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0001080657 Presidio Property Trust, Inc. false --12-31 Q3 2020 0.01 0.01 100,000,000 100,000,000 8,922,036 8,922,036 8,881,842 8,881,842 1,100,000 April 29, 2020 July 5, 2021 August 5, 2021 June 11, 2022 September 1, 2022 July 6, 2024 August 5, 2024 December 5, 2024 January 5, 2025 January 5, 2025 January 5, 2025 September 5, 2025 September 6, 2025 January 5, 2026 June 1, 2027 August 5, 2029 August 1, 2037 December 31, 2020 December 31, 2023 0 0 0 3 Properties held for sale as of September 30, 2020. One of four buildings at Executive Office Park was classified as held for sale; one model home was included as held for sale. Includes land, buildings and improvements, cash, cash equivalents, and restricted cash, current receivables, deferred rent receivables and deferred leasing costs and other related intangible assets, all shown on a net basis. Includes lease intangibles and the land purchase option related to property acquisitions. Includes one Model Home listed as held for sale as of September 30, 2020. Properties held for sale as of September 30, 2020. This property comprises four buildings, one of which is held for sale as of September 30, 2020 Interest rates as of September 30, 2020. Interest on this loan is ABR plus 0.75% and LIBOR plus 2.75%. For the nine months ended September 30, 2020, the weighted average interest rate was 3.53%. Each model home has a stand-alone mortgage note at interest rates ranging from 2.50% to 5.63% per annum at September 30, 2020. Centennial Tech Center and Union Terrace were sold on February 5, 2020 and March 13, 2020, respectively. Interest on this loan resets annually at LIBOR plus 3.00%, with a floor of 4.25%. 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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 September 30, 2020

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 No.)

___________________________________________________________

 

PRESIDIO PROPERTY TRUST, INC.

(Exact name of registrant as specified in its charter)

___________________________________________________________

   

Maryland

 

33-0841255

(State or other jurisdiction
of incorporation or organization

 

(I.R.S. employer
identification no.)

4995 Murphy Canyon Road, Suite 300, San Diego, CA 92123

(Address of principal executive offices)

 

(760) 471-8536

(Registrant’s telephone number, including area code)

Title of each class  Trading Symbol(s) Name of each exchange on which registered
Series A Common Stock, SQFT 

The Nasdaq Stock Market LLC

$0.01 par value per share    

________________________________________________

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)    Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging Growth company

   

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes    No ☒

At November 4, 2020, registrant had issued and outstanding 9,422,036 shares of its Series A common stock, $0.01 par value.

 

 

 

 

 

 
Index

Page

   

Part I. FINANCIAL INFORMATION:

4

Item 1. FINANCIAL STATEMENTS:

4

Condensed Consolidated Balance Sheets as of September 30, 2020 (unaudited) and December 31, 2019

4

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019 (unaudited)

5

Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2020 and 2019 (unaudited)

6

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019 (unaudited)

7

Notes to Condensed Consolidated Financial Statements (unaudited)

8

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3. Quantitative and Qualitative Disclosures about Market Risk

26

Item 4. Controls and Procedures

27

Part II. OTHER INFORMATION

27

Item 1. Legal Proceedings

27

Item 1A. Risk Factors

27

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

29

Item 3. Defaults Upon Senior Securities

29

Item 4. Mine Safety Disclosures

29

Item 5. Other Information

29

Item 6. Exhibits

29

Signatures

31

 

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This report 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 this report and in our other filings with the Securities and Exchange Commission (the “SEC”). Forward-looking statements relate to matters such as our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, financial condition, liquidity, capital resources, cash flows, results of operations and other financial and operating information. When used in this report, the words “will,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “should,” “project,” “plan,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Important factors that may cause actual results to differ from projections include, but are not limited to:

 

 

the potential continuing adverse effects of the COVID-19 virus and economic turmoil on the financial condition, results of operations, cash flows and performance of the Company, particularly our ability to collect rent, resulting from adverse changes on the financial condition, results of operations, cash flows and performance of our tenants, and on the global economy and financial markets; 

 

adverse economic conditions and/or changes in the real estate and capital financial markets;

 

inability to borrow or raise sufficient additional capital to maintain or expand our real estate investment portfolio;

 

insufficient cash to pay or restrictions on paying dividends to our stockholders;

  inability to satisfying maturing debt in the near-term and/or re-finance such debt;
 

unexpected costs and/or increases in our operating costs;

 

inability to attract or retain qualified personnel, including real estate management personnel;

 

adverse results of any legal proceedings;

 

inability to compete effectively;

 

inability to collect rent from tenants and/or defaults on leases by tenants;

 

early termination or non-renewal of leases by tenants;

 

lower than expected rents and revenues from our properties and/or increased vacancy rates;

 

inability to complete real estate acquisitions or dispositions on favorable terms and/or without significant defeasance or prepayment costs;

 

failure to manage or operate properties efficiently and effectively;

 

increased interest rates and/or borrowing costs;

 

changes in our business strategy;

 

failure to generate sufficient cash flows to service our outstanding mortgages

 

failure or inability to implement recapitalization plans;

 

environmental uncertainties, risks and cost related to adverse weather conditions and natural disasters (resulting in uninsured and under insured losses), and compliance with any environmental requirements;

 

failure to qualify and maintain our status as a REIT;

 

government approvals, actions and initiatives, including compliance with American with Disabilities Act of 1990 (ADA);

 

new legislation or unexpected interpretations of existing legislation;

 

adverse changes in real estate and zoning laws, increases in real property tax rates, and adverse rulings with respect to tax-deferred exchanges; and

 

additional factors discussed in our filings with the SEC.

 

3

 

 

PART I — FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

Presidio Property Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 

  

September 30,

  

December 31,

 
  2020  2019 
  

(Unaudited)

     

ASSETS

        

Real estate assets and lease intangibles:

        

Land

 $24,063,107  $24,490,342 

Buildings and improvements

  133,689,849   133,767,144 

Tenant improvements

  15,095,039   14,043,829 

Lease intangibles

  

5,321,295

   5,321,295 

Real estate assets and lease intangibles held for investment, cost

  178,169,290   177,622,610 

Accumulated depreciation and amortization

  (31,769,133)  (27,970,897)

Real estate assets and lease intangibles held for investment, net

  146,400,157   149,651,713 

Real estate assets held for sale, net

  27,551,655   50,554,907 

Real estate assets, net

  173,951,812   200,206,620 

Cash, cash equivalents and restricted cash

  10,006,026   10,391,275 

Deferred leasing costs, net

  1,721,939   2,053,927 

Goodwill

  2,423,000   2,423,000 

Other assets, net

  3,715,172   5,709,586 

TOTAL ASSETS

 $191,817,949  $220,784,408 

LIABILITIES AND EQUITY

        

Liabilities:

        

Mortgage notes payable, net

 $107,114,310  $109,795,546 

Mortgage notes payable related to properties held for sale, net

  16,422,504   32,597,446 

Mortgage notes payable, total net

  123,536,814   142,392,992 

Note payable, net

  8,424,574   12,238,692 

Accounts payable and accrued liabilities

  5,266,774   5,673,815 

Accrued real estate taxes

  1,972,841   2,987,601 

Lease liability, net

  108,743   560,188 

Below-market leases, net

  187,493   309,932 

Total liabilities

  139,497,239   164,163,220 

Commitments and contingencies (Note 9)

          

Equity:

        

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

  89,220   88,818 

Additional paid-in capital

  153,358,708   152,129,120 

Dividends and accumulated losses

  (117,815,335)  (113,037,144)

Total stockholders' equity before noncontrolling interest

  35,632,593   39,180,794 

Noncontrolling interest

  16,688,117   17,440,394 

Total equity

  52,320,710   56,621,188 

TOTAL LIABILITIES AND EQUITY

 $191,817,949  $220,784,408 

 

See Notes to Condensed Consolidated Financial Statements

 

4

 

 

Presidio Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

 

  

For the Three Months Ended September 30,

  

For the Nine Months Ended September 30,

 
  

2020

  

2019

  

2020

  

2019

 

Revenues:

                

Rental income

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

Fees and other income

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

Total revenue

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

Costs and expenses:

                

Rental operating costs

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

General and administrative

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

Depreciation and amortization

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

Impairment of real estate assets

        845,674    

Total costs and expenses

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

Other income (expense):

                

Interest expense-Series B preferred stock

     (924,538)     (2,200,262)

Interest expense-mortgage notes

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

Interest expense - note payable

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

Interest and other income (expense), net

  (12,270)  9,294   (10,865)  19,227 

Gain on sales of real estate, net

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

Income tax expense

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

Total other income (expense), net

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

Net (loss) income

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

Less: (Loss) income attributable to noncontrolling interests

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

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

 $(1,748,245) $2,536,864  $(4,778,191) $(451,127)
Basic (loss) income per common share $(0.20) $0.29  $(0.54) $(0.05)
Weighted average number of common shares outstanding - basic  8,922,525   8,852,348   8,900,547   8,860,228 

Diluted (loss) income per common share

 $(0.20) $0.27  $(0.54) $(0.05)

Weighted average number of common shares outstanding - diluted

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

 

 

See Notes to Condensed Consolidated Financial Statements

 

5

 

 

Presidio Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity

For the Three and Nine Months Ended September 30, 2020 and 2019

(Unaudited)

 

          

Additional

  

Dividends and

  

Total

  

Non-

     
  Common Stock  Paid-in  Accumulated  Stockholders  controlling  Total 
  

Shares

  

Amount

  

Capital

  

Losses

  

Equity

  

Interests

  

Equity

 

Balance, December 31, 2019

  8,881,842  $88,818  $152,129,120  $(113,037,144) $39,180,794  $17,440,394  $56,621,188 

Net loss

           (1,107,130)  (1,107,130)  175,011   (932,119)

Distributions in excess of contributions received

                 (277,472)  (277,472)

Balance, March 31, 2020

  8,881,842  $88,818  $152,129,120  $(114,144,274) $38,073,664  $17,337,933  $55,411,597 
Net loss           (1,922,816)  (1,922,816)  315,282   (1,607,534)

Contributions received from noncontrolling interests, net of distributions paid

                 66,697   66,697 

Share reconciliation adjustment

  (16,080)  (162)  162             

Issuance of stock for Limited Partnership interests

  59,274   594   1,247,396      1,247,990   (1,247,990)   

Balance, June 30, 2020

  8,925,036  $89,250  $153,376,678  $(116,067,090) $37,398,838  $16,471,922  $53,870,760 

Net loss

           (1,748,245)  (1,748,245)  363,777   (1,384,468)

Distributions in excess of contributions received

                 (147,582)  (147,582)

Repurchase of common stock

  (3,000)  (30)  (17,970)     (18,000)     (18,000)

Balance, September 30, 2020

  8,922,036  $89,220  $153,358,708  $(117,815,335) $35,632,593  $16,688,117  $52,320,710 

 

 

          

Additional

  

Dividends and

  

Total

  

Non-

     
  Common Stock  Paid-in  Accumulated  Stockholders’  controlling  Total 
  

Shares

  

Amount

  

Capital

  

Losses

  

Equity

  

Interests

  

Equity

 

Balance, December 31, 2018

  8,860,711  $88,608  $151,670,625  $(111,343,840) $40,415,393  $15,725,650  $56,141,043 

Net loss

           (1,728,392)  (1,728,392)  766,455   (961,937)

Dividends paid

           (150)  (150)     (150)

Distributions in excess of contributions received

                 (258,708)  (258,708)

Repurchase of common stock

  (7,161)  (72)  (52,077)     (52,149)     (52,149)

Vesting of restricted stock

  13,424   134   230,749      230,883      230,883 

Balance, March 31, 2019

  8,866,974  $88,670  $151,849,297  $(113,072,382) $38,865,585  $16,233,397  $55,098,982 

Net loss

           (1,259,598)  (1,259,598)  182,924   (1,076,674)

Dividends declared

           (1,082,947)  (1,082,947)     (1,082,947)

Contributions received from noncontrolling interests, net of distributions paid

                 195,178   195,178 

Repurchase of common stock

  (9,085)  (91)  (68,043)     (68,134)     (68,134)

Balance, June 30, 2019

  8,857,889  $88,579  $151,781,254  $(115,414,927) $36,454,906  $16,611,499  $53,066,405 

Net income

           2,536,864   2,536,864   416,725   2,953,589 

Distributions in excess of contributions received

                 (564,932)  (564,932)

Repurchase of common stock

  (12,700)  (127)  (95,375)     (95,502)     (95,502)

Balance, September 30, 2019

  8,845,189  $88,452  $151,685,879  $(112,878,063) $38,896,268  $16,463,292  $55,359,560 

 

See Notes to Condensed Consolidated Financial Statements

 

6

 

 

Presidio Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

  

For the Nine Months Ended September 30,

 
  

2020

  

2019

 

Cash flows from operating activities:

        

Net (loss) income

 $(3,924,121) $914,977 

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

        

Depreciation and amortization

  4,823,673   5,714,446 

Stock compensation

  541,865   809,127 

Bad debt expense

  93,958   19,088 

Gain on sale of real estate assets, net

  (656,975)  (6,243,819)

Impairment of real estate assets

  845,674    

Accretion of original issue discount

  1,013,405   48,793 

Amortization of financing costs

  992,705   592,598 

Amortization of above-market leases

  38,012   42,796 

Amortization of below-market leases

  (122,439)  (140,777)

Straight-line rent adjustment

  67,732   (26,590)

Changes in operating assets and liabilities:

        

Other assets

  2,171,813   1,709,386 

Accounts payable and accrued liabilities

  (1,974,401)  (244,791)

Accrued real estate taxes

  (1,014,760)  (817,366)

Net cash provided by operating activities

  2,896,141   2,377,868 

Cash flows from investing activities:

        

Real estate acquisitions

  (8,996,248)  (6,116,035)

Additions to buildings and tenant improvements

  (2,510,152)  (5,182,033)

Additions to deferred leasing costs

  (137,961)  (661,401)

Proceeds from sales of real estate, net

  33,810,274   29,211,836 

Net cash provided by investing activities

  22,165,913   17,252,367 

Cash flows from financing activities:

        

Proceeds from mortgage notes payable, net of issuance costs

  13,339,739   10,667,286 

Repayment of mortgage notes payable

  (32,399,522)  (20,723,326)
Proceeds from note payable, net of issuance cost of $1.1 million     11,623,164 

Repayment of note payable

  (5,224,402)   

Payment of extension costs, note payable

  (351,025)   

Redemption of mandatorily redeemable preferred stock

     (16,900,000)

Payment of deferred offering costs

  (435,736)   

Distributions to noncontrolling interests, net of contributions

  (358,357)  (628,462)

Repurchase of common stock

  (18,000)  (215,206)

Dividends paid to stockholders

     (2,158,467)

Net cash used in financing activities

  (25,447,303)  (18,335,011)

Net (decrease) increase in cash equivalents and restricted cash

  (385,249)  1,295,224 

Cash, cash equivalents and restricted cash - beginning of period

  10,391,275   9,776,215 

Cash, cash equivalents and restricted cash - end of period

 $10,006,026  $11,071,439 

Supplemental disclosure of cash flow information:

        

Interest paid-Series B preferred stock

 $  $1,859,672 

Interest paid-mortgage notes payable

 $4,542,959  $4,792,830 

Interest paid-notes payable

 $604,679  $ 

Non-cash financing activities:

        

Issuance of stock for limited partnership interests

 $1,247,990  $ 

 

See Notes to Condensed Consolidated Financial Statements

 

7

 

Presidio Property Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

September 30, 2020

 

1. ORGANIZATION

 

Organization. Presidio Property Trust, Inc. (“we”, “our”, “us” or the “Company”) is an internally managed diversified real estate investment trust (“REIT”), with holdings in office, industrial, retail, and model home properties. NetREIT was incorporated in California on January 28, 1999, and was merged into NetREIT, Inc., a Maryland corporation, on August 4, 2010. In October 2017, we changed our name from “NetREIT, Inc.” to “Presidio Property Trust, Inc.” The Company’s portfolio includes the following properties:

 

 

Ten office buildings and one industrial property (“Office/Industrial Properties”) which total approximately 998,016 rentable square feet;

   
 Four retail shopping centers (“Retail Properties”) which total approximately 131,722 rentable square feet; and
   
 128 model home residential properties (“Model Homes” or “Model Home Properties”) leased back on a triple-net basis to homebuilders that are owned by six affiliated limited partnerships and one wholly-owned corporation.

 

The Company or one of its affiliates operates the following partnerships during the periods covered by these condensed consolidated financial statements:

 

 The Company is the sole general partner and a limited partner in two limited partnerships (NetREIT Palm Self-Storage LP and NetREIT Casa Grande LP), all with ownership interests in entities that own real estate income producing properties.
   
 The Company is the general and/or limited partner in six limited partnerships that purchase Model Homes and lease them back to homebuilders (Dubose Model Home Investors #202, LP, Dubose Model Home Investors #203, LP, Dubose Model Home Investors #204, LP, Dubose Model Home Investors #205, LP, Dubose Model Home Investors #206, LP and NetREIT Dubose Model Home REIT, LP). The Company refers to these entities collectively as the “Model Home Partnerships”.

 

The Company has determined that the limited partnerships in which it owns less than 100% should be included in the Company’s consolidated financial statements as the Company directs their activities and has control of such limited partnerships.

 

We have elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code (“Code”), for federal income tax purposes. To maintain our qualification as a REIT, we are required to distribute at least 90% of our REIT taxable income to our stockholders and meet the various other requirements imposed by the Code relating to such matters as operating results, asset holdings, distribution levels and diversity of stock ownership. Provided we maintain our qualification for taxation as a REIT, we are generally not subject to corporate level income tax on the earnings distributed currently to our stockholders that we derive from our REIT qualifying activities. If we fail to maintain our qualification as a REIT in any taxable year and are unable to avail ourselves of certain savings provisions set forth in the Code, all of our taxable income would be subject to federal income tax at regular corporate rates, including any applicable alternative minimum tax. We are subject to certain state and local income taxes.

 

We, together with one of our entities, have elected to treat our subsidiaries as a taxable REIT subsidiary (a “TRS”) for federal income tax purposes. Certain activities that we undertake must be conducted by a TRS, such as non-customary services for our tenants, and holding assets that we cannot hold directly. A TRS is subject to federal and state income taxes. The Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. Neither the Company nor its subsidiaries have been assessed any significant interest or penalties for tax positions by any major tax jurisdictions.

 

Initial Public Offering. On October 6, 2020, we completed an initial public offering ("IPO"), selling 500,000 shares of Series A Common Stock at $5.00 per share. Proceeds from our IPO net of underwriting discounts and commissions were $2.3 million after deducting approximately $0.2 million in underwriting discounts and before giving effect to $775,000 in other expenses relating to the IPO. We intend to use the net proceeds of this offering for general corporate and working capital purposes, including to potentially acquire additional properties and reduce outstanding indebtedness.

 

Reverse Stock Split. On July 29, 2020, we amended our charter to effect a one-for-two reverse stock split of every outstanding share of our Series A Common Stock. The financial statements and accompanying footnotes have been retroactively restated to reflect the reverse stock split.

 

Liquidity. On September 17, 2019 the Company executed a Promissory Note (“Note”) pursuant to which Polar Multi-Strategy Master Fund (“Polar”), executed a loan in the principal amount of $14.0 million to the Company. The Note bears interest at a fixed rate of 8% per annum and requires monthly interest-only payments. On September 1, 2020, we extended the maturity of the Polar Note from October 1, 2020 to March 31, 2021 ("Maturity"), at which time the entire outstanding principal balance of $8.8 million and accrued and unpaid interest will be due and payable. On September 30, 2020 we paid a renewal fee of 4% on the unpaid principal balance. The final payment due at Maturity, includes payment of the outstanding principal and accrued and unpaid interest. The Company used the proceeds of the Note from Polar to redeem all of the outstanding shares of the Series B Preferred Stock.  

8

 

For the three months remaining in 2020 and the year ending December 31, 2021, we have $1.6 million and $27.7 million of mortgage notes payable maturing, respectively. For the remainder of the year ending December 31, 2020, we have $1.1 million of mortgage notes payable maturing related to the model homes properties and $468,000 of mortgage notes payable maturing related to the commercial properties. Management expects that certain properties may be sold and the underlying mortgage notes would be paid off with sales proceeds while other mortgage notes will be refinanced.

 

As the Company continues its operations, it may re-finance and/or seek additional financing, however, there can be no assurance that any such financing will be available to the Company on acceptable terms, if at all. If events or circumstances occur such that the Company does not obtain additional funding, it will most likely be required to reduce its plans and/or certain discretionary spending, which could have a material adverse effect on the Company’s ability to achieve its intended business objectives. Management believes that the combination of working capital on hand and the ability to refinance commercial and model home mortgages will fund operations through at least the next twelve months from the date of the issuance of these unaudited interim financial statements.

 

 

2. SIGNIFICANT ACCOUNTING POLICIES

 

There have been no significant changes to the Company’s accounting policies since it filed its audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2019. For further information about the Company’s accounting policies, refer to the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 13, 2020.

 

Basis of Presentation. The accompanying condensed consolidated financial statements have been prepared by the Company's management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statement and the instructions to Form 10-Q and Article 8 of Regulation S-X. Certain information and footnote disclosures required for annual consolidated financial statements have been condensed or excluded pursuant to rules and regulations of the SEC. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of our financial position, results of our operations, and cash flows as of and for the three and nine months ended September 30, 2020 and 2019, respectively. However, the results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. The condensed consolidated balance sheet as of December 31, 2019 has been derived from the audited consolidated financial statements included in the Form 10-K filed with the SEC on March 13, 2020. The results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the full year ending December 31, 2020 due to seasonal variations and other factors, such as the effects of the novel coronavirus (“COVID-19”) and its possible influence on our future results.

 

Principles of Consolidation. The accompanying condensed consolidated financial statements include the accounts of the Company and its direct and indirect wholly-owned subsidiaries and entities the Company controls or of which it is the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation.

 

Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include the allocation of purchase price paid for property acquisitions among land, building and intangible assets acquired including their useful lives; valuation of long-lived assets, and the allowance for doubtful accounts, which is based on an evaluation of the tenants’ ability to pay. Actual results may differ from those estimates.

 

Cash Equivalents and Restricted Cash. At September 30, 2020 and December 31, 2019, we had approximately $6.8 million and $5.7 million in cash equivalents, respectively, and $3.2 million and $4.7 million of restricted cash, respectively. Our cash equivalents and restricted cash consist of invested cash and cash in our operating accounts and are held in bank accounts at third party institutions. Restricted cash typically consists of funds held by lenders to be used for property taxes, insurance, capital expenditures and leasing commissions.

 

Real Estate Held for Sale. Real estate held for sale during the current period is classified as “real estate held for sale” for all prior periods presented in the accompanying condensed consolidated financial statements. Mortgage notes payable related to the real estate held for sale during the current period are classified as “mortgage notes payable related to

 

 

real estate held for sale, net” for all prior periods presented in the accompanying condensed consolidated financial statements. As of September 30, 2020, four commercial properties meet the criteria to be classified as held for sale (World Plaza, Garden Gateway, Waterman and one of the four buildings at Executive Office Park) and one Model Home was classified as held for sale.

