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Presidio Property Trust(SQFT) - 2023 Q4 - Annual Report
SQFTPresidio Property Trust(SQFT)2024-04-16 00:21

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 21.9millionin2023,consistingof21.9 million in 2023, consisting of 6.6 million in cash payments and 15.3millioninmortgagenotes[474]−Thecompanyrecognizedagainofapproximately15.3 million in mortgage notes[474] - The company recognized a gain of approximately 5.4 million from the sale of 31 model homes for 17.5millionin2023[475]−Thecompanyacquired31ModelHomePropertiesfor17.5 million in 2023[475] - The company acquired 31 Model Home Properties for 15.6 million in 2022, consisting of 4.8millionincashpaymentsand4.8 million in cash payments and 10.8 million in mortgage notes[467] - The company recognized a gain of approximately 3.2millionfromthesaleof22modelhomesfor3.2 million from the sale of 22 model homes for 11.7 million in 2022[468] - The company disposed of World Plaza for approximately 10.0millionin2022,recognizingalossofapproximately10.0 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 132,250,000incapitalinvestmentandownedapproximately23.49132,250,000 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 40.3milliongainfromdeconsolidationofMurphyCanyon,including40.3 million gain from deconsolidation of Murphy Canyon, including 34.1 million from remeasurement of retained investment and 6.2millionfromdeconsolidationofassets/liabilities[522]−IfallCommonStockWarrantswereexercisedat6.2 million from deconsolidation of assets/liabilities[522] - If all Common Stock Warrants were exercised at 5.00 per share, the company would receive 10millionandissue2,000,000additionalshares[538]−IfallSeriesAWarrantswereexercisedat10 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 101.2millionandissue14,450,069additionalshares[540]CapRatesandMarketTrends−REITimpliedandprivatetransaction−basedcapratespreadwas170bps,andREITimpliedandprivateappraisal−basedcapratespreadwas216bpsasofthethirdquarterof2023[480]−Industrialsectorcapratespeakedat6.39101.2 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 6.0millionfortheyearendedDecember31,2023,comparedto6.0 million for the year ended December 31, 2023, compared to 5.8 million in 2022[510] - General and administrative expenses increased by 0.6millionor100.6 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 0.3millionor60.3 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 3.6millionin2022to3.6 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 97.8millionin2022to97.8 million in 2022 to 108.5 million in 2023, with 23.5millioninprincipalpaymentsduein2024[525]−Cashandcashequivalentsdecreasedfrom23.5 million in principal payments due in 2024[525] - Cash and cash equivalents decreased from 16.5 million in 2022 to 6.5millionin2023,includingrestrictedcashof6.5 million in 2023, including restricted cash of 4.4 million and 3.7millionrespectively[530]−Netcashfrominvestingactivitieswas3.7 million respectively[530] - Net cash from investing activities was 120.3 million in 2023 compared to cash used of 126.4millionin2022,primarilydueto126.4 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 45.149millionasofDecember31,2023,measuredatfairvalueusingLevel1marketprices[503]−InvestmentsinConduit′scommonstockandwarrantstotaledapproximately45.149 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]