internal controls were not impacted by COVID-19 related circumstances, including remote work arrangements[202](index=202&type=chunk) PART II. OTHER INFORMATION This section includes information on legal proceedings, risk factors, unregistered equity sales, defaults on senior securities, and a list of filed exhibits [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - The company is not currently subject to any material litigation[203](index=203&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the December 31, 2021 Annual Report on Form 10-K - No material changes to risk factors since the December 31, 2021 Annual Report on Form 10-K[204](index=204&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales occurred; however, the Board authorized a new **$10 million** stock repurchase program in September 2022 for Series A Common and Series D Preferred Stock - No unregistered sales of equity securities occurred[205](index=205&type=chunk) - On September 15, 2022, the Board authorized a new stock repurchase program for up to **$6 million** of Series A Common Stock and up to **$4 million** of Series D Preferred Stock, with a one-year term[205](index=205&type=chunk) [Stock Repurchases](index=43&type=section&id=Stock%20Repurchases) This section details the company's stock repurchase activity for Series A Common Stock and Series D Preferred Stock in September 2022 Stock Repurchase Activity (Sep 2022) | Stock Repurchase (Sep 2022) | Shares Purchased | Average Price Per Share | Remaining Dollar Value Under Program | | :-------------------------- | :--------------- | :---------------------- | :----------------------------------- | | Series A Common Stock | 151,194 | $1.63 | $5,753,034 | | Series D Preferred Stock | 3,939 | $21.42 | $3,915,614 | [Item 3. Defaults Upon Senior Securities](index=45&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities - No defaults upon senior securities[212](index=212&type=chunk) [Item 4. Mine Safety Disclosures](index=45&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No information regarding mine safety disclosures is provided - No mine safety disclosures[213](index=213&type=chunk) [Item 5. Other Information](index=45&type=section&id=Item%205.%20Other%20Information) No other information is provided in this section - No other information is provided[214](index=214&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - Exhibits include CEO and CFO certifications (Sarbanes-Oxley Act Sections 302 and 906) and Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents, and Cover Page Interactive Data File)[215](index=215&type=chunk)[218](index=218&type=chunk) [Signatures](index=47&type=section&id=Signatures) The report was signed by Jack K. Heilbron (CEO), Adam Sragovicz (CFO), and Ed Bentzen (Chief Accounting Officer) on November 10, 2022 - The report was signed by Jack K. Heilbron (CEO), Adam Sragovicz (CFO), and Ed Bentzen (Chief Accounting Officer) on November 10, 2022[220](index=220&type=chunk)