 

Impairments of Real Estate Asset. We review for impairment on a property by property basis. Impairment is recognized on properties held for use when the expected undiscounted cash flows for a property are less than its carrying amount at which time the property is written-down to fair value. The calculation of both discounted and undiscounted cash flows requires management to make estimates of future cash flows including revenues, operating expenses, required maintenance and development expenditures, market conditions, demand for space by tenants and rental rates over long periods. Since our properties typically have a long life, the assumptions used to estimate the future recoverability of carrying value requires significant management judgment. Actual results could be significantly different from the estimates. These estimates have a direct impact on net income because recording an impairment charge results in a negative adjustment to net income. The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results in future periods.

 

Properties held for sale are recorded at the lower of the carrying amount or the expected sales price less costs to sell. Although our strategy is to hold our properties over the long-term, if our strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized to reduce the property to fair value and such loss could be material.

 

During the second quarter of 2020, the Company began negotiations to renew a lease with a significant tenant at our Waterman Plaza retail property at a lower market rental rate than the rental rate being charged previously. The Company obtained a broker opinion of value during the second quarter of 2020 that considered the lower market rental rates and subsequently determined there was a material change to undiscounted cash flows on the property as of June 30, 2020. Therefore, the Company recorded an $845,000 non-cash impairment in the Condensed Consolidated Statements of Operations in June 2020.

 

Fair Value Measurements.  Under GAAP, we are required to measure certain financial instruments at fair value on a recurring basis. In addition, we are required to measure other non-financial and financial assets at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

 

 

Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

 

 

Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

 

 

Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

 

When available, we utilize quoted market prices from independent third-party sources to determine fair value and classify such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require us to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When we determine the market for a financial instrument owned by us to be illiquid or when market transactions for similar instruments do not appear orderly, we use several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establish a fair value by assigning weights to the various valuation sources. Additionally, when determining the fair value of a liability in circumstances in which a quoted price in an active market for an identical liability is not available, we measure fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach.

 

Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument.

 

10

 

Subsequent Events. We evaluate subsequent events up until the date the consolidated financial statements are issued.

 

Recently Issued and Adopted Accounting Pronouncements.  In March 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform which provides optional expedients and exceptions in order to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting as it relates to contracts, hedging relationships and other transactions by allowing companies to modify contracts that previously contained LIBOR rates without evaluating whether the modification constituted a new contract. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, and are used on a prospective basis upon adoption. The Company adopted this guidance as of March 2020 noting no impact to the financial statements.

 

In June 2017, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses, amended in February 2020 with ASU No. 2020-02, Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842). ASU 2016-13 introduces a new model for estimating credit losses for certain types of financial instruments, including loans receivable, held-to-maturity debt securities, and net investments in direct financing leases, amongst other financial instruments. ASU 2016-13 also modifies the impairment model for available-for-sale debt securities and expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for losses. While ASU 2016-13 was effective for periods beginning after December 15, 2019, the issuance of ASU 2020-02 has allowed for the delay in adoption for certain smaller public companies, and is now effective for fiscal periods beginning after December 15, 2022. Retrospective adjustments shall be applied through a cumulative-effect adjustment to retained earnings. The Company is continuing to evaluate the impact of this guidance on its financial statements, and does not believe it will have a material impact on the financial statements.

 

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement which removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC 820. This guidance is effective for public companies in fiscal years beginning after December 15, 2019 with early adoption permitted. The Company adopted this guidance as of January 1, 2020 and noted no impact on its consolidated financial statements.

 

 

3. RECENT REAL ESTATE TRANSACTIONS

 

During the nine months ended September 30, 2020, the Company disposed of the following properties:

 

 

Centennial Tech Center, which was sold on February 5, 2020 for approximately $15.0 million and the Company recognized a loss of approximately $913,000.

 

 

Union Terrace, which was sold on March 13, 2020 for approximately $11.3 million and the Company recognized a gain of approximately $688,000.

 

During the nine months ended September 30, 2020, the Company disposed of 33 model homes for approximately $12.6 million and recognized a gain of approximately $894,000.

 

During the nine months ended September 30, 2020, the Company acquired 25 model homes for approximately $9.0 million. The purchase price was paid through cash payments of approximately $2.7 million and mortgage notes of approximately $6.3 million.

 

During the nine months ended September 30, 2019, the Company disposed of the following properties:

 

 

Morena Office Center, which was sold on January 15, 2019 for approximately $5.6 million and the Company recognized a gain of approximately $700,000.

 

 

Nightingale land was sold on May 8, 2019 for approximately $875,000 and the Company recognized a loss of approximately $93,000.

   
 On July 1, 2019, NetREIT Genesis, LLC sold a 43% tenants-in-common interest in Genesis Plaza (“TIC Interest”) for $5.6 million to a newly formed entity, NetREIT Genesis II, LLC, in which NetREIT Casa Grande LP is the sole member. NetREIT Casa Grande LP owned and sold Morena Office Center on January 15, 2019. The sale of the TIC Interest was structured as a 1031 exchange and included $2.9 million in cash and assumption of debt. The Company remains a guarantor of the debt and NetREIT Genesis, LLC and NetREIT Genesis II, LLC are jointly and severally liable for the debt securing Genesis Plaza, the financial terms and conditions of which remain materially unchanged.

 

 

The Presidio office building, which was sold on July 31, 2019 for approximately $12.3 million and the Company recognized a gain of approximately $4.5 million.

 

During the nine months ended September 30, 2019, the Company disposed of 35 model homes for approximately $12.4 million and recognized a gain of approximately $1.0 million.

 

During the nine months ended September 30, 2019, the Company acquired 18 model homes for approximately $6.1 million. The purchase price was paid through cash payments of approximately $1.8 million and mortgage notes of approximately $4.3 million.

 

11

 
 

4. REAL ESTATE ASSETS

 

A summary of the properties owned by the Company as of September 30, 2020 is as follows:

 

 

      

Real estate

 
  

Date

   

assets, net

 

Property Name

 

Acquired

 

Location

 

(in thousands)

 

Garden Gateway Plaza (1)

 

March 2007

 

Colorado Springs, Colorado

 $11,439 

World Plaza (1)

 

September 2007

 

San Bernardino, California

  9,272 

Executive Office Park (2)

 

July 2008

 

Colorado Springs, Colorado

  7,581 

Waterman Plaza (1)

 

August 2008

 

San Bernardino, California

  3,986 

Genesis Plaza

 

August 2010

 

San Diego, California

  8,816 

Dakota Center

 

May 2011

 

Fargo, North Dakota

  8,655 

Grand Pacific Center

 

March 2014

 

Bismarck, North Dakota

  5,754 

Arapahoe Center

 

December 2014

 

Centennial, Colorado

  9,362 

Union Town Center

 

December 2014

 

Colorado Springs, Colorado

  9,414 

West Fargo Industrial

 

August 2015

 

West Fargo, North Dakota

  7,079 

300 N.P.

 

August 2015

 

Fargo, North Dakota

  3,308 

Research Parkway

 

August 2015

 

Colorado Springs, Colorado

  2,454 

One Park Center

 

August 2015

 

Westminster, Colorado

  8,701 

Highland Court

 

August 2015

 

Centennial, Colorado

  10,992 

Shea Center II

 

December 2015

 

Highlands Ranch, Colorado

  21,193 

Presidio Property Trust, Inc. properties

      128,006 

Model Home properties (3)

 2014 - 2020 

AZ, FL, IL, PA, TX, WI

  45,946 

Total real estate assets and lease intangibles, net

     $173,952 

 

(1Properties held for sale as of September 30, 2020.

 

(2This property comprises four buildings, one of which is held for sale as of September 30, 2020.

 

(3Includes one Model Home listed as held for sale as of September 30, 2020.

 

Geographic Diversification Tables

 

The following tables show a list of commercial properties owned by the Company grouped by state and geographic region as of September 30, 2020:

 

     

Aggregate

      

Current

  

Approximate %

 
  

No. of

  

Square

  

Approximate %

  

Base Annual

  

of Aggregate

 

State

 

Properties

  

Feet

  

of Square Feet

  

Rent

  

Annual Rent

 

California

 3   134,787   11.9% $1,782,207   12.3%

Colorado

 8   597,912   52.9%  9,183,486   63.4%

North Dakota

 4   397,039   35.2%  3,525,685   24.3%

Total

 15   1,129,738   100.0% $14,491,378   100.0%

 

The following tables show a list of our Model Home properties by geographic region as of September 30, 2020:

 

             

Current

  

Approximate

 
  

No. of

  

Aggregate

  

Approximate %

  

Base Annual

  

of Aggregate

 

Geographic Region

 

Properties

  

Square Feet

  

of Square Feet

  

Rent

  

% Annual Rent

 

Southwest

 104   305,203   83.7% $3,036,024   80.2%

Southeast

 18   41,621   11.4%  499,320   13.2%

Midwest

 2   6,602   1.8%  99,276   2.6%

East

 2   5,255   1.4%  70,716   1.9%

Northeast

 2   6,153   1.7%  80,844   2.1%

Total

 128   364,834   100% $3,786,180   100%

 

12

 
 

5. LEASE INTANGIBLES

 

The following table summarizes the net value of other intangible assets acquired and the accumulated amortization for each class of intangible asset:

 

  

September 30, 2020

  

December 31, 2019

 
  

Lease

  

Accumulated

  

Lease

  

Lease

  

Accumulated

  

Lease

 
  

Intangibles

  

Amortization

  

Intangibles, net

  

Intangibles

  

Amortization

  

Intangibles, net

 

In-place leases

 $3,186,889  $(2,740,785) $446,104  $4,360,027  $(3,283,027) $1,077,000 

Leasing costs

  1,800,921   (1,542,960)  257,961   2,937,976   (2,002,711)  935,265 

Above-market leases

  333,485   (278,751)  54,734   333,485   (240,739)  92,746 
  $5,321,295  $(4,562,496) $758,799  $7,631,488  $(5,526,477) $2,105,011 

 

As of September 30, 2020 there were no gross lease intangible assets included in real estate assets held for sale. As of December 31, 2019, there was $2.3 million of gross lease intangible assets included in real estate assets held for sale, with $1.4 million of accumulated amortization related to the lease intangible assets netted against real estate assets held for sale.

 

The net value of acquired intangible liabilities was $187,000 and $310,000 relating to below-market leases as of September 30, 2020 and December 31, 2019, respectively.

 

Future aggregate approximate amortization expense for the Company's lease intangible assets is as follows:

 

Three months remaining in 2020

 $132,584 

Years ending December 31:

    

2021

  372,484 

2022

  202,479 

2023

  17,663 

2024

  17,663 

Thereafter

  15,926 

Total

 $758,799 
     

 

The weighted average remaining amortization period of the intangible assets as of September 30, 2020 is 1.6 years.

 

 

6. OTHER ASSETS

 

Other assets consist of the following:

 

  

September 30,

  

December 31,

 
  

2020

  

2019

 

Deferred rent receivable

 $1,898,960  $2,680,886 

Prepaid expenses, deposits and other

  406,807   601,897 

Accounts receivable, net

  390,986   1,336,122 

Right-of-use assets, net

  108,826   561,375 

Other intangibles, net

  157,483   212,932 

Notes receivable

  316,374   316,374 

Deferred offering costs

  435,736    

Total other assets

 $3,715,172  $5,709,586 

 

13

 

 

 

7. MORTGAGE NOTES PAYABLE

 

Mortgage notes payable consist of the following:

 

      

Principal as of

          
      

September 30,

  

December 31,

 

Loan

 

Interest

     

Mortgage note property

 

Notes

  

2020

  

2019

 

Type

 

Rate (1)

  

Maturity

 

Waterman Plaza

  (3) (7)  $3,240,076  $3,274,097 

Variable

  4.25% 

4/29/2021

 

World Plaza

  (3) (4)   5,828,395   4,979,384 

Variable

  2.91% 

7/5/2021

 

Garden Gateway Plaza

  (3)   5,914,955   6,071,315 

Fixed

  5.00% 

8/5/2021

 

300 N.P.

      2,283,380   2,311,739 

Fixed

  4.95% 

6/11/2022

 

Highland Court

      6,312,739   6,424,366 

Fixed

  3.82% 

9/1/2022

 

Dakota Center

      9,954,740   10,111,693 

Fixed

  4.74% 

7/6/2024

 

Union Terrace

  (2)     6,240,396 

Fixed

  4.50% 

8/5/2024

 

Centennial Tech Center

  (2)     9,561,652 

Fixed

  4.43% 

12/5/2024

 

Research Parkway

      1,773,846   1,813,305 

Fixed

  3.94% 

1/5/2025

 

Arapahoe Service Center

      7,971,736   8,085,727 

Fixed

  4.34% 

1/5/2025

 

Union Town Center

      8,350,338   8,440,000 

Fixed

  4.28% 

1/5/2025

 

One Park Centre

      6,411,646   6,487,532 

Fixed

  4.77% 

9/5/2025

 

Genesis Plaza

      6,302,600   6,378,110 

Fixed

  4.71% 

9/6/2025

 

Shea Center II

      17,727,500   17,727,500 

Fixed

  4.92% 

1/5/2026

 

Executive Office Park

  (3)  4,754,908   4,839,577 

Fixed

  4.83% 

6/1/2027

 

West Fargo Industrial

      4,290,717   4,216,565 

Fixed

  3.27% 

8/5/2029

 

Grand Pacific Center

  (5)  3,767,027   3,851,962 

Fixed

  4.02% 

8/1/2037

 

Subtotal, Presidio Property Trust, Inc. Properties

     $94,884,603  $110,814,920          

Model Home mortgage notes

  (3)  29,514,663   32,644,129 

Fixed

  (6)  2020 - 2023 

Mortgage Notes Payable

     $124,399,266  $143,459,049          

Unamortized loan costs

      (862,452)  (1,066,057)         

Mortgage Notes Payable, net

     $123,536,814  $142,392,992          

 

(1)

Interest rates as of September 30, 2020.

 

(2)

Centennial Tech Center and Union Terrace were sold on February 5, 2020 and March 13, 2020, respectively.

 

(3)

Properties held for sale as of September 30, 2020. One of four buildings at Executive Office Park was classified as held for sale; one model home was included as held for sale.

 

(4)

Interest on this loan is ABR plus 0.75% and LIBOR plus 2.75%. For the nine months ended September 30, 2020, the weighted average interest rate was 3.53%.

 

(5)

Interest rate is subject to reset on September 1, 2023.

 

(6)

Each model home has a stand-alone mortgage note at interest rates ranging from 2.50% to 5.63% per annum at September 30, 2020.

 

(7)

Interest on this loan resets annually at LIBOR plus 3.00%, with a floor of 4.25%.

 

The Company is in compliance with all material conditions and covenants of its mortgage notes payable.

 

14

 

Scheduled principal payments of mortgage notes payable were as follows as of September 30, 2020:

 

  

Presidio Property

  

Model

     
  

Trust, Inc.

  

Homes

  

Total Principal

 
  

Notes Payable

  

Notes Payable

  

Payments

 

Three months remaining in 2020

 $468,332  $1,112,728  $1,581,060 

Years ending December 31:

            

2021

  16,406,080   11,306,633  $27,712,713 

2022

  9,826,391   11,667,980  $21,494,371 

2023

  1,542,085   5,427,322  $6,969,407 

2024

  1,602,019     $1,602,019 

Thereafter

  65,039,696      65,039,696 

Total

 $94,884,603  $29,514,663  $124,399,266 

 

 

8. NOTES PAYABLE

 

On September 17, 2019, the Company executed a Promissory Note pursuant to which Polar Multi-Strategy Master Fund (“Polar”), extended a loan in the principal amount of $14.0 million to the Company (“Polar Note”). The Polar Note bears interest at a fixed rate of 8% per annum and requires monthly interest-only payments. On September 1, 2020, we extended the maturity of the Polar Note from October 1, 2020 to March 31, 2021, at which time the entire outstanding principal balance of $8.8 million and accrued and unpaid interest will be due and payable. On September 30, 2020, we paid the extension or renewal fee, which was 4% of the unpaid principal balance.  The Company may repay the Polar Note at any time, subject to the payment of an Optional Redemption Fee (as defined in the Polar Note), if applicable. Such fee is not applicable to repayments made from the proceeds of property sales.

 

The principal balance of the Polar Note as of September 30, 2020 consists of cash received, less cash repayments from property sales of $7.4 million and Original Issue Discount (“OID”) of $1.4 million. The OID has been recorded on the accompanying condensed consolidated balance sheets as a direct deduction from the principal of the Note and is recognized as interest expense over the term of the Note commencing on September 17, 2019 through October 1, 2020. There was no unrecognized OID as of September 30, 2020. The accretion of the OID recognized during the nine months ended September 30, 2020 was $1.0 million.

 

The Company incurred approximately $1.1 million in legal and underwriting costs related to the Polar Note transaction. These costs have been recorded as debt issuance costs on the accompanying condensed consolidated balance sheets as a direct deduction from the principal of the Note and were amortized over the original term of the Note. Amortization expense totaling approximately $748,000 was included in interest expenses for the nine months ended September 30, 2020, in the accompanying condensed consolidated statements of operations. The unamortized debt issuance costs related to the 4% renewal fee for the loan extension totaled $351,000 as of September 30, 2020 and will be amortized over the extended term of the Note.

 

Under the terms of the Polar Note, the Company is subject to certain financial covenants including maintaining a debt to property fair value ratio of no greater than 75%. As of September 30, 2020, the Company is in compliance with such covenants.

 

On April 22, 2020, the Company received an Economic Injury Disaster Loan of $10,000 from the Small Business Administration which will provide economic relief during the COVID-19 pandemic. This loan advance is not required to be repaid, has no stipulations on use, and has been recorded as fees and other income in the Condensed Consolidated Statements of Operations during fiscal 2020. On  August 17, 2020 we received an additional Economic Injury Disaster Loan of $150,000, for which principal and interest payments are deferred for twelve months from the date of issuance, and interest accrues at 3.75% per year. The loan matures on August 17, 2050. We intend to use the funds for general corporate purposes to alleviate economic injury caused by the COVID-19 pandemic, which economic injury included abating or deferring rent to certain tenants (primarily retail tenants).

 

On April 30, 2020, the Company received a Paycheck Protection Program loan of $462,000 from the Small Business Administration which will provide additional economic relief during the COVID-19 pandemic. The loan will be fully forgiven should the funds be used for payroll related costs, mortgage interest, rent and utilities, as long as our employee headcount remains consistent with our baseline period over an eight week period following the date the loan was received, otherwise the loan will be repaid over two years following a six month deferral. On June 5, 2020, the period over which the loan could be utilized was extended to 24 weeks. The loan was recorded in accounts payable and accrued liabilities on the Condensed Consolidated Balance Sheets as of September 30, 2020. We have used the funds to cover payroll related costs.

 

 

9. COMMITMENTS AND CONTINGENCIES

 

The Company is obligated under certain tenant leases to fund tenant improvements and the expansion of the underlying leased properties.

 

Under various federal, state and local laws, ordinances and regulations relating to the protection of the environment, a current or previous owner or operator of real estate may be liable for the cost of removal or remediation of certain hazardous or toxic substances disposed, stored, generated, released, manufactured or discharged from, on, at, under, or in a property. As such, the Company may be potentially liable for costs associated with any potential environmental remediation at any of its formerly or currently owned properties.

 

15

 

The Company believes that it is in compliance in all material respects with all federal, state and local ordinances and regulations regarding hazardous or toxic substances. Management is not aware of any environmental liability that it believes would have a material adverse impact on the Company’s financial position or results of operations. Management is unaware of any instances in which the Company would incur significant environmental costs if any or all properties were sold, disposed of or abandoned. However, there can be no assurance that any such non-compliance, liability, claim or expenditure will not arise in the future.

 

The Company is involved from time to time in lawsuits and other disputes which arise in the ordinary course of business. As of September 30, 2020, management believes that these matters will not have a material adverse effect, individually or in the aggregate, on the Company’s financial position or results of operations.

 

 

10. SERIES B MANDATORILY REDEEMABLE PREFERRED STOCK

 

During the year ended December 31, 2019, the Company redeemed all of its remaining 16,900 shares of its Series B Preferred Stock for $16.9 million. As of September 30, 2020 and December 31, 2019, no Series B Preferred Stock remained outstanding. Amortization expense of $122,000 was included in interest expense for the nine months ended September 30, 2019, and no related amortization expense was incurred during the three months ended  September 30, 2020 in the accompanying condensed consolidated statements of operations. There were no unamortized deferred costs as of September 30, 2020 and December 31, 2019, respectively.

 

 

11. STOCKHOLDERS' EQUITY

 

Preferred Stock. The Company is authorized to issue up to 1,000,000 shares of preferred stock (the “Preferred Stock”). The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is authorized to fix the number of shares of any series of the Preferred Stock, to determine the designation of any such series, and to determine or alter the rights granted to or imposed upon any wholly unissued series of preferred stock including the dividend rights, dividend rate, conversion rights, voting rights, redemption rights (including sinking fund provisions), redemption price, and liquidation preference.

 

Common Stock. The Company is authorized to issue up to 100,000,000 shares of Series A Common Stock, 1,000 shares of Series B Common Stock, and 9,000,000 shares of Series C Common Stock (collectively, the "common stock") each with $0.01 par value. The common stock have identical rights, preferences, terms and conditions except that the holders of Series B Common Stock are not entitled to receive any portion of Company assets in the event of Company liquidation. There have been no Series B or Series C Common Stock issued. Each share of common stock entitles the holder to one vote. Shares of our common stock are not subject to redemption and do not have any preference, conversion, exchange or preemptive rights. The articles of incorporation contain a restriction on ownership of the common stock that prevents one person from owning more than 9.8% of the outstanding shares of common stock.

 

Cash Dividends. During the nine months ended September 30, 2020 the Company paid no cash dividend. During the nine months ended September 30, 2019 the Company paid a cash dividend of approximately $2.2 million or $0.12 per share.

 

Partnership Interests. Through the Company, its subsidiaries and its partnerships, we own 15 commercial properties in fee interest, two of which we own partial interests in through our holdings in various affiliates in which we serve as general partner, member and/or manager. We purchased the partnership interest in one limited partnership that owned one property during 2016. Each of the limited partnerships is referred to as a “DownREIT.” In each DownREIT, we have the right, through put and call options, to require our co-investors to exchange their interests for shares of our common stock at a stated price after a defined period (generally five years from the date they first invested in the entity’s real property), the occurrence of a specified event or a combination thereof. The Company is a limited partner in four partnerships and sole stockholder in one corporation, which entities purchase and leaseback model homes from homebuilders.

 

During the nine months ended September 30, 2020, the Company exercised two put options with a limited partner in two limited partnerships and exchanged a total of 59,274 shares of the Company’s Series A Common Stock for the limited partner’s partnership interests, resulting in an increase in ownership interest of each limited partnership by the Company. As part of this non-cash equity transaction, the Company reclassified $1.2 million in minority interest to common stock and additional paid in capital on the Condensed Consolidated Balance Sheets.

 

16

 

Dividend Reinvestment Plan. The Company adopted a distribution reinvestment plan (“Plan) that allowed stockholders to receive dividends and other distributions otherwise distributable to them invested in additional shares of the Company’s common stock. The Company registered 3,000,000 shares of common stock pursuant to the Plan. The purchase price per share used in the past was 95% of the price the Company sold its shares or $19.00 per share. No sales commission or dealer manager fees were paid on shares sold through the Plan. The Company may amend, suspend or terminate the Plan at any time. Any such amendment, suspension or termination will be effective upon a designated dividend record date and notice of such amendment, suspension or termination will be sent to all participants at least thirty (30) days prior to such record date. The Plan became effective on January 23, 2012, was suspended on December 7, 2018 and adopted on October 6, 2020 in connection with our IPO, updated to reflect a change in transfer agent and registrar. As of September 30, 2020, approximately $17.4 million or approximately 917,074 shares of common stock have been issued under the Plan. No shares were issued under the Plan during the nine months ended September 30, 2020.

 

Stock-Based Compensation. The Company recognizes noncash compensation expense ratably over the vesting period, and accordingly, we recognized $181,000 and $193,000 in noncash compensation expense for the three month periods ended September 30, 2020 and 2019, respectively, and $542,000 and $809,000 for the nine months ended September 30, 2020 and 2019, respectively, which is included in general and administrative expense on the Condensed Consolidated Statements of Operations.

 

 

12. SEGMENTS

 

The Company’s reportable segments consist of three types of real estate properties for which the Company’s decision-makers internally evaluate operating performance and financial results: Office/Industrial Properties, Model Home Properties and Retail Properties. The Company also has certain corporate-level activities including accounting, finance, legal administration and management information systems which are not considered separate operating segments.  The accounting policies of the reportable segments are the same as those described in Note 2.  There is no material inter segment activity.

 

The Company evaluates the performance of its segments based upon net operating income (“NOI”), which is a non-GAAP supplemental financial measure. The Company defines NOI for its segments as operating revenues (rental income, tenant reimbursements and other operating income) less property and related expenses (property operating expenses, real estate taxes, insurance, asset management fees, impairments and provision for bad debt). NOI excludes certain items that are not considered to be controllable in connection with the management of an asset such as non-property income and expenses, depreciation and amortization, real estate acquisition fees and expenses and corporate general and administrative expenses. The Company uses NOI to evaluate the operating performance of the Company’s real estate investments and to make decisions about resource allocations.

 

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The following tables reconcile the Company’s segment activity to its results of operations and financial position as of and for the three and nine months ended September 30, 2020:

 

  

For the Three Months Ended September 30,

  

For the Nine Months Ended September 30,

 
  

2020

  

2019

  

2020

  

2019

 

Office/Industrial Properties:

                

Rental, fees and other income

 $4,098,892  $5,137,114  $13,334,595  $16,087,363 

Property and related expenses

  (1,813,950)  (2,237,392)  (5,539,320)  (7,041,306)

Net operating income, as defined

  2,284,942   2,899,722   7,795,275   9,046,057 

Model Home Properties:

                

Rental, fees and other income

  1,058,329   1,083,470   3,268,074   3,167,072 

Property and related expenses

  (58,897)  (42,258)  (160,688)  (140,866)

Net operating income, as defined

  999,432   1,041,212   3,107,386   3,026,206 

Retail Properties:

                

Rental, fees and other income

  548,392   780,286   2,305,412   2,046,686 

Property and related expenses

  (277,820)  (253,414)  (1,729,171)  (640,444)

Net operating (loss) income, as defined

  270,572   526,872   576,241   1,406,242 

Reconciliation to net loss:

                

Total net operating income, as defined, for reportable segments

  3,554,946   4,467,806   11,478,902   13,478,505 

General and administrative expenses

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

Depreciation and amortization

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

Interest expense

  (2,143,960)  (2,830,858)  (6,971,162)  (7,867,932)

Other income (expense), net

  (12,270)  9,294   (10,865)  19,227 

Income tax expense

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

Gain on sale of real estate

  332,715   4,853,186   656,975   6,243,819 

Net loss

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

 

 

  

September 30,

  

December 31,

 

Assets by Reportable Segment:

 

2020

  

2019

 

Office/Industrial Properties:

        

Land, buildings and improvements, net (1)

 $102,805,132  $126,421,648 

Total assets (2)

 $103,137,364  $131,180,612 

Model Home Properties:

        

Land, buildings and improvements, net (1)

 $45,945,657  $48,466,371 

Total assets (2)

 $45,235,619  $51,389,400 

Retail Properties:

        

Land, buildings and improvements, net (1)

 $25,125,813  $25,318,601 

Total assets (2)

 $26,449,473  $26,588,254 

Reconciliation to Total Assets:

        

Total assets for reportable segments

 $174,822,456  $209,158,266 

Other unallocated assets:

        

Cash, cash equivalents and restricted cash

  1,913,279   1,591,041 

Other assets, net

  15,082,214   10,035,101 

Total Assets

 $191,817,949  $220,784,408 

 

(1)

Includes lease intangibles and the land purchase option related to property acquisitions.

 

(2)

Includes land, buildings and improvements, cash, cash equivalents, and restricted cash, current receivables, deferred rent receivables and deferred leasing costs and other related intangible assets, all shown on a net basis.

 

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For the Nine Months Ended September 30,

 

Capital Expenditures by Reportable Segment

 

2020

  

2019

 

Office/Industrial Properties:

        

Capital expenditures and tenant improvements

 $2,501,075  $5,161,786 

Model Home Properties:

        

Acquisition of operating properties

  8,996,248   6,116,035 

Retail Properties:

        

Capital expenditures and tenant improvements

  9,077   20,247 

Totals:

        

Acquisition of operating properties, net

  8,996,248   6,116,035 

Capital expenditures and tenant improvements

  2,510,152   5,182,033 

Total real estate investments

 $11,506,400  $11,298,068 

 

 

13. SUBSEQUENT EVENTS

 

Dividend 

 

On November 3, 2020, our Board of Directors declared a dividend of $0.10 per share of Series A Common Stock, payable on November 30, 2020 to stockholders of record as of November 23, 2020.

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto appearing in Item 1 of this report and the more detailed information contained in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission (“SEC”) on March 13, 2020.

 

We may refer to the three months ended September 30, 2020 and September 30, 2019 as the “2020 Quarter” and the “2019 Quarter,” respectively.

 

Forward-Looking Statements

 

This Form 10-Q contains forward-looking statements which involve risks and uncertainties. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Currently, one of the most significant factors is the potential adverse effect of the COVID-19 virus and ensuing economic turmoil on the financial condition, results of operations, cash flows and performance of Presidio, particularly our ability to collect rent, on the financial condition, results of operations, cash flows and performance of our tenants, and on the global economy and financial markets. The extent to which COVID-19 impacts the Company and its tenants will depend on current and future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. Moreover, investors are cautioned to interpret many of the risks identified in the risk factors discussed in this 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2019, filed on March 13, 2020, as well as the risks set forth below, as being heightened as a result of the ongoing and numerous adverse impacts of COVID-19. Additional factors which may cause the actual results, performance, or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements include, but are not limited to the risks associated with the ownership of real estate in general and our real estate assets in particular; the economic health of the metro regions where we conduct business; the risk of failure to enter into/and or complete contemplated acquisitions and dispositions, within the price ranges anticipated and on the terms and timing anticipated; changes in the composition of our portfolio; fluctuations in interest rates; reductions in or actual or threatened changes to the timing of federal government spending; the risks related to use of third-party providers and joint venture partners; the ability to control our operating expenses; the economic health of our tenants; the supply of competing properties; shifts away from brick and mortar stores to e-commerce; the availability and terms of financing and capital and the general volatility of securities markets; compliance with applicable laws, including those concerning the environment and access by persons with disabilities; terrorist attacks or actions and/or cyber-attacks; weather conditions, natural disasters and pandemics; ability to maintain key personnel; failure to qualify and maintain our qualification as a REIT and the risks of changes in laws 

 

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affecting REITs; and other risks and uncertainties detailed from time to time in our filings with the SEC, including our 2019 Annual Report on Form 10-K filed on March 13, 2020, and subsequent Quarterly Reports on Form 10-Q. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We undertake no obligation to update our forward-looking statements or risk factors to reflect new information, future events, or otherwise.

 

Outlook

 

On March 11, 2020, the World Health Organization declared COVID-19, a respiratory illness caused by the novel coronavirus, a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The COVID-19 pandemic caused state and local governments within our areas of business operations to institute quarantines, “shelter-in-place” mandates, including rules and restrictions on travel and the types of businesses that may continue to operate. While certain areas begin to re-open, others have seen an increase in the number of cases reported, prompting local government to enforce further restrictions. We continue to monitor our operations and government recommendations. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law to provide widespread emergency relief for the economy and to provide aid to corporations. The CARES Act includes several significant provisions related to taxes, refundable payroll tax credits and deferment of social security payments.

 

We continue to evaluate the relief options for us and our tenants available under the CARES Act, as well as other emergency relief initiatives and stimulus packages instituted by the federal government. A number of the relief options contain restrictions on future business activities, including ability to repurchase shares and pay dividends, that require careful evaluation and consideration. We will continue to assess these options, and any subsequent legislation or other relief packages, including the accompanying restrictions on our business, as the effects of the pandemic continue to evolve.

 

The effects of the COVID-19 pandemic did not significantly impact our operating results during the first three quarters of 2020. We continue to monitor and communicate with our tenants to assess their needs and ability to pay rent. We have negotiated lease amendments with certain tenants who have demonstrated financial distress caused by the COVID-19 pandemic, which have included or may include rent deferral, temporary rent abatement, or reduced rental rates and/or lease extension periods, however no new negotiations were initiated during the third quarter of 2020. While these amendments have affected our short term cash flows, we do not believe they represent a change in the valuation of our assets for the properties affected and have not significantly effected our results of operations. Given the longevity of this pandemic, the COVID-19 outbreak may materially affect our financial condition and results of operations going forward, including, but not limited to, real estate rental revenues, credit losses, leasing activity, and potentially the valuation of our real estate assets. We expect that we may have additional rent deferrals, abatements and credit losses from our commercial tenants during the remainder of 2020 which may have a material impact on our real estate rental revenue and cash collections. We also expect that the effects of the COVID-19 pandemic will impact our ability to lease up available commercial space. Our business operations and activities in many regions may be subject to future quarantines, "shelter-in-place" rules, and various other restrictions for the foreseeable future. Due to the uncertainty of the future impacts of the COVID-19 pandemic, the extent of the financial impact cannot be reasonably estimated at this time. For more information, see Part II - Item 1A. Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q.

 

 

OVERVIEW

 

The Company operates as an internally managed, diversified REIT, with holdings in office, industrial, retail, and model home properties. In October 2017, we changed our name from “NetREIT, Inc.” to “Presidio Property Trust, Inc.” The Company acquires, owns and manages a geographically diversified portfolio of real estate assets including office, industrial, retail and model home residential properties leased to homebuilders located in the United States. As of September 30, 2020, the Company owned or had an equity interest in:

 

 

Ten office buildings and one industrial property (“Office/Industrial Properties”), which totals approximately 998,016 rentable square feet;

 

 

Four retail shopping centers (“Retail Properties”), which total approximately 131,722 rentable square feet; and

 

 

128 Model Homes (“Model Homes” or “Model Home Properties”) leased back on a triple-net basis to homebuilders that are owned by six affiliated limited partnerships and one wholly-owned corporation.

 

The Company’s office, industrial and retail properties are located primarily in Colorado, with four properties located in North Dakota and three in California. While geographical clustering of real estate enables us to reduce our operating costs through economies of scale by servicing a number of properties with less staff, it makes us susceptible to changing market conditions in 

 

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these discrete geographic areas, including those that have developed as a result of COVID-19. We do not develop properties but acquire properties that are stabilized or that we anticipate will be stabilized within two or three years of acquisition. We consider a property to be stabilized once it has achieved an 80% occupancy rate for a full year as of January 1 of such year or has been operating for three years.

 

Most of our office and retail properties are leased to a variety of tenants ranging from small businesses to large public companies, many of which are not investment grade. We have in the past entered into, and intend in the future to enter into, purchase agreements for real estate having net leases that require the tenant to pay all of the operating expense or pay increases in operating expenses over specific base years. Most of our office leases are for terms of three to five years with annual rental increases. Our model homes are typically leased back for two to three years to the home builder on a triple net lease. Under a triple net lease, the tenant is required to pay all operating, maintenance and insurance costs and real estate taxes with respect to the leased property.

 

We seek to diversify our portfolio by commercial real estate segments to reduce the adverse effect of a single under-performing segment, geographic market and/or tenant. We further supplement this at the tenant level through our credit review process, which varies by tenant class. For example, our commercial and industrial tenants tend to be corporations or individual owned businesses. In these cases, we typically obtain financial records, including financial statements and tax returns (depending on the circumstance), and run credit reports for any prospective tenant to support our decision to enter into a rental arrangement. We also typically obtain security deposits from these commercial tenants. Our Model Home commercial tenants are well-known homebuilders with established credit histories. These tenants are subjected to financial review and analysis prior to us entering into a sales-leaseback transaction.

 

Initial Public Offering. On October 6, 2020, we completed an initial public offering, or IPO, selling 500,000 shares of Series A Common Stock at $5.00 per share. Proceeds from our initial public offering net of underwriting discounts and commissions were $2.3 million after deducting approximately $0.2 million in underwriting discounts and before giving effect to $775,000 in other expenses relating to the IPO. We intend to use the net proceeds of this offering for general corporate and working capital purposes, including to potentially acquire additional properties and reduce outstanding indebtedness.

 

Reverse Stock Split. On July 29, 2020, we amended our charter to effect a one-for-two reverse stock split of every outstanding share of our Series A Common Stock. The financial statements and accompanying footnotes have been retroactively restated to reflect the reverse stock split.

 

SIGNIFICANT TRANSACTIONS IN 2020 AND 2019

 

Acquisitions - During the nine months ended September 30, 2020, the Company acquired 25 model homes for approximately $9.0 million and leased them back to the homebuilders. The purchase price was paid through cash payments of approximately $2.7 million and mortgage notes of approximately $6.3 million. During the nine months ended September 30, 2019, the Company acquired 18 model homes for approximately $6.1 million. The purchase price was paid through cash payments of approximately $1.8 million and mortgage notes of approximately $4.3 million.

 

Dispositions - We review our portfolio of investment properties for value appreciation potential on an ongoing basis and dispose of any properties that no longer satisfy our requirements in this regard. The proceeds from any such property sale, after repayment of any associated mortgage, are available for investing in properties that we believe will have a much greater likelihood of future price appreciation, for the payment of other debt and for general corporate purposes.

 

We disposed of the following properties during the nine months ended September 30, 2020:

 

 

Centennial Tech Center, which was sold on February 5, 2020 for approximately $15.0 million and the Company recognized a loss of approximately $913,000;

 

 

Union Terrace, which was sold on March 13, 2020 for approximately $11.3 million and the Company recognized a gain of approximately $688,000;

 

 

The Company disposed of 33 model homes for approximately $12.6 million and recognized a gain of approximately $894,000.

 

We disposed of the following properties during the nine months ended September 30, 2019:

 

 

On January 15, 2019, the Company sold the Morena Office Center for approximately $5.6 million and the Company recognized a gain of approximately $700,000;

     
  Nightingale land was sold on May 8, 2019 for approximately $875,000 and the Company recognized a loss of approximately $93,000;

 

 
On July 1, 2019, NetREIT Genesis, LLC sold a 43% tenants-in-common interest in Genesis Plaza (“TIC Interest”) for $5.6 million to a newly formed entity, NetREIT Genesis II, LLC, in which NetREIT Casa Grande LP is the sole member. NetREIT Casa Grande LP owned and sold Morena Office Center on January 15, 2019. The sale of the TIC Interest was structured as a 1031 exchange and included $2.9 million in cash and assumption of debt. The Company remains a guarantor of the debt and NetREIT Genesis, LLC and NetREIT Genesis II, LLC are jointly and severally liable for the debt securing Genesis Plaza, the financial terms and conditions of which remain materially unchanged;
     
 
The Presidio office building, which was sold on July 31, 2019 for approximately $12.3 million and the Company recognized a gain of approximately $4.5 million;
     
 

The Company disposed of 35 model homes for approximately $12.4 million and recognized a gain of approximately $1.0 million.

 

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CRITICAL ACCOUNTING POLICIES

 

There have been no material changes to our critical accounting policies as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 13, 2020.

 

MANAGEMENT EVALUATION OF RESULTS OF OPERATIONS

 

Management’s evaluation of operating results includes an assessment of our ability to generate cash flow necessary to pay operating expenses, general and administrative expenses, debt service and to fund distributions to our stockholders. As a result, management’s assessment of operating results gives less emphasis to the effects of unrealized gains and losses and other non-cash charges, such as depreciation and amortization and impairment charges, which may cause fluctuations in net income for comparable periods but have no impact on cash flows. Management’s evaluation of our potential for generating cash flow includes assessments of our recently acquired properties, our non-stabilized properties, long-term sustainability of our real estate portfolio, our future operating cash flow from anticipated acquisitions, and the proceeds from the sales of our real estate assets.

 

In addition, management evaluates the results of the operations of our portfolio and individual properties with a primary focus on increasing and enhancing the value, quality and quantity of properties in our real estate holdings. Management focuses its efforts on improving underperforming assets through re-leasing efforts, including negotiation of lease renewals and rental rates. Properties are regularly evaluated for potential added value appreciation and cashflow and, if lacking such potential, are sold with the equity reinvested in new acquisitions or otherwise allocated in a manner accretive to the shareholders. Our ability to increase assets under management is affected by our ability to raise borrowings and/or capital, coupled with our ability to identify appropriate investments.

 

 

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED September 30, 2020 and 2019

 

The discussion that follows is based on our consolidated results of operations for the 2020 Quarter and 2019 Quarter. Although the COVID-19 pandemic did not significantly impact our operating results for the 2020 Quarter, we expect that the effects of the COVID-19 pandemic may significantly adversely affect our business, financial condition, results of operations and cash flows going forward, including but not limited to, real estate rental revenues, credit losses, and leasing activity, in ways that may vary widely depending on the duration and magnitude of the COVID-19 pandemic and ensuing economic turmoil, as well as numerous factors, many of which are outside of our control, as discussed under “Risk Factors.”

 

Revenues. Total revenue was $5.7 million for the three months ended September 30, 2020 compared to $7.0 million for the same period in 2019, a decrease of $1.3 million or 19%, which is primarily due to a net decrease in rental income related to the sale of three properties in 2019 and two properties during the first quarter of 2020. The decrease in rental income is also attributed to COVID-19 related tenant workouts, which included rent abatements and deferrals that are being recognized over the remaining lease term.

 

Rental Operating Costs. Rental operating costs decreased by $0.4 million to $2.1 million for the three months ended September 30, 2020, compared to $2.5 million for the same period in 2019. Rental operating costs as a percentage of total revenue also increased to 37.2% as compared to 36.2% for the three months ended September 30, 2020 and 2019, respectively, primarily due to COVID-19 related costs incurred. The overall decrease in rental operating costs for the three months ended September 30, 2020 as compared to 2019 is due to the sale of three properties in 2019 and two properties during the quarter ended September 30, 2020, as well as the mix of properties held to include a higher percentage of model homes period over period, which have significantly lower operating costs. 

 

General and Administrative Expenses. General & Administrative (“G&A”) expenses decreased by $0.1 million for the three months ended September 30, 2020 compared to the same period in 2019. G&A expenses as a percentage of total revenue was 24.1% and 20.7% for three months ended September 30, 2020 and 2019, respectively, primarily due to payroll related costs. The decrease in G&A expenses overall for the three months ended September 30, 2020 as compared to 2019 is mainly due to a decrease in stock compensation expense.

 

Depreciation and Amortization. Depreciation and amortization expense was $1.6 million for the three months ended September 30, 2020, compared to $1.8 million for the same period in 2019, representing a decrease of $0.1 million or 6%. The decrease in depreciation and amortization expense in 2020 compared to the same period in 2019 is primarily due to the sale of three properties in 2019 and two properties during the three months ended September 30, 2020, and the classification of three additional commercial properties as held for sale subsequent to September 30, 2019, upon which the Company ceased depreciation.

 

Asset Impairments. We review the carrying value of each of our real estate properties quarterly to determine if circumstances indicate an impairment in the carrying value of these investments exists. The Company did not recognize any impairment in the Condensed Consolidated Statements of Operations during the three months ended September 30, 2020. Management considered the impact of COVID-19 on all remaining assets as of September 30, 2020 and determined that there was not sufficient data to indicate an impairment had occurred as of that date.

 

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Interest Expense - Series B Preferred Stock. The Series B Preferred Stock issued in August 2014 included a mandatory redemption provision and therefore, was treated as a liability for financial reporting purposes. The interest paid and accrued and the amortization of the deferred offering costs are considered interest expense. The Series B Preferred Stock was redeemed during 2019 and was no longer outstanding as of September 30, 2019. Interest expense, including amortization of the deferred offering costs, totaled $0.9 million for the three months ended September 30, 2019.

 

Interest Expense - mortgage notes. Interest expense, including amortization of deferred finance charges was $1.4 million for the three months ended September 30, 2020 compared to $1.7 million for the same period in 2019, a decrease of $0.3 million or 17%. The decrease in mortgage interest expense relates to the decreased number of commercial properties owned in 2020 compared to 2019 and the related mortgage debt. The weighted average interest rate on our outstanding debt was 3.9% and 4.7% as of September 30, 2020 and 2019, respectively.

 

Interest expense - note payable. On September 17, 2019, the Company executed a Promissory Note pursuant to which Polar Multi-Strategy Master Fund (“Polar”), extended a loan in the principal amount of $14.0 million to the Company ("Polar Note"). The Polar Note bears interest at a fixed rate of 8% per annum and requires monthly interest-only payments. Interest expense, including amortization of the deferred offering costs and Original Issue Discount ("OID") of $1.4 million, totaled $0.7 million for the three months ended September 30, 2020.

 

Gain on Sale of Real Estate Assets, net. The change in gain or loss on the sale of real estate assets is dependent on the mix of properties sold and the market conditions at the time of the sale. See "Significant Transactions in 2020 and 2019" above for further detail.

 

Income allocated to non-controlling interests. Income allocated to non-controlling interests for the three months ended September 30, 2020 and 2019 totaled approximately $0.4 million. 

 

RESULTS OF OPERATIONS FOR THE nine months ended September 30, 2020 and 2019

 

Revenues.  Total revenue was $18.8 million for the nine months ended September 30, 2020 compared to $21.3 million for the same period in 2019, a decrease of $2.5 million or 12%. The decrease in revenue for the six months period is primarily due to a decrease in rental income related to the sale of three properties during 2019 and two properties during the first quarter of 2020 as well as COVID-19 related tenant workouts, which included rent abatements and deferrals.

 

Rental Operating Costs.  Rental operating costs decreased $1.3 million, to $6.5 million for the nine months ended September 30, 2020 from $7.8 million for the nine months ended September 30, 2019. Rental operating costs as a percentage of total revenue decreased to 34.5% from 36.7% for the nine months ended September 30, 2020 and 2019, respectively. Rental operating costs as a percentage of total revenue decreased for the nine months ended September 30, 2020 as compared to 2019 due to the sale of three properties in 2019 and two properties during the nine months ended September 30, 2020, as well as the mix of properties held to include a higher percentage of model homes period over period, which have significantly lower operating costs.

 

General and Administrative Expenses.  G&A expenses decreased by $0.6 million, or 13%, to $4.0 million for the nine months ended September 30, 2020 compared to $4.6 million for the same period in 2019. G&A expenses as a percentage of total revenue was 21.2% and 21.7% for the nine months ended September 30, 2020 and 2019, respectively. The decrease in G&A expense is due to a decrease in stock compensation expense.

 

Depreciation and Amortization.  Depreciation and amortization expense totaled $4.8 million for the nine months ended September 30, 2020, compared to $5.7 million for the same period in 2019, a decrease of $0.9 million or 16%. The decrease in depreciation and amortization during the nine months ended September 30, 2020 when compared to the same period in 2019 is primarily due to the sale of three properties in 2019 and two properties during the nine months ended September 30, 2020, and the classification of three additional commercial properties as held for sale subsequent to September 30, 2019, upon which the Company ceased depreciation.

 

23

 

Asset Impairments.  We review the carrying value of each of our real estate properties quarterly to determine if circumstances indicate an impairment in the carrying value of these investments exists. During the second quarter of 2020, the Company entered into lease renewal negotiations with a significant tenant at our Waterman Plaza retail property at a lower market rental rate than the rental rate being charged. The Company obtained a broker opinion of value that considered the lower market rental rates and subsequently determined there was a material change to undiscounted cash flows on the property as of June 30, 2020. Therefore, the Company recorded an $845,000 non-cash impairment in the Condensed Consolidated Statements of Operations during the second quarter of 2020, and during the third quarter of 2020, the parties executed an amendment to renew the lease. Management considered the impact of COVID-19 on all remaining assets as of September 30, 2020 and determined that no other impairments had occurred as of that date.

 

Interest Expense-Series B preferred stock.  The Series B Preferred Stock issued in August 2014 included a mandatory redemption provision and therefore, was treated as a liability for financial reporting purposes. The interest paid and accrued and the amortization of the deferred offering costs are considered interest expense. The Series B Preferred Stock was redeemed during 2019 and was no longer outstanding as of September 30, 2019. Interest expense, including amortization of the deferred offering costs, totaled $2.2 million for the nine months ended September 30, 2019.

 

Interest Expense-mortgage notes.  Interest expense, including amortization of deferred finance charges was $4.6 million for the nine months ended September 30, 2020 compared to $5.5 million for the same period in 2019, a decrease of $0.9 million or 16%. The decrease in interest relates to the decreased number of commercial properties owned in 2019 compared to 2019 and the related debt. The weighted average interest rate on our outstanding debt was 3.9% and 4.7% as of September 30, 2020 and 2019, respectively.

 

Interest expense - note payable. On September 17, 2019, the Company executed a Promissory Note pursuant to which Polar Multi-Strategy Master Fund (“Polar”), extended a loan in the principal amount of $14.0 million to the Company ("Polar Note"). The Polar Note bears interest at a fixed rate of 8% per annum and requires monthly interest-only payments. Interest expense, including amortization of the deferred offering costs and amortization of the Original Issue Discount ("OID") of $1.4 million, totaled $2.4 million for the nine months ended September 30, 2020 and $0.2 million for the nine months ended September 30, 2019.

 

Gain on Sale of Real Estate Assets, net. The change in gain or loss on the sale of real estate assets is dependent on the mix of properties sold and the market conditions at the time of the sale. See "Significant Transactions in 2020 and 2019" above for further detail.

 

Income allocated to non-controlling interests.  Income allocated to non-controlling interests for the nine months ended September 30, 2020 was approximately $0.9 million compared to the income allocated during the nine months ended September 30, 2019 of approximately $1.4 million. The decrease is related to the sale of 33 Model Home Properties during the nine months ended September 30, 2020 compared to 35 Model Home Properties during the nine months ended September 30, 2019, for which the decrease is primarily attributable to homes were sold at a higher gain in 2019.

 

 

LIQUIDITY AND CAPITAL RESOURCES

 

Overview

 

As the local and global economies have weakened as a result of COVID-19, ensuring adequate liquidity is critical. We believe we have access to adequate resources to meet the needs of our existing operations and working capital, to the extent we are not funded by cash provided by operating activities. However, we expect the COVID-19 pandemic may adversely impact our future operating cash flows due to the inability of some of our tenants to pay their rent on time or at all. We have negotiated lease amendments with certain tenants who have demonstrated financial distress caused by the COVID-19 pandemic, which included rent deferral, temporary rent abatement, or reduced rental rates and/or lease extensions and has affected our short-term liquidity. The COVID-19 pandemic may also make financing more difficult for us to obtain, as well as for prospective buyers of our properties to obtain, resulting in difficulty in selling assets within our expected timeframe, or for our expected sales price.

 

Our anticipated future sources of liquidity may include existing cash and cash equivalents, cash flows from operations, refinancing of existing mortgages, future real estate sales, new borrowings, financial aid from government programs instituted as a result of COVID-19, and the sale of equity or debt securities. Our cash and restricted cash at September 30, 2020 was $10.0 million, which included our available liquidity of cash and cash equivalents of $6.8 million. Liquidity events have primarily included:

 

   

Economic Injury Disaster Loan of $10,000 on April 22, 2020

       
    Paycheck Protection Program loan of $462,000 on April 30, 2020
       
    Economic Injury Disaster Loan of $150,000 on August 17, 2020
       
    Proceeds from our initial public offering net of underwriting discounts and commissions of $2.3 million (before fees and expenses) on October 6, 2020.

 

 

24

 

Our future capital needs include paying down existing borrowings, maintaining our existing properties, funding tenant improvements, paying lease commissions (to the extent they are not covered by lender-held reserve deposits), and the payment of dividends to our stockholders. We also are actively seeking investments that are likely to produce income and achieve long term gains in order to pay dividends to our stockholders. To ensure that we can effectively execute these objectives, we routinely review our liquidity requirements and continually evaluate all potential sources of liquidity. We currently do not have a revolving line of credit but have been working to obtain such a line of credit.

 

Our short-term liquidity needs include paying down the remaining balance of the Polar Note, paying our current operating costs, satisfying the debt service requirements of our existing mortgages, completing tenant improvements, paying leasing commissions, and funding dividends to stockholders. For the three months remaining in 2020 and the year ending December 31, 2021, we have $1.1 million and $11.3 million of mortgage notes payable due, respectively, related to the Model Home Properties. Certain Model Home Properties will be sold and the underlying mortgage notes will be paid off with sales proceeds while other mortgage notes will be refinanced. For the three months remaining in 2020 and the year ending December 31, 2021, we have $468,000 and $16.4 million of mortgage notes payments due, respectively, related to the commercial properties. We plan to sell certain commercial properties or refinance a significant portion of the mortgage notes payable in the event the commercial property securing the respective mortgage note is not sold on or before maturity. We believe that the cash flow from our existing portfolio, distributions from joint ventures in Model Home partnerships and property sales during 2020 will be sufficient to fund our near-term operating costs, capital expenditures and future dividends that may be paid to stockholders. If our cash flow from operating activities is not sufficient to fund our short-term liquidity needs, we plan to fund a portion of these needs from additional borrowings of secured or unsecured indebtedness, from real estate sales, issuance of debt instruments, additional investors, or we will reduce the rate of dividends to the stockholders. During the nine months ended September 30, 2020, we did not pay any cash dividends to our common stockholders, but intend to pay dividends to our stockholders on a quarterly basis going forward.

 

Our long-term liquidity needs include proceeds necessary to grow and maintain our portfolio of investments. We believe that the potential financing capital available to us in the future is sufficient to fund our long-term liquidity needs. We are continually reviewing our existing portfolio to determine which properties have met our short- and long-term goals and reinvesting the proceeds in properties with better potential to increase performance. We expect to obtain additional cash in connection with refinancing of maturing mortgages and assumption of existing debt collateralized by some or all of our real property in the future to meet our long-term liquidity needs. If we are unable to arrange a line of credit, borrow on properties, issue debt instruments, privately place securities or sell securities to the public we may not be able to acquire additional properties to meet our long-term objectives.

 

Cash Equivalents and Restricted Cash

 

At September 30, 2020 and December 31, 2019, we had approximately $6.8 million and $5.7 million in cash equivalents, respectively, and $3.2 million and $4.7 million of restricted cash, respectively. Our cash equivalents and restricted cash consist of invested cash, cash in our operating accounts and cash held in bank accounts at third party institutions. During 2020 and 2019, we did not experience any loss or lack of access to our cash or cash equivalents. Approximately $1.7 million of our cash balance is intended for capital expenditures on existing properties (net of deposits held in reserve accounts by our lenders). We intend to use the remainder of our existing cash and cash equivalents for reduction of principal debt, general corporate purposes and/or dividends to our stockholders.

 

Secured Debt

 

As of September 30, 2020, the Company had one variable-rate mortgage note payable on a commercial property with a principal amount of $5.8 million and fixed-rate mortgage notes payable in the aggregate principal amount of $89.1 million, collateralized by a total of 15 commercial properties with loan terms at issuance ranging from 3 to 22 years. The weighted-average interest rate on these mortgage notes payable as of September 30, 2020 was approximately 4.4%, and our debt to estimated market value of these properties was approximately 59.9%.

 

As of September 30, 2020, the Company had 119 fixed-rate mortgage notes payable related to model homes in the aggregate principal amount of $29.5 million, collateralized by a total of 119 Model Homes. These loans generally have a term at issuance of three to five years. As of September 30, 2020, the average loan balance per home outstanding and the weighted-average interest rate on these mortgage loans are approximately $250,000 and 3.6%, respectively. Our debt to estimated market value on these properties is approximately 73.3%. The Company has guaranteed between 25% - 100% of these mortgage loans.

 

We have been able to refinance maturing mortgages to extend maturity dates and we have not experienced any notable difficulties financing our acquisitions.

 

25

 

Cash Flows for the nine months ended September 30, 2020 and September 30, 2019

 

Operating Activities: Net cash provided by operating activities for the nine months ended September 30, 2020 increased by approximately $0.5 million to approximately $2.9 million from $2.4 million for the nine months ended September 30, 2019. The increase in net cash provided by operating activities is due to a $0.2 million increase in working capital which fluctuates based on timing of receipt and payment, as well as an increase in non-cash addbacks such as straight-line rent.

 

Investing Activities: Net cash provided by investing activities during the nine months ended September 30, 2020 was approximately $22.2 million compared to approximately $17.3 million during the same period in 2019. The increase primarily related to the mix of gross proceeds from the sale of office buildings and Model Homes year over year, as well as a decrease in capital expenditures due to timing of capital expenditures during the COVID-19 pandemic. 

 

We currently project that we could spend up to $1.7 million (net of deposits held in reserve accounts by lenders) on capital improvements, tenant improvements and leasing costs for properties within our portfolio on an annual basis. Capital expenditures may fluctuate in any given period subject to the nature, extent, and timing of improvements required to the properties. We may spend more on capital expenditures in the future due to rising construction costs. Tenant improvements and leasing costs may also fluctuate in any given year depending upon factors such as the property, the term of the lease, the type of lease, the involvement of external leasing agents and overall market conditions.

 

Financing Activities: Net cash used in financing activities during the nine months ended September 30, 2020 was $25.4 million compared to $18.3 million for the same period in 2019 and was primarily due to the following activities for the nine months ended September 30, 2020:

 

 

Net increase in repayment of mortgage notes payable of $11.7 million;

 

 

Net increase in repayment of the Polar note payable of $5.2 million; offset by

 

 

Net increase in proceeds from mortgage notes of $2.7 million;

 

 

Net decrease in dividends paid to stockholders of $2.2 million; and

 

 

Redemption of mandatorily redeemable preferred stock of $16.9 million during the nine months ended September 30, 2019.

 

Off-Balance Sheet Arrangements

 

As of September 30, 2020, we had one letter of credit outstanding for $0.2 million, to satisfy mortgage lender requirements.

 

Inflation

 

Substantially all of our office leases provide for real estate tax and operating expense escalations. In addition, most of the leases provide for fixed annual rent increases. We believe that inflationary increases may be at least partially offset by these contractual rent increases and expense escalations.

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not required

 

26

 

ITEM 4. CONTROLS AND PROCEDURES

 

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act report is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-14(c). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

 

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, Chief Financial Officer and our Chief Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Furthermore, we do not believe that these controls have been impacted by COVID-19 related circumstances, including remote work arrangements with our employees.

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

None.

 

Item 1A. Risk Factors

 

The following supplements and updates the risk factors in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019. If any of the risks discussed below or in our Annual Report on Form 10-K occur, our business, prospects, liquidity, financial condition and results of operations (individually and collectively referred to in the following risk factor as “Financial Performance”) could be materially and adversely affected. Some statements in this Quarterly Report on Form 10-Q, including statements in the following risk factors, constitute forward-looking statements. Please refer to the introductory section of this Quarterly Report on Form 10-Q, preceding Part I, "Financial Information," entitled “Cautionary Note Regarding Forward-Looking Statements.”

 

Risks Related to COVID-19

 

The current outbreak of the novel coronavirus (COVID-19), and the resulting volatility it has created, has disrupted our business and we expect that the COVID-19 pandemic, may significantly and adversely impact our business, financial condition and results of operations going forward, and that other potential pandemics or outbreaks, could materially adversely affect our business, financial condition, results of operations and cash flows in the future. Further, the spread of the COVID-19 outbreak has caused severe disruptions in the U.S. and global economy and financial markets, and could potentially create widespread business continuity issues of an unknown magnitude and duration.

 

Since being reported in December 2019, COVID-19 has spread globally, including to every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19.

 

The COVID-19 pandemic has had, and another pandemic in the future could have, repercussions across regional and global economies and financial markets. The global impact of the outbreak has been rapidly evolving and many countries, including the United States (including the states and cities that comprise the San Diego, California; Denver and Colorado Springs, Colorado; Fargo and Bismarck, North Dakota; and other metro regions, where we own and operate properties) have also instituted quarantines, "shelter in place" mandates, including rules and restrictions on travel and the types of businesses that 

 

27

 

may continue to operate. As a result, the COVID-19 pandemic is negatively impacting almost every industry, both inside and outside these metro regions, directly or indirectly and has created business continuity issues. For instance, a number of our commercial tenants have announced temporary closures of their offices or stores and requested temporary rent deferral or rent abatement during this pandemic. In addition, jurisdictions where we own and operate properties have implemented, or may implement, rent freezes, eviction freezes, or other similar restrictions. The full extent of the impacts on our business over the long term are largely uncertain and dependent on a number of factors beyond our control.

 

As a result of the effects of the COVID-19 pandemic, we have been impacted by and may further be impacted by one or more of the following:

 

 

a decrease in real estate rental revenue (our primary source of operating cash flow), as a result of temporary rent deferrals, rent abatement and/or rent reductions, rent freezes or declines impacting new and renewal rental rates on properties, longer lease-up periods for both anticipated and unanticipated vacancies (in part, due to “shelter-in-place” mandates), lower revenue recognized as a result of waiving late fees, as well as our tenants’ ability and willingness to pay rent, and our ability to continue to collect rents, on a timely basis or at all;


 

 

a complete or partial closure of one or more of our properties resulting from government or tenant action (as of October 20, 2020, many of our commercial properties were reopened, however certain tenants were still operating on a limited basis pursuant to local government orders);

 

 

reductions in demand for commercial space and the inability to provide physical tours of our commercial spaces may result in our inability to renew leases, re-lease space as leases expire, or lease vacant space, particularly without concessions, or a decline in rental rates on new leases;

 

 

the inability of one or more major tenants to pay rent, or the bankruptcy or insolvency of one or more major tenants, may be increased due to a downturn in its business or a weakening of its financial condition as a result of shelter-in-place orders, phased re-opening of its business, or other pandemic related causes;

 

 

the inability to decrease certain fixed expenses at our properties despite decreased operations at such properties;

 

 

the inability of our third-party service providers to adequately perform their property management and/or leasing activities at our properties due to decreased on-site staff;

 

 

the effect of existing and future orders by governmental authorities in any of our markets, which might require homebuilders to cease operations for an uncertain or indefinite period of time, which could significantly affect new home orders and deliveries, and negatively impact their home sales revenue and ability to perform on their lease obligations to the Company in such markets;

 

 

difficulty accessing capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deterioration in credit and financing conditions, which may affect our access to capital and our commercial tenants' ability to fund their business operations and meet their obligations to us;

 

 

the financial impact of the COVID-19 pandemic could negatively impact our future compliance with financial covenants of debt agreements;

 

 

a decline in the market value of real estate may result in the carrying value of certain real estate assets exceeding their fair value, which may require us to recognize an impairment to those assets;

 

 

future delays in the supply of products or services may negatively impact our ability to complete the renovations and lease-up of our buildings on schedule or for their original estimated cost;

 

 

a general decline in business activity and demand for real estate transactions could adversely affect our ability or desire to grow or change the complexion of our portfolio of properties;

 

 

our insurance may not cover loss of revenue or other expenses resulting from the pandemic and related shelter-in-place rules;

 

 

unanticipated costs and operating expenses and decreased anticipated revenue related to compliance with regulations, such as additional expenses related to staff working remotely, requirements to provide employees with additional mandatory paid time off and increased expenses related to sanitation measures performed at each of our properties, as well as additional expenses incurred to protect the welfare of our employees, such as expanded access to health services;

 

28

 

the potential for one or more members of our senior management team to become sick with COVID-19 and the loss of such services could adversely affect our business;

 

 

the increased vulnerability to cyber-attacks or cyber intrusions while employees are working remotely has the potential to disrupt our operations or cause material harm to our financial condition; and

 

 

complying with REIT requirements during a period of reduced cash flow could cause us to liquidate otherwise attractive investments or borrow funds on unfavorable conditions.

 

The significance, extent and duration of the impact of COVID-19 remains largely uncertain and dependent on future developments that cannot be accurately predicted at this time, such as the continued severity, duration, transmission rate and geographic spread of COVID-19, the extent and effectiveness of the containment measures taken, and the response of the overall economy, the financial markets and the population, once the current containment measures are lifted.

 

The rapid development and volatility of this situation precludes us from making any prediction as to the ultimate adverse impact of COVID-19. As a result, we cannot provide an estimate of the overall impact of the COVID-19 pandemic on our business or when, or if, we (or our tenants) will be able to resume fully normal operations. Nevertheless, COVID-19 presents material uncertainty and risk with respect to our business, financial performance and condition, operating results and cash flows.

 

The impact of COVID-19 may also exacerbate other risks discussed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K, any of which could have a material effect on us.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

Unregistered Sales of Equity Securities. None.

 

Stock Repurchases. The Company does not have a formal policy with respect to a stock repurchase program and typically restricts repurchases to hardship cases only.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures

 

None.

 

Item 5. Other Information.

 

None.

 

Item 6. EXHIBITS.

 

Exhibit
Number

 

Description

31.1

 

Certificate of the Company's Chief Executive Officer (Principal Executive Officer) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant's Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2020.

     

31.2

 

Certification of the Company's Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant's Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2020.

     

31.3

 

Certification of the Company's Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant's Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2020.

     

32.1

 

Certification of Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

29

 

101.INS

Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

   

101.SCH

Inline XBRL Taxonomy Extension Schema Document

   

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

   

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

   

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

   

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

   
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

30

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: November 5, 2020

Presidio Property Trust, Inc.

 
           
 

By:

/s/ Jack K. Heilbron

 

Name:

Jack K. Heilbron

     
 

Title:

Chief Executive Officer

     
           
 

By:

/s/ Adam Sragovicz

 

Name:

Adam Sragovicz

     
 

Title:

Chief Financial Officer

     
           
 

By:

/s/ Jessica Joelson

 

Name:

Jessica Joelson

     
 

Title:

Chief Accounting Officer

     

 

31
ex_202923.htm

EXHIBIT 31.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY

ACT OF 2002

 

I, Jack K. Heilbron, certify that:

 

1.

I have reviewed this Quarterly Report on Form 10-Q of Presidio Property Trust, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

 

4.

The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

 

 

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has material affected, or is reasonably likely to materially effect, the registrant's internal control over financial reporting; and

 

5.

The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

 

Date: November 5, 2020

By:

/s/ Jack K. Heilbron

   

Jack K. Heilbron,
Chief Executive Officer

 

 
ex_202924.htm

EXHIBIT 31.2

 

CERTIFICATION OF CHIEF FINANCIAL

OFFICER PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

 

I, Adam Sragovicz, certify that:

 

1.

I have reviewed this Quarterly Report on Form 10-Q of Presidio Property Trust, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

 

4.

The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

 

 

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has material affected, or is reasonably likely to materially effect, the registrant's internal control over financial reporting; and

 

5.

The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Date: November 5, 2020

By:

 /s/ Adam Sragovicz

    Adam Sragovicz,
    Chief Financial Officer

 

 
ex_202925.htm

EXHIBIT 31.3

 

CERTIFICATION OF CHIEF ACCOUNTING OFFICER PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

 

I, Jessica Joelson, certify that:

 

1.

I have reviewed this Quarterly Report on Form 10-Q of Presidio Property Trust, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

 

4.

The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

 

 

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has material affected, or is reasonably likely to materially effect, the registrant's internal control over financial reporting; and

 

5.

The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Date: November 5, 2020

By:

 /s/ Jessica Joelson

   

Jessica Joelson,
Chief Accounting Officer

 

 
ex_202926.htm

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

 

Each of the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, in their capacities as CEO, CFO and CAO, respectively, of Presidio Property Trust, Inc. (the "Company") that, to the best of their knowledge:

 

 

(i)

the Quarterly Report for the quarter ended September 30, 2020 of the Company on Form 10-Q (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

 

 

(i)

the information contained in the Report fairly presents, in all material respects, the financial condition and the results of operations of the Company.

 

 

Date: November 5, 2020

By:

/s/ Jack K. Heilbron

   

Jack K. Heilbron,
Chief Executive Officer

     

Date: November 5, 2020

By:

/s/ Adam Sragovicz

   

Adam Sragovicz
Chief Financial Officer

     

Date: November 5, 2020

By:

/s/ Jessica Joelson

   

Jessica Joelson,
Chief Accounting Officer

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 
v3.20.2
Document And Entity Information - shares
9 Months Ended
Sep. 30, 2020
Nov. 04, 2020
Document Information [Line Items]    
Entity Central Index Key 0001080657  
Entity Registrant Name Presidio Property Trust, Inc.  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2020  
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2020  
Document Transition Report false  
Entity File Number 001-34049  
Entity Incorporation, State or Country Code MD  
Entity Tax Identification Number 33-0841255  
Entity Address, Address Line One 4995 Murphy Canyon Road, Suite 300  
Entity Address, City or Town San Diego  
Entity Address, State or Province CA  
Entity Address, Postal Zip Code 92123  
City Area Code 760  
Local Phone Number 471-8536  
Title of 12(b) Security Series A Common Stock  
Trading Symbol SQFT  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   9,422,036
v3.20.2
Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)
Sep. 30, 2020
Dec. 31, 2019
Real estate assets and lease intangibles:    
Land $ 24,063,107 $ 24,490,342
Buildings and improvements 133,689,849 133,767,144
Tenant improvements 15,095,039 14,043,829
Lease intangibles 5,321,295 5,321,295
Real estate assets and lease intangibles held for investment, cost 178,169,290 177,622,610
Accumulated depreciation and amortization (31,769,133) (27,970,897)
Real estate assets and lease intangibles held for investment, net 146,400,157 149,651,713
Real estate assets held for sale, net 27,551,655 50,554,907
Real estate assets, net 173,951,812 200,206,620
Cash, cash equivalents and restricted cash 10,006,026 10,391,275
Deferred leasing costs, net 1,721,939 2,053,927
Goodwill 2,423,000 2,423,000
Other assets, net 3,715,172 5,709,586
TOTAL ASSETS 191,817,949 220,784,408
Liabilities:    
Mortgage notes payable, net 107,114,310 109,795,546
Mortgage notes payable related to properties held for sale, net 16,422,504 32,597,446
Mortgage notes payable, total net 123,536,814 142,392,992
Note payable, net 8,424,574 12,238,692
Accounts payable and accrued liabilities 5,266,774 5,673,815
Accrued real estate taxes 1,972,841 2,987,601
Lease liability, net 108,743 560,188
Below-market leases, net 187,493 309,932
Total liabilities 139,497,239 164,163,220
Commitments and contingencies (Note 9)
Equity:    
Additional paid-in capital 153,358,708 152,129,120
Dividends and accumulated losses (117,815,335) (113,037,144)
Total stockholders' equity before noncontrolling interest 35,632,593 39,180,794
Noncontrolling interest 16,688,117 17,440,394
Total equity 52,320,710 56,621,188
TOTAL LIABILITIES AND EQUITY 191,817,949 220,784,408
Common Class A [Member]    
Equity:    
Series A Common Stock, $0.01 par value, shares authorized: 100,000,000; 8,922,036 and 8,881,842 shares were both issued and outstanding at September 30, 2020 and December 31, 2019, respectively $ 89,220 $ 88,818
v3.20.2
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - Common Class A [Member] - $ / shares
Sep. 30, 2020
Dec. 31, 2019
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 100,000,000 100,000,000
Common stock, shares issued (in shares) 8,922,036 8,881,842
Common stock, shares outstanding (in shares) 8,922,036 8,881,842
v3.20.2
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Revenues:        
Rental income $ 5,433,303 $ 6,677,145 $ 18,098,514 $ 20,371,900
Fees and other income 230,265 323,725 715,609 929,221
Total revenue 5,663,568 7,000,870 18,814,123 21,301,121
Costs and expenses:        
Rental operating costs 2,108,621 2,533,064 6,489,547 7,822,616
General and administrative 1,366,380 1,451,873 3,996,696 4,632,244
Depreciation and amortization 1,626,917 1,755,253 4,823,673 5,714,446
Impairment of real estate assets 0 0 845,674 0
Total costs and expenses 5,101,918 5,740,190 16,155,590 18,169,306
Other income (expense):        
Interest expense-Series B preferred stock 0 (924,538) 0 (2,200,262)
Interest and other income (expense), net (12,270) 9,294 (10,865) 19,227
Gain on sales of real estate, net 332,714 4,853,186 656,975 6,243,819
Income tax expense (122,602) (338,713) (257,602) (611,952)
Total other income (expense), net (1,946,118) 1,692,909 (6,582,654) (2,216,838)
Net (loss) income (1,384,468) 2,953,589 (3,924,121) 914,977
Less: (Loss) income attributable to noncontrolling interests (363,777) (416,725) (854,070) (1,366,104)
Net (loss) income attributable to Presidio Property Trust, Inc. common stockholders $ (1,748,245) $ 2,536,864 $ (4,778,191) $ (451,127)
Basic (loss) income per common share (in dollars per share) $ (0.20) $ 0.29 $ (0.54) $ (0.05)
Weighted average number of common shares outstanding - basic (in shares) 8,922,525 8,852,348 8,900,547 8,860,228
Diluted (loss) income per common share (in dollars per share) $ (0.20) $ 0.27 $ (0.54) $ (0.05)
Weighted average number of common shares outstanding - diluted (in shares) 8,922,525 9,275,427 8,900,547 8,860,228
Mortgage Notes [Member]        
Other income (expense):        
Interest expense $ (1,439,771) $ (1,723,844) $ (4,605,175) $ (5,485,194)
Notes Payable [Member]        
Other income (expense):        
Interest expense $ (704,189) $ (182,476) $ (2,365,987) $ (182,476)
v3.20.2
Condensed Consolidated Statements of Changes in Equity (Unaudited) - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Parent [Member]
Noncontrolling Interest [Member]
Total
Balance (in shares) at Dec. 31, 2018 8,860,711          
Balance at Dec. 31, 2018 $ 88,608 $ 151,670,625 $ (111,343,840) $ 40,415,393 $ 15,725,650 $ 56,141,043
Net (loss) income 0 0 (1,728,392) (1,728,392) 766,455 (961,937)
Distributions in excess of contributions received $ 0 0 0 0 (258,708) (258,708)
Repurchase of common stock (in shares) (7,161)          
Repurchase of common stock $ (72) (52,077) 0 (52,149) 0 (52,149)
Dividends $ 0 0 (150) (150) 0 (150)
Vesting of restricted stock (in shares) 13,424          
Vesting of restricted stock $ 134 230,749 0 230,883 0 230,883
Balance (in shares) at Mar. 31, 2019 8,866,974          
Balance at Mar. 31, 2019 $ 88,670 151,849,297 (113,072,382) 38,865,585 16,233,397 55,098,982
Balance (in shares) at Dec. 31, 2018 8,860,711          
Balance at Dec. 31, 2018 $ 88,608 151,670,625 (111,343,840) 40,415,393 15,725,650 56,141,043
Net (loss) income           914,977
Balance (in shares) at Sep. 30, 2019 8,845,189          
Balance at Sep. 30, 2019 $ 88,452 151,685,879 (112,878,063) 38,896,268 16,463,292 55,359,560
Balance (in shares) at Mar. 31, 2019 8,866,974          
Balance at Mar. 31, 2019 $ 88,670 151,849,297 (113,072,382) 38,865,585 16,233,397 55,098,982
Net (loss) income 0 0 (1,259,598) (1,259,598) 182,924 (1,076,674)
Contributions received from noncontrolling interests, net of distributions paid $ 0 0 0 0 195,178 195,178
Repurchase of common stock (in shares) (9,085)          
Repurchase of common stock $ (91) (68,043) 0 (68,134) 0 (68,134)
Dividends $ 0 0 (1,082,947) (1,082,947) 0 (1,082,947)
Balance (in shares) at Jun. 30, 2019 8,857,889          
Balance at Jun. 30, 2019 $ 88,579 151,781,254 (115,414,927) 36,454,906 16,611,499 53,066,405
Net (loss) income 0 0 2,536,864 2,536,864 416,725 2,953,589
Distributions in excess of contributions received $ 0 0 0 0 (564,932) (564,932)
Repurchase of common stock (in shares) (12,700)          
Repurchase of common stock $ (127) (95,375) 0 (95,502) 0 (95,502)
Balance (in shares) at Sep. 30, 2019 8,845,189          
Balance at Sep. 30, 2019 $ 88,452 151,685,879 (112,878,063) 38,896,268 16,463,292 55,359,560
Balance (in shares) at Dec. 31, 2019 8,881,842          
Balance at Dec. 31, 2019 $ 88,818 152,129,120 (113,037,144) 39,180,794 17,440,394 56,621,188
Net (loss) income 0 0 (1,107,130) (1,107,130) 175,011 (932,119)
Distributions in excess of contributions received $ 0 0 0 0 (277,472) (277,472)
Balance (in shares) at Mar. 31, 2020 8,881,842          
Balance at Mar. 31, 2020 $ 88,818 152,129,120 (114,144,274) 38,073,664 17,337,933 55,411,597
Balance (in shares) at Dec. 31, 2019 8,881,842          
Balance at Dec. 31, 2019 $ 88,818 152,129,120 (113,037,144) 39,180,794 17,440,394 56,621,188
Net (loss) income           (3,924,121)
Issuance of stock for Limited Partnership interests           59,274
Issuance of stock for Limited Partnership interests         (1,200,000)  
Balance (in shares) at Sep. 30, 2020 8,922,036          
Balance at Sep. 30, 2020 $ 89,220 153,358,708 (117,815,335) 35,632,593 16,688,117 52,320,710
Balance (in shares) at Mar. 31, 2020 8,881,842          
Balance at Mar. 31, 2020 $ 88,818 152,129,120 (114,144,274) 38,073,664 17,337,933 55,411,597
Net (loss) income 0 0 (1,922,816) (1,922,816) 315,282 (1,607,534)
Contributions received from noncontrolling interests, net of distributions paid $ 0 0 0 0 66,697 66,697
Share reconciliation adjustment (in shares) (16,080)          
Share reconciliation adjustment $ (162) 162 0 0 0 0
Issuance of stock for Limited Partnership interests (in shares) 59,274          
Issuance of stock for Limited Partnership interests $ 594 1,247,396 0 1,247,990   0
Issuance of stock for Limited Partnership interests         (1,247,990)  
Balance (in shares) at Jun. 30, 2020 8,925,036          
Balance at Jun. 30, 2020 $ 89,250 153,376,678 (116,067,090) 37,398,838 16,471,922 53,870,760
Net (loss) income 0 (1,748,245) (1,748,245) 363,777 (1,384,468)
Distributions in excess of contributions received $ 0 0 0 0 (147,582) (147,582)
Repurchase of common stock (in shares) (3,000)          
Repurchase of common stock $ (30) (17,970) 0 (18,000) 0 (18,000)
Balance (in shares) at Sep. 30, 2020 8,922,036          
Balance at Sep. 30, 2020 $ 89,220 $ 153,358,708 $ (117,815,335) $ 35,632,593 $ 16,688,117 $ 52,320,710
v3.20.2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Cash flows from operating activities:    
Net (loss) income $ (3,924,121) $ 914,977
Adjustments to reconcile net (loss) income to net cash provided by operating activities:    
Depreciation and amortization 4,823,673 5,714,446
Stock compensation 541,865 809,127
Bad debt expense 93,958 19,088
Gain on sale of real estate assets, net (656,975) (6,243,819)
Impairment of real estate assets 845,674 0
Accretion of original issue discount 1,013,405 48,793
Amortization of financing costs 992,705 592,598
Amortization of above-market leases 38,012 42,796
Amortization of below-market leases (122,439) (140,777)
Straight-line rent adjustment 67,732 (26,590)
Changes in operating assets and liabilities:    
Other assets 2,171,813 1,709,386
Accounts payable and accrued liabilities (1,974,401) (244,791)
Accrued real estate taxes (1,014,760) (817,366)
Net cash provided by operating activities 2,896,141 2,377,868
Cash flows from investing activities:    
Real estate acquisitions (8,996,248) (6,116,035)
Additions to buildings and tenant improvements (2,510,152) (5,182,033)
Additions to deferred leasing costs (137,961) (661,401)
Proceeds from sales of real estate, net 33,810,274 29,211,836
Net cash provided by investing activities 22,165,913 17,252,367
Cash flows from financing activities:    
Proceeds from mortgage notes payable, net of issuance costs 13,339,739 10,667,286
Repayment of mortgage notes payable (32,399,522) (20,723,326)
Repayment of note payable (5,224,402) 0
Payment of extension costs, note payable (351,025) 0
Redemption of mandatorily redeemable preferred stock 0 (16,900,000)
Payment of deferred offering costs (435,736) 0
Distributions to noncontrolling interests, net of contributions (358,357) (628,462)
Repurchase of common stock (18,000) (215,206)
Dividends paid to stockholders 0 (2,158,467)
Net cash used in financing activities (25,447,303) (18,335,011)
Net (decrease) increase in cash equivalents and restricted cash (385,249) 1,295,224
Cash, cash equivalents and restricted cash - beginning of period 10,391,275 9,776,215
Cash, cash equivalents and restricted cash - end of period 10,006,026 11,071,439
Supplemental disclosure of cash flow information:    
Interest paid-Series B preferred stock 0 1,859,672
Interest paid-mortgage notes payable 4,542,959 4,792,830
Interest paid-notes payable 604,679 0
Non-cash financing activities:    
Issuance of stock for limited partnership interests 1,247,990 0
Polar Multi-Strategy Master Fund [Member] | Notes Payable to Banks [Member]    
Adjustments to reconcile net (loss) income to net cash provided by operating activities:    
Amortization of financing costs 748,000  
Cash flows from financing activities:    
Proceeds from note payable, net of issuance cost of $1.1 million 0 11,623,164
Payment of extension costs, note payable $ (351,000)  
Payment of deferred offering costs   $ (1,100,000)
v3.20.2
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parentheticals)
9 Months Ended
Sep. 30, 2019
USD ($)
Payment of deferred offering costs $ 0
Polar Multi-Strategy Master Fund [Member] | Notes Payable to Banks [Member]  
Payment of deferred offering costs $ (1,100,000)
v3.20.2
Note 1 - Organization
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. ORGANIZATION

 

Organization. Presidio Property Trust, Inc. (“we”, “our”, “us” or the “Company”) is an internally managed diversified real estate investment trust (“REIT”), with holdings in office, industrial, retail, and model home properties. NetREIT was incorporated in California on January 28, 1999, and was merged into NetREIT, Inc., a Maryland corporation, on August 4, 2010. In October 2017, we changed our name from “NetREIT, Inc.” to “Presidio Property Trust, Inc.” The Company’s portfolio includes the following properties:

 

 

Ten office buildings and one industrial property (“Office/Industrial Properties”) which total approximately 998,016 rentable square feet;

   
 Four retail shopping centers (“Retail Properties”) which total approximately 131,722 rentable square feet; and
   
 128 model home residential properties (“Model Homes” or “Model Home Properties”) leased back on a triple-net basis to homebuilders that are owned by six affiliated limited partnerships and one wholly-owned corporation.

 

The Company or one of its affiliates operates the following partnerships during the periods covered by these condensed consolidated financial statements:

 

 The Company is the sole general partner and a limited partner in two limited partnerships (NetREIT Palm Self-Storage LP and NetREIT Casa Grande LP), all with ownership interests in entities that own real estate income producing properties.
   
 The Company is the general and/or limited partner in six limited partnerships that purchase Model Homes and lease them back to homebuilders (Dubose Model Home Investors #202, LP, Dubose Model Home Investors #203, LP, Dubose Model Home Investors #204, LP, Dubose Model Home Investors #205, LP, Dubose Model Home Investors #206, LP and NetREIT Dubose Model Home REIT, LP). The Company refers to these entities collectively as the “Model Home Partnerships”.

 

The Company has determined that the limited partnerships in which it owns less than 100% should be included in the Company’s consolidated financial statements as the Company directs their activities and has control of such limited partnerships.

 

We have elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code (“Code”), for federal income tax purposes. To maintain our qualification as a REIT, we are required to distribute at least 90% of our REIT taxable income to our stockholders and meet the various other requirements imposed by the Code relating to such matters as operating results, asset holdings, distribution levels and diversity of stock ownership. Provided we maintain our qualification for taxation as a REIT, we are generally not subject to corporate level income tax on the earnings distributed currently to our stockholders that we derive from our REIT qualifying activities. If we fail to maintain our qualification as a REIT in any taxable year and are unable to avail ourselves of certain savings provisions set forth in the Code, all of our taxable income would be subject to federal income tax at regular corporate rates, including any applicable alternative minimum tax. We are subject to certain state and local income taxes.

 

We, together with one of our entities, have elected to treat our subsidiaries as a taxable REIT subsidiary (a “TRS”) for federal income tax purposes. Certain activities that we undertake must be conducted by a TRS, such as non-customary services for our tenants, and holding assets that we cannot hold directly. A TRS is subject to federal and state income taxes. The Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. Neither the Company nor its subsidiaries have been assessed any significant interest or penalties for tax positions by any major tax jurisdictions.

 

Initial Public Offering. On October 6, 2020, we completed an initial public offering ("IPO"), selling 500,000 shares of Series A Common Stock at $5.00 per share. Proceeds from our IPO net of underwriting discounts and commissions were $2.3 million after deducting approximately $0.2 million in underwriting discounts and before giving effect to $775,000 in other expenses relating to the IPO. We intend to use the net proceeds of this offering for general corporate and working capital purposes, including to potentially acquire additional properties and reduce outstanding indebtedness.

 

Reverse Stock Split. On July 29, 2020, we amended our charter to effect a one-for-two reverse stock split of every outstanding share of our Series A Common Stock. The financial statements and accompanying footnotes have been retroactively restated to reflect the reverse stock split.

 

Liquidity. On September 17, 2019 the Company executed a Promissory Note (“Note”) pursuant to which Polar Multi-Strategy Master Fund (“Polar”), executed a loan in the principal amount of $14.0 million to the Company. The Note bears interest at a fixed rate of 8% per annum and requires monthly interest-only payments. On September 1, 2020, we extended the maturity of the Polar Note from October 1, 2020 to March 31, 2021 ("Maturity"), at which time the entire outstanding principal balance of $8.8 million and accrued and unpaid interest will be due and payable. On September 30, 2020 we paid a renewal fee of 4% on the unpaid principal balance. The final payment due at Maturity, includes payment of the outstanding principal and accrued and unpaid interest. The Company used the proceeds of the Note from Polar to redeem all of the outstanding shares of the Series B Preferred Stock.  

 

For the three months remaining in 2020 and the year ending December 31, 2021, we have $1.6 million and $27.7 million of mortgage notes payable maturing, respectively. For the remainder of the year ending December 31, 2020, we have $1.1 million of mortgage notes payable maturing related to the model homes properties and $468,000 of mortgage notes payable maturing related to the commercial properties. Management expects that certain properties may be sold and the underlying mortgage notes would be paid off with sales proceeds while other mortgage notes will be refinanced.

 

As the Company continues its operations, it may re-finance and/or seek additional financing, however, there can be no assurance that any such financing will be available to the Company on acceptable terms, if at all. If events or circumstances occur such that the Company does not obtain additional funding, it will most likely be required to reduce its plans and/or certain discretionary spending, which could have a material adverse effect on the Company’s ability to achieve its intended business objectives. Management believes that the combination of working capital on hand and the ability to refinance commercial and model home mortgages will fund operations through at least the next twelve months from the date of the issuance of these unaudited interim financial statements.

 

v3.20.2
Note 2 - Significant Accounting Policies
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Significant Accounting Policies [Text Block]

2. SIGNIFICANT ACCOUNTING POLICIES

 

There have been no significant changes to the Company’s accounting policies since it filed its audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2019. For further information about the Company’s accounting policies, refer to the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 13, 2020.

 

Basis of Presentation. The accompanying condensed consolidated financial statements have been prepared by the Company's management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statement and the instructions to Form 10-Q and Article 8 of Regulation S-X. Certain information and footnote disclosures required for annual consolidated financial statements have been condensed or excluded pursuant to rules and regulations of the SEC. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of our financial position, results of our operations, and cash flows as of and for the three and nine months ended September 30, 2020 and 2019, respectively. However, the results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. The condensed consolidated balance sheet as of December 31, 2019 has been derived from the audited consolidated financial statements included in the Form 10-K filed with the SEC on March 13, 2020. The results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the full year ending December 31, 2020 due to seasonal variations and other factors, such as the effects of the novel coronavirus (“COVID-19”) and its possible influence on our future results.

 

Principles of Consolidation. The accompanying condensed consolidated financial statements include the accounts of the Company and its direct and indirect wholly-owned subsidiaries and entities the Company controls or of which it is the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation.

 

Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include the allocation of purchase price paid for property acquisitions among land, building and intangible assets acquired including their useful lives; valuation of long-lived assets, and the allowance for doubtful accounts, which is based on an evaluation of the tenants’ ability to pay. Actual results may differ from those estimates.

 

Cash Equivalents and Restricted Cash. At September 30, 2020 and December 31, 2019, we had approximately $6.8 million and $5.7 million in cash equivalents, respectively, and $3.2 million and $4.7 million of restricted cash, respectively. Our cash equivalents and restricted cash consist of invested cash and cash in our operating accounts and are held in bank accounts at third party institutions. Restricted cash typically consists of funds held by lenders to be used for property taxes, insurance, capital expenditures and leasing commissions.

 

Real Estate Held for Sale. Real estate held for sale during the current period is classified as “real estate held for sale” for all prior periods presented in the accompanying condensed consolidated financial statements. Mortgage notes payable related to the real estate held for sale during the current period are classified as “mortgage notes payable related to

real estate held for sale, net” for all prior periods presented in the accompanying condensed consolidated financial statements. As of September 30, 2020, four commercial properties meet the criteria to be classified as held for sale (World Plaza, Garden Gateway, Waterman and one of the four buildings at Executive Office Park) and one Model Home was classified as held for sale.

 

Impairments of Real Estate Asset. We review for impairment on a property by property basis. Impairment is recognized on properties held for use when the expected undiscounted cash flows for a property are less than its carrying amount at which time the property is written-down to fair value. The calculation of both discounted and undiscounted cash flows requires management to make estimates of future cash flows including revenues, operating expenses, required maintenance and development expenditures, market conditions, demand for space by tenants and rental rates over long periods. Since our properties typically have a long life, the assumptions used to estimate the future recoverability of carrying value requires significant management judgment. Actual results could be significantly different from the estimates. These estimates have a direct impact on net income because recording an impairment charge results in a negative adjustment to net income. The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results in future periods.

 

Properties held for sale are recorded at the lower of the carrying amount or the expected sales price less costs to sell. Although our strategy is to hold our properties over the long-term, if our strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized to reduce the property to fair value and such loss could be material.

 

During the second quarter of 2020, the Company began negotiations to renew a lease with a significant tenant at our Waterman Plaza retail property at a lower market rental rate than the rental rate being charged previously. The Company obtained a broker opinion of value during the second quarter of 2020 that considered the lower market rental rates and subsequently determined there was a material change to undiscounted cash flows on the property as of June 30, 2020. Therefore, the Company recorded an $845,000 non-cash impairment in the Condensed Consolidated Statements of Operations in June 2020.

 

Fair Value Measurements.  Under GAAP, we are required to measure certain financial instruments at fair value on a recurring basis. In addition, we are required to measure other non-financial and financial assets at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

 

 

Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

 

 

Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

 

 

Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

 

When available, we utilize quoted market prices from independent third-party sources to determine fair value and classify such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require us to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When we determine the market for a financial instrument owned by us to be illiquid or when market transactions for similar instruments do not appear orderly, we use several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establish a fair value by assigning weights to the various valuation sources. Additionally, when determining the fair value of a liability in circumstances in which a quoted price in an active market for an identical liability is not available, we measure fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach.

 

Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument.

 

Subsequent Events. We evaluate subsequent events up until the date the consolidated financial statements are issued.

 

Recently Issued and Adopted Accounting Pronouncements.  In March 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform which provides optional expedients and exceptions in order to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting as it relates to contracts, hedging relationships and other transactions by allowing companies to modify contracts that previously contained LIBOR rates without evaluating whether the modification constituted a new contract. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, and are used on a prospective basis upon adoption. The Company adopted this guidance as of March 2020 noting no impact to the financial statements.

 

In June 2017, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses, amended in February 2020 with ASU No. 2020-02, Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842). ASU 2016-13 introduces a new model for estimating credit losses for certain types of financial instruments, including loans receivable, held-to-maturity debt securities, and net investments in direct financing leases, amongst other financial instruments. ASU 2016-13 also modifies the impairment model for available-for-sale debt securities and expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for losses. While ASU 2016-13 was effective for periods beginning after December 15, 2019, the issuance of ASU 2020-02 has allowed for the delay in adoption for certain smaller public companies, and is now effective for fiscal periods beginning after December 15, 2022. Retrospective adjustments shall be applied through a cumulative-effect adjustment to retained earnings. The Company is continuing to evaluate the impact of this guidance on its financial statements, and does not believe it will have a material impact on the financial statements.

 

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement which removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC 820. This guidance is effective for public companies in fiscal years beginning after December 15, 2019 with early adoption permitted. The Company adopted this guidance as of January 1, 2020 and noted no impact on its consolidated financial statements.

 

v3.20.2
Note 3 - Recent Real Estate Transactions
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Real Estate Disclosure [Text Block]

3. RECENT REAL ESTATE TRANSACTIONS

 

During the nine months ended September 30, 2020, the Company disposed of the following properties:

 

 

Centennial Tech Center, which was sold on February 5, 2020 for approximately $15.0 million and the Company recognized a loss of approximately $913,000.

 

 

Union Terrace, which was sold on March 13, 2020 for approximately $11.3 million and the Company recognized a gain of approximately $688,000.

 

During the nine months ended September 30, 2020, the Company disposed of 33 model homes for approximately $12.6 million and recognized a gain of approximately $894,000.

 

During the nine months ended September 30, 2020, the Company acquired 25 model homes for approximately $9.0 million. The purchase price was paid through cash payments of approximately $2.7 million and mortgage notes of approximately $6.3 million.

 

During the nine months ended September 30, 2019, the Company disposed of the following properties:

 

 

Morena Office Center, which was sold on January 15, 2019 for approximately $5.6 million and the Company recognized a gain of approximately $700,000.

 

 

Nightingale land was sold on May 8, 2019 for approximately $875,000 and the Company recognized a loss of approximately $93,000.

   
 On July 1, 2019, NetREIT Genesis, LLC sold a 43% tenants-in-common interest in Genesis Plaza (“TIC Interest”) for $5.6 million to a newly formed entity, NetREIT Genesis II, LLC, in which NetREIT Casa Grande LP is the sole member. NetREIT Casa Grande LP owned and sold Morena Office Center on January 15, 2019. The sale of the TIC Interest was structured as a 1031 exchange and included $2.9 million in cash and assumption of debt. The Company remains a guarantor of the debt and NetREIT Genesis, LLC and NetREIT Genesis II, LLC are jointly and severally liable for the debt securing Genesis Plaza, the financial terms and conditions of which remain materially unchanged.

 

 

The Presidio office building, which was sold on July 31, 2019 for approximately $12.3 million and the Company recognized a gain of approximately $4.5 million.

 

During the nine months ended September 30, 2019, the Company disposed of 35 model homes for approximately $12.4 million and recognized a gain of approximately $1.0 million.

 

During the nine months ended September 30, 2019, the Company acquired 18 model homes for approximately $6.1 million. The purchase price was paid through cash payments of approximately $1.8 million and mortgage notes of approximately $4.3 million.

 

v3.20.2
Note 4 - Real Estate Assets
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Real Estate Assets [Text Block]

4. REAL ESTATE ASSETS

 

A summary of the properties owned by the Company as of September 30, 2020 is as follows:

 

 

      

Real estate

 
  

Date

   

assets, net

 

Property Name

 

Acquired

 

Location

 

(in thousands)

 

Garden Gateway Plaza (1)

 

March 2007

 

Colorado Springs, Colorado

 $11,439 

World Plaza (1)

 

September 2007

 

San Bernardino, California

  9,272 

Executive Office Park (2)

 

July 2008

 

Colorado Springs, Colorado

  7,581 

Waterman Plaza (1)

 

August 2008

 

San Bernardino, California

  3,986 

Genesis Plaza

 

August 2010

 

San Diego, California

  8,816 

Dakota Center

 

May 2011

 

Fargo, North Dakota

  8,655 

Grand Pacific Center

 

March 2014

 

Bismarck, North Dakota

  5,754 

Arapahoe Center

 

December 2014

 

Centennial, Colorado

  9,362 

Union Town Center

 

December 2014

 

Colorado Springs, Colorado

  9,414 

West Fargo Industrial

 

August 2015

 

West Fargo, North Dakota

  7,079 

300 N.P.

 

August 2015

 

Fargo, North Dakota

  3,308 

Research Parkway

 

August 2015

 

Colorado Springs, Colorado

  2,454 

One Park Center

 

August 2015

 

Westminster, Colorado

  8,701 

Highland Court

 

August 2015

 

Centennial, Colorado

  10,992 

Shea Center II

 

December 2015

 

Highlands Ranch, Colorado

  21,193 

Presidio Property Trust, Inc. properties

      128,006 

Model Home properties (3)

 2014 - 2020 

AZ, FL, IL, PA, TX, WI

  45,946 

Total real estate assets and lease intangibles, net

     $173,952 

 

(1Properties held for sale as of September 30, 2020.

 

(2This property comprises four buildings, one of which is held for sale as of September 30, 2020.

 

(3Includes one Model Home listed as held for sale as of September 30, 2020.

 

Geographic Diversification Tables

 

The following tables show a list of commercial properties owned by the Company grouped by state and geographic region as of September 30, 2020:

 

     

Aggregate

      

Current

  

Approximate %

 
  

No. of

  

Square

  

Approximate %

  

Base Annual

  

of Aggregate

 

State

 

Properties

  

Feet

  

of Square Feet

  

Rent

  

Annual Rent

 

California

 3   134,787   11.9% $1,782,207   12.3%

Colorado

 8   597,912   52.9%  9,183,486   63.4%

North Dakota

 4   397,039   35.2%  3,525,685   24.3%

Total

 15   1,129,738   100.0% $14,491,378   100.0%

 

The following tables show a list of our Model Home properties by geographic region as of September 30, 2020:

 

             

Current

  

Approximate

 
  

No. of

  

Aggregate

  

Approximate %

  

Base Annual

  

of Aggregate

 

Geographic Region

 

Properties

  

Square Feet

  

of Square Feet

  

Rent

  

% Annual Rent

 

Southwest

 104   305,203   83.7% $3,036,024   80.2%

Southeast

 18   41,621   11.4%  499,320   13.2%

Midwest

 2   6,602   1.8%  99,276   2.6%

East

 2   5,255   1.4%  70,716   1.9%

Northeast

 2   6,153   1.7%  80,844   2.1%

Total

 128   364,834   100% $3,786,180   100%

 

v3.20.2
Note 5 - Lease Intangibles
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Intangible Assets Disclosure [Text Block]

5. LEASE INTANGIBLES

 

The following table summarizes the net value of other intangible assets acquired and the accumulated amortization for each class of intangible asset:

 

  

September 30, 2020

  

December 31, 2019

 
  

Lease

  

Accumulated

  

Lease

  

Lease

  

Accumulated

  

Lease

 
  

Intangibles

  

Amortization

  

Intangibles, net

  

Intangibles

  

Amortization

  

Intangibles, net

 

In-place leases

 $3,186,889  $(2,740,785) $446,104  $4,360,027  $(3,283,027) $1,077,000 

Leasing costs

  1,800,921   (1,542,960)  257,961   2,937,976   (2,002,711)  935,265 

Above-market leases

  333,485   (278,751)  54,734   333,485   (240,739)  92,746 
  $5,321,295  $(4,562,496) $758,799  $7,631,488  $(5,526,477) $2,105,011 

 

As of September 30, 2020 there were no gross lease intangible assets included in real estate assets held for sale. As of December 31, 2019, there was $2.3 million of gross lease intangible assets included in real estate assets held for sale, with $1.4 million of accumulated amortization related to the lease intangible assets netted against real estate assets held for sale.

 

The net value of acquired intangible liabilities was $187,000 and $310,000 relating to below-market leases as of September 30, 2020 and December 31, 2019, respectively.

 

Future aggregate approximate amortization expense for the Company's lease intangible assets is as follows:

 

Three months remaining in 2020

 $132,584 

Years ending December 31:

    

2021

  372,484 

2022

  202,479 

2023

  17,663 

2024

  17,663 

Thereafter

  15,926 

Total

 $758,799 
     

 

The weighted average remaining amortization period of the intangible assets as of September 30, 2020 is 1.6 years.

 

v3.20.2
Note 6 - Other Assets
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Other Assets Disclosure [Text Block]

6. OTHER ASSETS

 

Other assets consist of the following:

 

  

September 30,

  

December 31,

 
  

2020

  

2019

 

Deferred rent receivable

 $1,898,960  $2,680,886 

Prepaid expenses, deposits and other

  406,807   601,897 

Accounts receivable, net

  390,986   1,336,122 

Right-of-use assets, net

  108,826   561,375 

Other intangibles, net

  157,483   212,932 

Notes receivable

  316,374   316,374 

Deferred offering costs

  435,736    

Total other assets

 $3,715,172  $5,709,586 

 

v3.20.2
Note 7 - Mortgage Notes Payable
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Mortgage Notes Payable Disclosure [Text Block]

7. MORTGAGE NOTES PAYABLE

 

Mortgage notes payable consist of the following:

 

      

Principal as of

          
      

September 30,

  

December 31,

 

Loan

 

Interest

     

Mortgage note property

 

Notes

  

2020

  

2019

 

Type

 

Rate (1)

  

Maturity

 

Waterman Plaza

  (3) (7)  $3,240,076  $3,274,097 

Variable

  4.25% 

4/29/2021

 

World Plaza

  (3) (4)   5,828,395   4,979,384 

Variable

  2.91% 

7/5/2021

 

Garden Gateway Plaza

  (3)   5,914,955   6,071,315 

Fixed

  5.00% 

8/5/2021

 

300 N.P.

      2,283,380   2,311,739 

Fixed

  4.95% 

6/11/2022

 

Highland Court

      6,312,739   6,424,366 

Fixed

  3.82% 

9/1/2022

 

Dakota Center

      9,954,740   10,111,693 

Fixed

  4.74% 

7/6/2024

 

Union Terrace

  (2)     6,240,396 

Fixed

  4.50% 

8/5/2024

 

Centennial Tech Center

  (2)     9,561,652 

Fixed

  4.43% 

12/5/2024

 

Research Parkway

      1,773,846   1,813,305 

Fixed

  3.94% 

1/5/2025

 

Arapahoe Service Center

      7,971,736   8,085,727 

Fixed

  4.34% 

1/5/2025

 

Union Town Center

      8,350,338   8,440,000 

Fixed

  4.28% 

1/5/2025

 

One Park Centre

      6,411,646   6,487,532 

Fixed

  4.77% 

9/5/2025

 

Genesis Plaza

      6,302,600   6,378,110 

Fixed

  4.71% 

9/6/2025

 

Shea Center II

      17,727,500   17,727,500 

Fixed

  4.92% 

1/5/2026

 

Executive Office Park

  (3)  4,754,908   4,839,577 

Fixed

  4.83% 

6/1/2027

 

West Fargo Industrial

      4,290,717   4,216,565 

Fixed

  3.27% 

8/5/2029

 

Grand Pacific Center

  (5)  3,767,027   3,851,962 

Fixed

  4.02% 

8/1/2037

 

Subtotal, Presidio Property Trust, Inc. Properties

     $94,884,603  $110,814,920          

Model Home mortgage notes

  (3)  29,514,663   32,644,129 

Fixed

  (6)  2020 - 2023 

Mortgage Notes Payable

     $124,399,266  $143,459,049          

Unamortized loan costs

      (862,452)  (1,066,057)         

Mortgage Notes Payable, net

     $123,536,814  $142,392,992          

 

(1)

Interest rates as of September 30, 2020.

 

(2)

Centennial Tech Center and Union Terrace were sold on February 5, 2020 and March 13, 2020, respectively.

 

(3)

Properties held for sale as of September 30, 2020. One of four buildings at Executive Office Park was classified as held for sale; one model home was included as held for sale.

 

(4)

Interest on this loan is ABR plus 0.75% and LIBOR plus 2.75%. For the nine months ended September 30, 2020, the weighted average interest rate was 3.53%.

 

(5)

Interest rate is subject to reset on September 1, 2023.

 

(6)

Each model home has a stand-alone mortgage note at interest rates ranging from 2.50% to 5.63% per annum at September 30, 2020.

 

(7)

Interest on this loan resets annually at LIBOR plus 3.00%, with a floor of 4.25%.

 

The Company is in compliance with all material conditions and covenants of its mortgage notes payable.

 

Scheduled principal payments of mortgage notes payable were as follows as of September 30, 2020:

 

  

Presidio Property

  

Model

     
  

Trust, Inc.

  

Homes

  

Total Principal

 
  

Notes Payable

  

Notes Payable

  

Payments

 

Three months remaining in 2020

 $468,332  $1,112,728  $1,581,060 

Years ending December 31:

            

2021

  16,406,080   11,306,633  $27,712,713 

2022

  9,826,391   11,667,980  $21,494,371 

2023

  1,542,085   5,427,322  $6,969,407 

2024

  1,602,019     $1,602,019 

Thereafter

  65,039,696      65,039,696 

Total

 $94,884,603  $29,514,663  $124,399,266 

 

v3.20.2
Note 8 - Notes Payable
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Accounts Payable and Accrued Liabilities Disclosure [Text Block]

8. NOTES PAYABLE

 

On September 17, 2019, the Company executed a Promissory Note pursuant to which Polar Multi-Strategy Master Fund (“Polar”), extended a loan in the principal amount of $14.0 million to the Company (“Polar Note”). The Polar Note bears interest at a fixed rate of 8% per annum and requires monthly interest-only payments. On September 1, 2020, we extended the maturity of the Polar Note from October 1, 2020 to March 31, 2021, at which time the entire outstanding principal balance of $8.8 million and accrued and unpaid interest will be due and payable. On September 30, 2020, we paid the extension or renewal fee, which was 4% of the unpaid principal balance.  The Company may repay the Polar Note at any time, subject to the payment of an Optional Redemption Fee (as defined in the Polar Note), if applicable. Such fee is not applicable to repayments made from the proceeds of property sales.

 

The principal balance of the Polar Note as of September 30, 2020 consists of cash received, less cash repayments from property sales of $7.4 million and Original Issue Discount (“OID”) of $1.4 million. The OID has been recorded on the accompanying condensed consolidated balance sheets as a direct deduction from the principal of the Note and is recognized as interest expense over the term of the Note commencing on September 17, 2019 through October 1, 2020. There was no unrecognized OID as of September 30, 2020. The accretion of the OID recognized during the nine months ended September 30, 2020 was $1.0 million.

 

The Company incurred approximately $1.1 million in legal and underwriting costs related to the Polar Note transaction. These costs have been recorded as debt issuance costs on the accompanying condensed consolidated balance sheets as a direct deduction from the principal of the Note and were amortized over the original term of the Note. Amortization expense totaling approximately $748,000 was included in interest expenses for the nine months ended September 30, 2020, in the accompanying condensed consolidated statements of operations. The unamortized debt issuance costs related to the 4% renewal fee for the loan extension totaled $351,000 as of September 30, 2020 and will be amortized over the extended term of the Note.

 

Under the terms of the Polar Note, the Company is subject to certain financial covenants including maintaining a debt to property fair value ratio of no greater than 75%. As of September 30, 2020, the Company is in compliance with such covenants.

 

On April 22, 2020, the Company received an Economic Injury Disaster Loan of $10,000 from the Small Business Administration which will provide economic relief during the COVID-19 pandemic. This loan advance is not required to be repaid, has no stipulations on use, and has been recorded as fees and other income in the Condensed Consolidated Statements of Operations during fiscal 2020. On  August 17, 2020 we received an additional Economic Injury Disaster Loan of $150,000, for which principal and interest payments are deferred for twelve months from the date of issuance, and interest accrues at 3.75% per year. The loan matures on August 17, 2050. We intend to use the funds for general corporate purposes to alleviate economic injury caused by the COVID-19 pandemic, which economic injury included abating or deferring rent to certain tenants (primarily retail tenants).

 

On April 30, 2020, the Company received a Paycheck Protection Program loan of $462,000 from the Small Business Administration which will provide additional economic relief during the COVID-19 pandemic. The loan will be fully forgiven should the funds be used for payroll related costs, mortgage interest, rent and utilities, as long as our employee headcount remains consistent with our baseline period over an eight week period following the date the loan was received, otherwise the loan will be repaid over two years following a six month deferral. On June 5, 2020, the period over which the loan could be utilized was extended to 24 weeks. The loan was recorded in accounts payable and accrued liabilities on the Condensed Consolidated Balance Sheets as of September 30, 2020. We have used the funds to cover payroll related costs.

 

v3.20.2
Note 9 - Commitments and Contingencies
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]

9. COMMITMENTS AND CONTINGENCIES

 

The Company is obligated under certain tenant leases to fund tenant improvements and the expansion of the underlying leased properties.

 

Under various federal, state and local laws, ordinances and regulations relating to the protection of the environment, a current or previous owner or operator of real estate may be liable for the cost of removal or remediation of certain hazardous or toxic substances disposed, stored, generated, released, manufactured or discharged from, on, at, under, or in a property. As such, the Company may be potentially liable for costs associated with any potential environmental remediation at any of its formerly or currently owned properties.

 

The Company believes that it is in compliance in all material respects with all federal, state and local ordinances and regulations regarding hazardous or toxic substances. Management is not aware of any environmental liability that it believes would have a material adverse impact on the Company’s financial position or results of operations. Management is unaware of any instances in which the Company would incur significant environmental costs if any or all properties were sold, disposed of or abandoned. However, there can be no assurance that any such non-compliance, liability, claim or expenditure will not arise in the future.

 

The Company is involved from time to time in lawsuits and other disputes which arise in the ordinary course of business. As of September 30, 2020, management believes that these matters will not have a material adverse effect, individually or in the aggregate, on the Company’s financial position or results of operations.

 

v3.20.2
Note 10 - Series B Mandatorily Redeemable Preferred Stock
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Financial Instruments Subject to Mandatory Redemption Disclosure [Text Block]

10. SERIES B MANDATORILY REDEEMABLE PREFERRED STOCK

 

During the year ended December 31, 2019, the Company redeemed all of its remaining 16,900 shares of its Series B Preferred Stock for $16.9 million. As of September 30, 2020 and December 31, 2019, no Series B Preferred Stock remained outstanding. Amortization expense of $122,000 was included in interest expense for the nine months ended September 30, 2019, and no related amortization expense was incurred during the three months ended  September 30, 2020 in the accompanying condensed consolidated statements of operations. There were no unamortized deferred costs as of September 30, 2020 and December 31, 2019, respectively.

 

v3.20.2
Note 11 - Stockholders' Equity
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]

11. STOCKHOLDERS' EQUITY

 

Preferred Stock. The Company is authorized to issue up to 1,000,000 shares of preferred stock (the “Preferred Stock”). The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is authorized to fix the number of shares of any series of the Preferred Stock, to determine the designation of any such series, and to determine or alter the rights granted to or imposed upon any wholly unissued series of preferred stock including the dividend rights, dividend rate, conversion rights, voting rights, redemption rights (including sinking fund provisions), redemption price, and liquidation preference.

 

Common Stock. The Company is authorized to issue up to 100,000,000 shares of Series A Common Stock, 1,000 shares of Series B Common Stock, and 9,000,000 shares of Series C Common Stock (collectively, the "common stock") each with $0.01 par value. The common stock have identical rights, preferences, terms and conditions except that the holders of Series B Common Stock are not entitled to receive any portion of Company assets in the event of Company liquidation. There have been no Series B or Series C Common Stock issued. Each share of common stock entitles the holder to one vote. Shares of our common stock are not subject to redemption and do not have any preference, conversion, exchange or preemptive rights. The articles of incorporation contain a restriction on ownership of the common stock that prevents one person from owning more than 9.8% of the outstanding shares of common stock.

 

Cash Dividends. During the nine months ended September 30, 2020 the Company paid no cash dividend. During the nine months ended September 30, 2019 the Company paid a cash dividend of approximately $2.2 million or $0.12 per share.

 

Partnership Interests. Through the Company, its subsidiaries and its partnerships, we own 15 commercial properties in fee interest, two of which we own partial interests in through our holdings in various affiliates in which we serve as general partner, member and/or manager. We purchased the partnership interest in one limited partnership that owned one property during 2016. Each of the limited partnerships is referred to as a “DownREIT.” In each DownREIT, we have the right, through put and call options, to require our co-investors to exchange their interests for shares of our common stock at a stated price after a defined period (generally five years from the date they first invested in the entity’s real property), the occurrence of a specified event or a combination thereof. The Company is a limited partner in four partnerships and sole stockholder in one corporation, which entities purchase and leaseback model homes from homebuilders.

 

During the nine months ended September 30, 2020, the Company exercised two put options with a limited partner in two limited partnerships and exchanged a total of 59,274 shares of the Company’s Series A Common Stock for the limited partner’s partnership interests, resulting in an increase in ownership interest of each limited partnership by the Company. As part of this non-cash equity transaction, the Company reclassified $1.2 million in minority interest to common stock and additional paid in capital on the Condensed Consolidated Balance Sheets.

 

Dividend Reinvestment Plan. The Company adopted a distribution reinvestment plan (“Plan) that allowed stockholders to receive dividends and other distributions otherwise distributable to them invested in additional shares of the Company’s common stock. The Company registered 3,000,000 shares of common stock pursuant to the Plan. The purchase price per share used in the past was 95% of the price the Company sold its shares or $19.00 per share. No sales commission or dealer manager fees were paid on shares sold through the Plan. The Company may amend, suspend or terminate the Plan at any time. Any such amendment, suspension or termination will be effective upon a designated dividend record date and notice of such amendment, suspension or termination will be sent to all participants at least thirty (30) days prior to such record date. The Plan became effective on January 23, 2012, was suspended on December 7, 2018 and adopted on October 6, 2020 in connection with our IPO, updated to reflect a change in transfer agent and registrar. As of September 30, 2020, approximately $17.4 million or approximately 917,074 shares of common stock have been issued under the Plan. No shares were issued under the Plan during the nine months ended September 30, 2020.

 

Stock-Based Compensation. The Company recognizes noncash compensation expense ratably over the vesting period, and accordingly, we recognized $181,000 and $193,000 in noncash compensation expense for the three month periods ended September 30, 2020 and 2019, respectively, and $542,000 and $809,000 for the nine months ended September 30, 2020 and 2019, respectively, which is included in general and administrative expense on the Condensed Consolidated Statements of Operations.

 

v3.20.2
Note 12 - Segments
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

12. SEGMENTS

 

The Company’s reportable segments consist of three types of real estate properties for which the Company’s decision-makers internally evaluate operating performance and financial results: Office/Industrial Properties, Model Home Properties and Retail Properties. The Company also has certain corporate-level activities including accounting, finance, legal administration and management information systems which are not considered separate operating segments.  The accounting policies of the reportable segments are the same as those described in Note 2.  There is no material inter segment activity.

 

The Company evaluates the performance of its segments based upon net operating income (“NOI”), which is a non-GAAP supplemental financial measure. The Company defines NOI for its segments as operating revenues (rental income, tenant reimbursements and other operating income) less property and related expenses (property operating expenses, real estate taxes, insurance, asset management fees, impairments and provision for bad debt). NOI excludes certain items that are not considered to be controllable in connection with the management of an asset such as non-property income and expenses, depreciation and amortization, real estate acquisition fees and expenses and corporate general and administrative expenses. The Company uses NOI to evaluate the operating performance of the Company’s real estate investments and to make decisions about resource allocations.

 

The following tables reconcile the Company’s segment activity to its results of operations and financial position as of and for the three and nine months ended September 30, 2020:

 

  

For the Three Months Ended September 30,

  

For the Nine Months Ended September 30,

 
  

2020

  

2019

  

2020

  

2019

 

Office/Industrial Properties:

                

Rental, fees and other income

 $4,098,892  $5,137,114  $13,334,595  $16,087,363 

Property and related expenses

  (1,813,950)  (2,237,392)  (5,539,320)  (7,041,306)

Net operating income, as defined

  2,284,942   2,899,722   7,795,275   9,046,057 

Model Home Properties:

                

Rental, fees and other income

  1,058,329   1,083,470   3,268,074   3,167,072 

Property and related expenses

  (58,897)  (42,258)  (160,688)  (140,866)

Net operating income, as defined

  999,432   1,041,212   3,107,386   3,026,206 

Retail Properties:

                

Rental, fees and other income

  548,392   780,286   2,305,412   2,046,686 

Property and related expenses

  (277,820)  (253,414)  (1,729,171)  (640,444)

Net operating (loss) income, as defined

  270,572   526,872   576,241   1,406,242 

Reconciliation to net loss:

                

Total net operating income, as defined, for reportable segments

  3,554,946   4,467,806   11,478,902   13,478,505 

General and administrative expenses

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

Depreciation and amortization

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

Interest expense

  (2,143,960)  (2,830,858)  (6,971,162)  (7,867,932)

Other income (expense), net

  (12,270)  9,294   (10,865)  19,227 

Income tax expense

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

Gain on sale of real estate

  332,715   4,853,186   656,975   6,243,819 

Net loss

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

 

 

  

September 30,

  

December 31,

 

Assets by Reportable Segment:

 

2020

  

2019

 

Office/Industrial Properties:

        

Land, buildings and improvements, net (1)

 $102,805,132  $126,421,648 

Total assets (2)

 $103,137,364  $131,180,612 

Model Home Properties:

        

Land, buildings and improvements, net (1)

 $45,945,657  $48,466,371 

Total assets (2)

 $45,235,619  $51,389,400 

Retail Properties:

        

Land, buildings and improvements, net (1)

 $25,125,813  $25,318,601 

Total assets (2)

 $26,449,473  $26,588,254 

Reconciliation to Total Assets:

        

Total assets for reportable segments

 $174,822,456  $209,158,266 

Other unallocated assets:

        

Cash, cash equivalents and restricted cash

  1,913,279   1,591,041 

Other assets, net

  15,082,214   10,035,101 

Total Assets

 $191,817,949  $220,784,408 

 

(1)

Includes lease intangibles and the land purchase option related to property acquisitions.

 

(2)

Includes land, buildings and improvements, cash, cash equivalents, and restricted cash, current receivables, deferred rent receivables and deferred leasing costs and other related intangible assets, all shown on a net basis.

 

  

For the Nine Months Ended September 30,

 

Capital Expenditures by Reportable Segment

 

2020

  

2019

 

Office/Industrial Properties:

        

Capital expenditures and tenant improvements

 $2,501,075  $5,161,786 

Model Home Properties:

        

Acquisition of operating properties

  8,996,248   6,116,035 

Retail Properties:

        

Capital expenditures and tenant improvements

  9,077   20,247 

Totals:

        

Acquisition of operating properties, net

  8,996,248   6,116,035 

Capital expenditures and tenant improvements

  2,510,152   5,182,033 

Total real estate investments

 $11,506,400  $11,298,068 

 

v3.20.2
Note 13 - Subsequent Events
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Subsequent Events [Text Block]

13. SUBSEQUENT EVENTS

 

Dividend 

 

On November 3, 2020, our Board of Directors declared a dividend of $0.10 per share of Series A Common Stock, payable on November 30, 2020 to stockholders of record as of November 23, 2020.

 

v3.20.2
Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2020
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation. The accompanying condensed consolidated financial statements have been prepared by the Company's management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statement and the instructions to Form 10-Q and Article 8 of Regulation S-X. Certain information and footnote disclosures required for annual consolidated financial statements have been condensed or excluded pursuant to rules and regulations of the SEC. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of our financial position, results of our operations, and cash flows as of and for the three and nine months ended September 30, 2020 and 2019, respectively. However, the results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. The condensed consolidated balance sheet as of December 31, 2019 has been derived from the audited consolidated financial statements included in the Form 10-K filed with the SEC on March 13, 2020. The results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the full year ending December 31, 2020 due to seasonal variations and other factors, such as the effects of the novel coronavirus (“COVID-19”) and its possible influence on our future results.

 

Consolidation, Policy [Policy Text Block]

Principles of Consolidation. The accompanying condensed consolidated financial statements include the accounts of the Company and its direct and indirect wholly-owned subsidiaries and entities the Company controls or of which it is the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation.

 

Use of Estimates, Policy [Policy Text Block]

Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include the allocation of purchase price paid for property acquisitions among land, building and intangible assets acquired including their useful lives; valuation of long-lived assets, and the allowance for doubtful accounts, which is based on an evaluation of the tenants’ ability to pay. Actual results may differ from those estimates.

 

Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block]

Cash Equivalents and Restricted Cash. At September 30, 2020 and December 31, 2019, we had approximately $6.8 million and $5.7 million in cash equivalents, respectively, and $3.2 million and $4.7 million of restricted cash, respectively. Our cash equivalents and restricted cash consist of invested cash and cash in our operating accounts and are held in bank accounts at third party institutions. Restricted cash typically consists of funds held by lenders to be used for property taxes, insurance, capital expenditures and leasing commissions.

 

Real Estate Held for Development and Sale, Policy [Policy Text Block]

Real Estate Held for Sale. Real estate held for sale during the current period is classified as “real estate held for sale” for all prior periods presented in the accompanying condensed consolidated financial statements. Mortgage notes payable related to the real estate held for sale during the current period are classified as “mortgage notes payable related to

real estate held for sale, net” for all prior periods presented in the accompanying condensed consolidated financial statements. As of September 30, 2020, four commercial properties meet the criteria to be classified as held for sale (World Plaza, Garden Gateway, Waterman and one of the four buildings at Executive Office Park) and one Model Home was classified as held for sale.

 

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Impairments of Real Estate Asset. We review for impairment on a property by property basis. Impairment is recognized on properties held for use when the expected undiscounted cash flows for a property are less than its carrying amount at which time the property is written-down to fair value. The calculation of both discounted and undiscounted cash flows requires management to make estimates of future cash flows including revenues, operating expenses, required maintenance and development expenditures, market conditions, demand for space by tenants and rental rates over long periods. Since our properties typically have a long life, the assumptions used to estimate the future recoverability of carrying value requires significant management judgment. Actual results could be significantly different from the estimates. These estimates have a direct impact on net income because recording an impairment charge results in a negative adjustment to net income. The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results in future periods.

 

Properties held for sale are recorded at the lower of the carrying amount or the expected sales price less costs to sell. Although our strategy is to hold our properties over the long-term, if our strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized to reduce the property to fair value and such loss could be material.

 

During the second quarter of 2020, the Company began negotiations to renew a lease with a significant tenant at our Waterman Plaza retail property at a lower market rental rate than the rental rate being charged previously. The Company obtained a broker opinion of value during the second quarter of 2020 that considered the lower market rental rates and subsequently determined there was a material change to undiscounted cash flows on the property as of June 30, 2020. Therefore, the Company recorded an $845,000 non-cash impairment in the Condensed Consolidated Statements of Operations in June 2020.

 

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurements.  Under GAAP, we are required to measure certain financial instruments at fair value on a recurring basis. In addition, we are required to measure other non-financial and financial assets at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

 

 

Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

 

 

Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

 

 

Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

 

When available, we utilize quoted market prices from independent third-party sources to determine fair value and classify such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require us to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When we determine the market for a financial instrument owned by us to be illiquid or when market transactions for similar instruments do not appear orderly, we use several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establish a fair value by assigning weights to the various valuation sources. Additionally, when determining the fair value of a liability in circumstances in which a quoted price in an active market for an identical liability is not available, we measure fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach.

 

Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument.

Subsequent Events, Policy [Policy Text Block]

Subsequent Events. We evaluate subsequent events up until the date the consolidated financial statements are issued.

 

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued and Adopted Accounting Pronouncements.  In March 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform which provides optional expedients and exceptions in order to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting as it relates to contracts, hedging relationships and other transactions by allowing companies to modify contracts that previously contained LIBOR rates without evaluating whether the modification constituted a new contract. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, and are used on a prospective basis upon adoption. The Company adopted this guidance as of March 2020 noting no impact to the financial statements.

 

In June 2017, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses, amended in February 2020 with ASU No. 2020-02, Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842). ASU 2016-13 introduces a new model for estimating credit losses for certain types of financial instruments, including loans receivable, held-to-maturity debt securities, and net investments in direct financing leases, amongst other financial instruments. ASU 2016-13 also modifies the impairment model for available-for-sale debt securities and expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for losses. While ASU 2016-13 was effective for periods beginning after December 15, 2019, the issuance of ASU 2020-02 has allowed for the delay in adoption for certain smaller public companies, and is now effective for fiscal periods beginning after December 15, 2022. Retrospective adjustments shall be applied through a cumulative-effect adjustment to retained earnings. The Company is continuing to evaluate the impact of this guidance on its financial statements, and does not believe it will have a material impact on the financial statements.

 

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement which removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC 820. This guidance is effective for public companies in fiscal years beginning after December 15, 2019 with early adoption permitted. The Company adopted this guidance as of January 1, 2020 and noted no impact on its consolidated financial statements.

v3.20.2
Note 4 - Real Estate Assets (Tables)
9 Months Ended
Sep. 30, 2020
Notes Tables  
Schedule of Real Estate Properties [Table Text Block]
      

Real estate

 
  

Date

   

assets, net

 

Property Name

 

Acquired

 

Location

 

(in thousands)

 

Garden Gateway Plaza (1)

 

March 2007

 

Colorado Springs, Colorado

 $11,439 

World Plaza (1)

 

September 2007

 

San Bernardino, California

  9,272 

Executive Office Park (2)

 

July 2008

 

Colorado Springs, Colorado

  7,581 

Waterman Plaza (1)

 

August 2008

 

San Bernardino, California

  3,986 

Genesis Plaza

 

August 2010

 

San Diego, California

  8,816 

Dakota Center

 

May 2011

 

Fargo, North Dakota

  8,655 

Grand Pacific Center

 

March 2014

 

Bismarck, North Dakota

  5,754 

Arapahoe Center

 

December 2014

 

Centennial, Colorado

  9,362 

Union Town Center

 

December 2014

 

Colorado Springs, Colorado

  9,414 

West Fargo Industrial

 

August 2015

 

West Fargo, North Dakota

  7,079 

300 N.P.

 

August 2015

 

Fargo, North Dakota

  3,308 

Research Parkway

 

August 2015

 

Colorado Springs, Colorado

  2,454 

One Park Center

 

August 2015

 

Westminster, Colorado

  8,701 

Highland Court

 

August 2015

 

Centennial, Colorado

  10,992 

Shea Center II

 

December 2015

 

Highlands Ranch, Colorado

  21,193 

Presidio Property Trust, Inc. properties

      128,006 

Model Home properties (3)

 2014 - 2020 

AZ, FL, IL, PA, TX, WI

  45,946 

Total real estate assets and lease intangibles, net

     $173,952 
Schedule of Geographic Locations of Real Estate Properties [Table Text Block]
     

Aggregate

      

Current

  

Approximate %

 
  

No. of

  

Square

  

Approximate %

  

Base Annual

  

of Aggregate

 

State

 

Properties

  

Feet

  

of Square Feet

  

Rent

  

Annual Rent

 

California

 3   134,787   11.9% $1,782,207   12.3%

Colorado

 8   597,912   52.9%  9,183,486   63.4%

North Dakota

 4   397,039   35.2%  3,525,685   24.3%

Total

 15   1,129,738   100.0% $14,491,378   100.0%
             

Current

  

Approximate

 
  

No. of

  

Aggregate

  

Approximate %

  

Base Annual

  

of Aggregate

 

Geographic Region

 

Properties

  

Square Feet

  

of Square Feet

  

Rent

  

% Annual Rent

 

Southwest

 104   305,203   83.7% $3,036,024   80.2%

Southeast

 18   41,621   11.4%  499,320   13.2%

Midwest

 2   6,602   1.8%  99,276   2.6%

East

 2   5,255   1.4%  70,716   1.9%

Northeast

 2   6,153   1.7%  80,844   2.1%

Total

 128   364,834   100% $3,786,180   100%
v3.20.2
Note 5 - Lease Intangibles (Tables)
9 Months Ended
Sep. 30, 2020
Notes Tables  
Schedule of Finite-Lived Intangible Assets [Table Text Block]
  

September 30, 2020

  

December 31, 2019

 
  

Lease

  

Accumulated

  

Lease

  

Lease

  

Accumulated

  

Lease

 
  

Intangibles

  

Amortization

  

Intangibles, net

  

Intangibles

  

Amortization

  

Intangibles, net

 

In-place leases

 $3,186,889  $(2,740,785) $446,104  $4,360,027  $(3,283,027) $1,077,000 

Leasing costs

  1,800,921   (1,542,960)  257,961   2,937,976   (2,002,711)  935,265 

Above-market leases

  333,485   (278,751)  54,734   333,485   (240,739)  92,746 
  $5,321,295  $(4,562,496) $758,799  $7,631,488  $(5,526,477) $2,105,011 
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

Three months remaining in 2020

 $132,584 

Years ending December 31:

    

2021

  372,484 

2022

  202,479 

2023

  17,663 

2024

  17,663 

Thereafter

  15,926 

Total

 $758,799 
     
v3.20.2
Note 6 - Other Assets (Tables)
9 Months Ended
Sep. 30, 2020
Notes Tables  
Schedule of Other Assets [Table Text Block]
  

September 30,

  

December 31,

 
  

2020

  

2019

 

Deferred rent receivable

 $1,898,960  $2,680,886 

Prepaid expenses, deposits and other

  406,807   601,897 

Accounts receivable, net

  390,986   1,336,122 

Right-of-use assets, net

  108,826   561,375 

Other intangibles, net

  157,483   212,932 

Notes receivable

  316,374   316,374 

Deferred offering costs

  435,736    

Total other assets

 $3,715,172  $5,709,586 
v3.20.2
Note 7 - Mortgage Notes Payable (Tables)
9 Months Ended
Sep. 30, 2020
Notes Tables  
Schedule of Debt [Table Text Block]
      

Principal as of

          
      

September 30,

  

December 31,

 

Loan

 

Interest

     

Mortgage note property

 

Notes

  

2020

  

2019

 

Type

 

Rate (1)

  

Maturity

 

Waterman Plaza

  (3) (7)  $3,240,076  $3,274,097 

Variable

  4.25% 

4/29/2021

 

World Plaza

  (3) (4)   5,828,395   4,979,384 

Variable

  2.91% 

7/5/2021

 

Garden Gateway Plaza

  (3)   5,914,955   6,071,315 

Fixed

  5.00% 

8/5/2021

 

300 N.P.

      2,283,380   2,311,739 

Fixed

  4.95% 

6/11/2022

 

Highland Court

      6,312,739   6,424,366 

Fixed

  3.82% 

9/1/2022

 

Dakota Center

      9,954,740   10,111,693 

Fixed

  4.74% 

7/6/2024

 

Union Terrace

  (2)     6,240,396 

Fixed

  4.50% 

8/5/2024

 

Centennial Tech Center

  (2)     9,561,652 

Fixed

  4.43% 

12/5/2024

 

Research Parkway

      1,773,846   1,813,305 

Fixed

  3.94% 

1/5/2025

 

Arapahoe Service Center

      7,971,736   8,085,727 

Fixed

  4.34% 

1/5/2025

 

Union Town Center

      8,350,338   8,440,000 

Fixed

  4.28% 

1/5/2025

 

One Park Centre

      6,411,646   6,487,532 

Fixed

  4.77% 

9/5/2025

 

Genesis Plaza

      6,302,600   6,378,110 

Fixed

  4.71% 

9/6/2025

 

Shea Center II

      17,727,500   17,727,500 

Fixed

  4.92% 

1/5/2026

 

Executive Office Park

  (3)  4,754,908   4,839,577 

Fixed

  4.83% 

6/1/2027

 

West Fargo Industrial

      4,290,717   4,216,565 

Fixed

  3.27% 

8/5/2029

 

Grand Pacific Center

  (5)  3,767,027   3,851,962 

Fixed

  4.02% 

8/1/2037

 

Subtotal, Presidio Property Trust, Inc. Properties

     $94,884,603  $110,814,920          

Model Home mortgage notes

  (3)  29,514,663   32,644,129 

Fixed

  (6)  2020 - 2023 

Mortgage Notes Payable

     $124,399,266  $143,459,049          

Unamortized loan costs

      (862,452)  (1,066,057)         

Mortgage Notes Payable, net

     $123,536,814  $142,392,992          
Contractual Obligation, Fiscal Year Maturity [Table Text Block]
  

Presidio Property

  

Model

     
  

Trust, Inc.

  

Homes

  

Total Principal

 
  

Notes Payable

  

Notes Payable

  

Payments

 

Three months remaining in 2020

 $468,332  $1,112,728  $1,581,060 

Years ending December 31:

            

2021

  16,406,080   11,306,633  $27,712,713 

2022

  9,826,391   11,667,980  $21,494,371 

2023

  1,542,085   5,427,322  $6,969,407 

2024

  1,602,019     $1,602,019 

Thereafter

  65,039,696      65,039,696 

Total

 $94,884,603  $29,514,663  $124,399,266 
v3.20.2
Note 12 - Segments (Tables)
9 Months Ended
Sep. 30, 2020
Notes Tables  
Schedule of Segment Reporting Information, by Segment [Table Text Block]
  

For the Three Months Ended September 30,

  

For the Nine Months Ended September 30,

 
  

2020

  

2019

  

2020

  

2019

 

Office/Industrial Properties:

                

Rental, fees and other income

 $4,098,892  $5,137,114  $13,334,595  $16,087,363 

Property and related expenses

  (1,813,950)  (2,237,392)  (5,539,320)  (7,041,306)

Net operating income, as defined

  2,284,942   2,899,722   7,795,275   9,046,057 

Model Home Properties:

                

Rental, fees and other income

  1,058,329   1,083,470   3,268,074   3,167,072 

Property and related expenses

  (58,897)  (42,258)  (160,688)  (140,866)

Net operating income, as defined

  999,432   1,041,212   3,107,386   3,026,206 

Retail Properties:

                

Rental, fees and other income

  548,392   780,286   2,305,412   2,046,686 

Property and related expenses

  (277,820)  (253,414)  (1,729,171)  (640,444)

Net operating (loss) income, as defined

  270,572   526,872   576,241   1,406,242 

Reconciliation to net loss:

                

Total net operating income, as defined, for reportable segments

  3,554,946   4,467,806   11,478,902   13,478,505 

General and administrative expenses

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

Depreciation and amortization

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

Interest expense

  (2,143,960)  (2,830,858)  (6,971,162)  (7,867,932)

Other income (expense), net

  (12,270)  9,294   (10,865)  19,227 

Income tax expense

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

Gain on sale of real estate

  332,715   4,853,186   656,975   6,243,819 

Net loss

 $(1,384,468) $2,953,589  $(3,924,121) $914,977 
Reconciliation of Assets from Segment to Consolidated [Table Text Block]
  

September 30,

  

December 31,

 

Assets by Reportable Segment:

 

2020

  

2019

 

Office/Industrial Properties:

        

Land, buildings and improvements, net (1)

 $102,805,132  $126,421,648 

Total assets (2)

 $103,137,364  $131,180,612 

Model Home Properties:

        

Land, buildings and improvements, net (1)

 $45,945,657  $48,466,371 

Total assets (2)

 $45,235,619  $51,389,400 

Retail Properties:

        

Land, buildings and improvements, net (1)

 $25,125,813  $25,318,601 

Total assets (2)

 $26,449,473  $26,588,254 

Reconciliation to Total Assets:

        

Total assets for reportable segments

 $174,822,456  $209,158,266 

Other unallocated assets:

        

Cash, cash equivalents and restricted cash

  1,913,279   1,591,041 

Other assets, net

  15,082,214   10,035,101 

Total Assets

 $191,817,949  $220,784,408 
Reconciliation of Other Significant Reconciling Items from Segments to Consolidated [Table Text Block]
  

For the Nine Months Ended September 30,

 

Capital Expenditures by Reportable Segment

 

2020

  

2019

 

Office/Industrial Properties:

        

Capital expenditures and tenant improvements

 $2,501,075  $5,161,786 

Model Home Properties:

        

Acquisition of operating properties

  8,996,248   6,116,035 

Retail Properties:

        

Capital expenditures and tenant improvements

  9,077   20,247 

Totals:

        

Acquisition of operating properties, net

  8,996,248   6,116,035 

Capital expenditures and tenant improvements

  2,510,152   5,182,033 

Total real estate investments

 $11,506,400  $11,298,068 
v3.20.2
Note 1 - Organization (Details Textual)
9 Months Ended 12 Months Ended
Oct. 06, 2020
USD ($)
$ / shares
shares
Jul. 29, 2020
Sep. 30, 2020
USD ($)
ft²
Dec. 31, 2016
Sep. 01, 2020
USD ($)
Sep. 17, 2019
USD ($)
Jan. 23, 2012
$ / shares
Area of Real Estate Property (Square Foot) | ft²     364,834        
Number of Real Estate Properties     128        
Number of Limited Partnerships in which Company is Sole General Partner       1      
Number of Limited Liability Companies       4      
Percentage of Distributed Taxable Income to Qualify as REIT     90.00%        
Shares Issued, Price Per Share (in dollars per share) | $ / shares             $ 19.00
Long-Term Debt, Maturity, Remainder of Fiscal Year     $ 1,581,060        
Long-Term Debt, Maturity, Year One     $ 27,712,713        
Commercial Property [Member]              
Area of Real Estate Property (Square Foot) | ft²     1,129,738        
Number of Real Estate Properties     15        
Mortgage Notes [Member]              
Long-Term Debt, Maturity, Remainder of Fiscal Year     $ 1,600,000        
Long-Term Debt, Maturity, Year One     27,700,000        
Mortgage Notes [Member] | Model Home Properties [Member]              
Long-Term Debt, Maturity, Remainder of Fiscal Year     1,100,000        
Mortgage Notes [Member] | Commercial Property [Member]              
Long-Term Debt, Maturity, Remainder of Fiscal Year     468,000        
Polar Multi-Strategy Master Fund [Member] | Notes Payable to Banks [Member]              
Debt Instrument, Face Amount           $ 14,000,000.0  
Debt Instrument, Interest Rate, Stated Percentage           8.00%  
Long-term Debt, Total     $ 8,800,000   $ 8,800,000    
Debt Instrument, Renewal Fee Percentage           4.00%  
Reverse Stock Split [Member]              
Stockholders' Equity Note, Stock Split, Conversion Ratio   2          
IPO [Member] | Subsequent Event [Member]              
Stock Issued During Period, Shares, New Issues (in shares) | shares 500,000            
Shares Issued, Price Per Share (in dollars per share) | $ / shares $ 5.00            
Proceeds from Issuance of Common Stock $ 2,300,000            
IPO [Member] | Subsequent Event [Member] | Underwriting Discounts [Member]              
Payments of Stock Issuance Costs 200,000            
IPO [Member] | Subsequent Event [Member] | Other Expenses [Member]              
Payments of Stock Issuance Costs $ 775,000            
Office/Industrial Properties [Member]              
Area of Real Estate Property (Square Foot) | ft²     998,016        
Retail Properties [Member]              
Area of Real Estate Property (Square Foot) | ft²     131,722        
Model Home Properties [Member]              
Number of Real Estate Properties     128        
Number of Limited Partnerships in which Company is Sole General Partner     6        
Number of Limited Liability Companies     1        
v3.20.2
Note 2 - Significant Accounting Policies (Details Textual)
3 Months Ended 6 Months Ended 9 Months Ended
Sep. 30, 2020
USD ($)
Sep. 30, 2019
USD ($)
Jun. 30, 2020
USD ($)
Sep. 30, 2020
USD ($)
Sep. 30, 2019
USD ($)
Dec. 31, 2019
USD ($)
Cash Equivalents, at Carrying Value, Total $ 6,800,000     $ 6,800,000   $ 5,700,000
Restricted Cash, Total $ 3,200,000     $ 3,200,000   $ 4,700,000
Number of Real Estate Properties Held for Sale 4     4    
Number of Real Estate Properties 128     128    
Impairment of Real Estate $ 0 $ 0   $ 845,674 $ 0  
Executive Park [Member]            
Number of Real Estate Properties Held for Sale 1     1    
Number of Real Estate Properties 4     4    
Model Home [Member]            
Number of Real Estate Properties Held for Sale 1     1    
Number of Real Estate Properties 25 18   25 18  
Waterman Plaza [Member]            
Impairment of Real Estate     $ 845,000      
v3.20.2
Note 3 - Recent Real Estate Transactions (Details Textual)
9 Months Ended
Mar. 13, 2020
USD ($)
Feb. 05, 2020
USD ($)
Jul. 31, 2019
USD ($)
Jul. 01, 2019
USD ($)
May 08, 2019
USD ($)
Jan. 15, 2019
USD ($)
Sep. 30, 2020
USD ($)
Sep. 30, 2019
USD ($)
Dec. 31, 2019
USD ($)
Number of Real Estate Properties             128    
Notes Payable, Total             $ 8,424,574   $ 12,238,692
Centennial Tech Center [Member] | Discontinued Operations, Disposed of by Sale [Member]                  
Proceeds from Sale of Real Estate, Total   $ 15,000,000.0              
Gain (Loss) on Sale of Properties   $ (913,000)              
Union Terrace [Member] | Discontinued Operations, Disposed of by Sale [Member]                  
Proceeds from Sale of Real Estate, Total $ 11,300,000                
Gain (Loss) on Sale of Properties $ 688,000                
Model Home [Member]                  
Number of Real Estate Properties             25 18  
Real Estate Property, Consideration Transferred, Total             $ 9,000,000.0 $ 6,100,000  
Payments to Acquire Residential Real Estate             2,700,000 1,800,000  
Model Home [Member] | Mortgage Notes [Member]                  
Notes Payable, Total             6,300,000 4,300,000  
Model Home [Member] | Discontinued Operations, Disposed of by Sale [Member]                  
Proceeds from Sale of Real Estate, Total             12,600,000 12,400,000  
Gain (Loss) on Sale of Properties             $ 894,000 $ 1,000,000.0  
Number of Real Estate Properties             33 35  
Morena Office Center [Member] | Discontinued Operations, Disposed of by Sale [Member]                  
Proceeds from Sale of Real Estate, Total           $ 5,600,000      
Gain (Loss) on Sale of Properties           $ 700,000      
Nightingale Land [Member] | Discontinued Operations, Disposed of by Sale [Member]                  
Proceeds from Sale of Real Estate, Total         $ 875,000        
Gain (Loss) on Sale of Properties         $ (93,000)        
Genesis Plaza [Member] | Discontinued Operations, Disposed of by Sale [Member]                  
Proceeds from Sale of Real Estate, Total       $ 2,900,000          
Sale of Percentage Interest in Real Estate Property       43.00%          
Sale of Real Estate Property       $ 5,600,000          
The Presidio [Member] | Discontinued Operations, Disposed of by Sale [Member]                  
Proceeds from Sale of Real Estate, Total     $ 12,300,000            
Gain (Loss) on Sale of Properties     $ 4,500,000            
v3.20.2
Note 4 - Real Estate Assets (Details Textual)
Sep. 30, 2020
Sep. 30, 2019
Number of Real Estate Properties 128  
Number of Real Estate Properties Held for Sale 4  
Executive Office Park [Member]    
Number of Real Estate Properties 4  
Number of Real Estate Properties Held for Sale 1  
Model Home [Member]    
Number of Real Estate Properties 25 18
Number of Real Estate Properties Held for Sale 1  
v3.20.2
Note 4 - Real Estate Assets - Summary of Properties Owned (Details)
$ in Thousands
9 Months Ended
Sep. 30, 2020
USD ($)
Real estate assets owned $ 173,952
Garden Gateway Plaza [Member]  
Geographic location Colorado Springs, Colorado [1]
Real estate assets owned $ 11,439 [1]
World Plaza [Member]  
Geographic location San Bernardino, California [1]
Real estate assets owned $ 9,272 [1]
Executive Office Park [Member]  
Geographic location Colorado Springs, Colorado [2]
Real estate assets owned $ 7,581 [2]
Waterman Plaza [Member]  
Geographic location San Bernardino, California [1]
Real estate assets owned $ 3,986 [1]
Genesis Plaza [Member]  
Geographic location San Diego, California
Real estate assets owned $ 8,816
Dakota Center [Member]  
Geographic location Fargo, North Dakota
Real estate assets owned $ 8,655
Grand Pacific Center [Member]  
Geographic location Bismarck, North Dakota
Real estate assets owned $ 5,754
Arapahoe Center [Member]  
Geographic location Centennial, Colorado
Real estate assets owned $ 9,362
Union Town Center [Member]  
Geographic location Colorado Springs, Colorado
Real estate assets owned $ 9,414
West Fargo Industrial [Member]  
Geographic location West Fargo, North Dakota
Real estate assets owned $ 7,079
The 300 N.P [Member]  
Geographic location Fargo, North Dakota
Real estate assets owned $ 3,308
Research Parkway [Member]  
Geographic location Colorado Springs, Colorado
Real estate assets owned $ 2,454
One Park Centre [Member]  
Geographic location Westminster, Colorado
Real estate assets owned $ 8,701
Highland Court [Member]  
Geographic location Centennial, Colorado
Real estate assets owned $ 10,992
Shea Center II [Member]  
Geographic location Highlands Ranch, Colorado
Real estate assets owned $ 21,193
Presidio Property Trust, Inc. Properties [Member]  
Real estate assets owned 128,006
Model Home Properties [Member]  
Real estate assets owned $ 45,946 [3]
[1] Properties held for sale as of September 30, 2020.
[2] This property comprises four buildings, one of which is held for sale as of September 30, 2020
[3] Includes one Model Home listed as held for sale as of September 30, 2020.
v3.20.2
Note 4 - Real Estate Assets - Geographic Diversification Tables (Details)
9 Months Ended
Sep. 30, 2020
USD ($)
ft²
Number of properties 128
Aggregate Square Feet (Square Foot) | ft² 364,834
Approximate % of Square Feet 100.00%
Current Base Annual Rent | $ $ 3,786,180
Approximate of Aggregate % Annual Rent 100.00%
Commercial Property [Member]  
Number of properties 15
Aggregate Square Feet (Square Foot) | ft² 1,129,738
Approximate % of Square Feet 100.00%
Current Base Annual Rent | $ $ 14,491,378
Approximate of Aggregate % Annual Rent 100.00%
CALIFORNIA | Commercial Property [Member]  
Number of properties 3
Aggregate Square Feet (Square Foot) | ft² 134,787
Approximate % of Square Feet 11.90%
Current Base Annual Rent | $ $ 1,782,207
Approximate of Aggregate % Annual Rent 12.30%
Southwest [Member] | Model Home Properties [Member]  
Number of properties 104
Aggregate Square Feet (Square Foot) | ft² 305,203
Approximate % of Square Feet 83.70%
Current Base Annual Rent | $ $ 3,036,024
Approximate of Aggregate % Annual Rent 80.20%
COLORADO | Commercial Property [Member]  
Number of properties 8
Aggregate Square Feet (Square Foot) | ft² 597,912
Approximate % of Square Feet 52.90%
Current Base Annual Rent | $ $ 9,183,486
Approximate of Aggregate % Annual Rent 63.40%
Southeast [Member] | Model Home Properties [Member]  
Number of properties 18
Aggregate Square Feet (Square Foot) | ft² 41,621
Approximate % of Square Feet 11.40%
Current Base Annual Rent | $ $ 499,320
Approximate of Aggregate % Annual Rent 13.20%
NORTH DAKOTA | Commercial Property [Member]  
Number of properties 4
Aggregate Square Feet (Square Foot) | ft² 397,039
Approximate % of Square Feet 35.20%
Current Base Annual Rent | $ $ 3,525,685
Approximate of Aggregate % Annual Rent 24.30%
Midwest [Member] | Model Home Properties [Member]  
Number of properties 2
Aggregate Square Feet (Square Foot) | ft² 6,602
Approximate % of Square Feet 1.80%
Current Base Annual Rent | $ $ 99,276
Approximate of Aggregate % Annual Rent 2.60%
East [Member] | Model Home Properties [Member]  
Number of properties 2
Aggregate Square Feet (Square Foot) | ft² 5,255
Approximate % of Square Feet 1.40%
Current Base Annual Rent | $ $ 70,716
Approximate of Aggregate % Annual Rent 1.90%
Northeast [Member] | Model Home Properties [Member]  
Number of properties 2
Aggregate Square Feet (Square Foot) | ft² 6,153
Approximate % of Square Feet 1.70%
Current Base Annual Rent | $ $ 80,844
Approximate of Aggregate % Annual Rent 2.10%
v3.20.2
Note 5 - Lease Intangibles (Details Textual) - USD ($)
9 Months Ended
Sep. 30, 2020
Dec. 31, 2019
Finite-Lived Intangible Assets, Gross, Total $ 5,321,295 $ 7,631,488
Finite-Lived Intangible Assets, Accumulated Amortization 4,562,496 5,526,477
Below Market Lease, Net, Ending Balance $ 187,493 309,932
Weighted Average [Member]    
Finite-Lived Intangible Assets, Remaining Amortization Period (Year) 1 year 7 months 6 days  
Real Estate Assets Held for Sale [Member]    
Finite-Lived Intangible Assets, Gross, Total $ 0 2,300,000
Finite-Lived Intangible Assets, Accumulated Amortization   $ 1,400,000
v3.20.2
Note 5 - Lease Intangibles - Net Value of Other Intangibles (Details) - USD ($)
Sep. 30, 2020
Dec. 31, 2019
Lease intangibles, gross $ 5,321,295 $ 7,631,488
Accumulated Amortization (4,562,496) (5,526,477)
Lease Intangibles, net 758,799 2,105,011
Leases, Acquired-in-Place [Member]    
Lease intangibles, gross 3,186,889 4,360,027
Accumulated Amortization (2,740,785) (3,283,027)
Lease Intangibles, net 446,104 1,077,000
Leasing Costs [Member]    
Lease intangibles, gross 1,800,921 2,937,976
Accumulated Amortization (1,542,960) (2,002,711)
Lease Intangibles, net 257,961 935,265
Above Market Lease [Member]    
Lease intangibles, gross 333,485 333,485
Accumulated Amortization (278,751) (240,739)
Lease Intangibles, net $ 54,734 $ 92,746
v3.20.2
Note 5 - Lease Intangibles - Amortization Expense (Details) - USD ($)
Sep. 30, 2020
Dec. 31, 2019
Three months remaining in 2020 $ 132,584  
2021 372,484  
2022 202,479  
2023 17,663  
2024 17,663  
Thereafter 15,926  
Total $ 758,799 $ 2,105,011
v3.20.2
Note 6 - Other Assets - Other Assets (Details) - USD ($)
Sep. 30, 2020
Dec. 31, 2019
Total other assets $ 3,715,172 $ 5,709,586
Other Assets [Member]    
Deferred rent receivable 1,898,960 2,680,886
Prepaid expenses, deposits and other 406,807 601,897
Accounts receivable, net 390,986 1,336,122
Right-of-use assets, net 108,826 561,375
Other intangibles, net 157,483 212,932
Notes receivable 316,374 316,374
Deferred offering costs 435,736 0
Total other assets $ 3,715,172 $ 5,709,586
v3.20.2
Note 7 - Mortgage Notes Payable (Details Textual)
9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Number of Real Estate Properties Held for Sale 4  
Number of Real Estate Properties 128  
Executive Office Park [Member]    
Number of Real Estate Properties Held for Sale 1  
Number of Real Estate Properties 4  
Executive Office Park [Member] | Mortgage Notes [Member]    
Debt Instrument, Interest Rate, Stated Percentage [1],[2] 4.83%  
Model Home [Member]    
Number of Real Estate Properties Held for Sale 1  
Number of Real Estate Properties 25 18
World Plaza [Member] | Mortgage Notes [Member]    
Debt, Weighted Average Interest Rate 3.53%  
World Plaza [Member] | ABR [Member] | Mortgage Notes [Member]    
Debt Instrument, Basis Spread on Variable Rate 0.75%  
World Plaza [Member] | London Interbank Offered Rate (LIBOR) [Member] | Mortgage Notes [Member]    
Debt Instrument, Basis Spread on Variable Rate 2.75%  
Model Home Properties [Member] | Mortgage Notes [Member] | Minimum [Member]    
Debt Instrument, Interest Rate, Stated Percentage 2.50%  
Model Home Properties [Member] | Mortgage Notes [Member] | Maximum [Member]    
Debt Instrument, Interest Rate, Stated Percentage 5.63%  
Waterman Plaza [Member] | Mortgage Notes [Member]    
Debt Instrument, Floor Interest Rate 4.25%  
Waterman Plaza [Member] | London Interbank Offered Rate (LIBOR) [Member] | Mortgage Notes [Member]    
Debt Instrument, Basis Spread on Variable Rate 3.00%  
[1] Interest rates as of September 30, 2020.
[2] Properties held for sale as of September 30, 2020. One of four buildings at Executive Office Park was classified as held for sale; one model home was included as held for sale.
v3.20.2
Note 7 - Mortgage Notes Payable - Mortgage Notes Payable (Details) - USD ($)
9 Months Ended
Sep. 30, 2020
Dec. 31, 2019
Mortgage Notes Payable, net $ 123,536,814 $ 142,392,992
Mortgage Notes [Member]    
Mortgage Notes Payable 124,399,266 143,459,049
Unamortized loan costs (862,452) (1,066,057)
Waterman Plaza [Member] | Mortgage Notes [Member]    
Mortgage Notes Payable [1],[2] $ 3,240,076 3,274,097
Interest rate, variable [1],[2],[3] 4.25%  
Maturity date [1],[2] Apr. 29, 2020  
World Plaza [Member] | Mortgage Notes [Member]    
Mortgage Notes Payable [2],[4] $ 5,828,395 4,979,384
Interest rate, variable [2],[3],[4] 2.91%  
Maturity date [2],[4] Jul. 05, 2021  
Garden Gateway Plaza [Member] | Mortgage Notes [Member]    
Mortgage Notes Payable [2] $ 5,914,955 6,071,315
Maturity date [2] Aug. 05, 2021  
Interest rate [2],[3] 5.00%  
The 300 N.P [Member] | Mortgage Notes [Member]    
Mortgage Notes Payable $ 2,283,380 2,311,739
Maturity date Jun. 11, 2022  
Interest rate [3] 4.95%  
Highland Court [Member] | Mortgage Notes [Member]    
Mortgage Notes Payable $ 6,312,739 6,424,366
Maturity date Sep. 01, 2022  
Interest rate [3] 3.82%  
Dakota Center [Member] | Mortgage Notes [Member]    
Mortgage Notes Payable $ 9,954,740 10,111,693
Maturity date Jul. 06, 2024  
Interest rate [3] 4.74%  
Union Terrace [Member] | Mortgage Notes [Member]    
Mortgage Notes Payable [5] $ 0 6,240,396
Maturity date [5] Aug. 05, 2024  
Interest rate [3],[5] 4.50%  
Centennial Tech Center [Member] | Mortgage Notes [Member]    
Mortgage Notes Payable [5] $ 0 9,561,652
Maturity date [5] Dec. 05, 2024  
Interest rate [3],[5] 4.43%  
Research Parkway [Member] | Mortgage Notes [Member]    
Mortgage Notes Payable $ 1,773,846 1,813,305
Maturity date Jan. 05, 2025  
Interest rate [3] 3.94%  
Arapahoe Center [Member] | Mortgage Notes [Member]    
Mortgage Notes Payable $ 7,971,736 8,085,727
Maturity date Jan. 05, 2025  
Interest rate [3] 4.34%  
Union Town Center [Member] | Mortgage Notes [Member]    
Mortgage Notes Payable $ 8,350,338 8,440,000
Maturity date Jan. 05, 2025  
Interest rate [3] 4.28%  
One Park Centre [Member] | Mortgage Notes [Member]    
Mortgage Notes Payable $ 6,411,646 6,487,532
Maturity date Sep. 05, 2025  
Interest rate [3] 4.77%  
Genesis Plaza [Member] | Mortgage Notes [Member]    
Mortgage Notes Payable $ 6,302,600 6,378,110
Maturity date Sep. 06, 2025  
Interest rate [3] 4.71%  
Shea Center II [Member] | Mortgage Notes [Member]    
Mortgage Notes Payable $ 17,727,500 17,727,500
Maturity date Jan. 05, 2026  
Interest rate [3] 4.92%  
Executive Office Park [Member] | Mortgage Notes [Member]    
Mortgage Notes Payable [2] $ 4,754,908 4,839,577
Maturity date [2] Jun. 01, 2027  
Interest rate [2],[3] 4.83%  
West Fargo Industrial [Member] | Mortgage Notes [Member]    
Mortgage Notes Payable $ 4,290,717 4,216,565
Maturity date Aug. 05, 2029  
Interest rate [3] 3.27%  
Grand Pacific Center [Member] | Mortgage Notes [Member]    
Mortgage Notes Payable [6] $ 3,767,027 3,851,962
Maturity date [6] Aug. 01, 2037  
Interest rate [3],[6] 4.02%  
Subtotal, Presidio Property Trust, Inc. Properties [Member] | Mortgage Notes [Member]    
Mortgage Notes Payable $ 94,884,603 110,814,920
Model Home [Member] | Mortgage Notes [Member]    
Mortgage Notes Payable [2],[7] $ 29,514,663 $ 32,644,129
Model Home [Member] | Mortgage Notes [Member] | Minimum [Member]    
Maturity date [2],[7] Dec. 31, 2020  
Model Home [Member] | Mortgage Notes [Member] | Maximum [Member]    
Maturity date [2],[7] Dec. 31, 2023  
[1] Interest on this loan resets annually at LIBOR plus 3.00%, with a floor of 4.25%.
[2] Properties held for sale as of September 30, 2020. One of four buildings at Executive Office Park was classified as held for sale; one model home was included as held for sale.
[3] Interest rates as of September 30, 2020.
[4] Interest on this loan is ABR plus 0.75% and LIBOR plus 2.75%. For the nine months ended September 30, 2020, the weighted average interest rate was 3.53%.
[5] Centennial Tech Center and Union Terrace were sold on February 5, 2020 and March 13, 2020, respectively.
[6] Interest rate is subject to reset on September 1, 2023.
[7] Each model home has a stand-alone mortgage note at interest rates ranging from 2.50% to 5.63% per annum at September 30, 2020.
v3.20.2
Note 7 - Mortgage Notes Payable - Scheduled Principal Payments of Mortgage Notes Payable (Details)
Sep. 30, 2020
USD ($)
Long-Term Debt, Maturity, Remainder of Fiscal Year $ 1,581,060
Long-Term Debt, Maturity, Year One 27,712,713
2022 21,494,371
2023 6,969,407
2024 1,602,019
Thereafter 65,039,696
Total 124,399,266
Office/Industrial and Retail Notes Payable [Member]  
Long-Term Debt, Maturity, Remainder of Fiscal Year 468,332
Long-Term Debt, Maturity, Year One 16,406,080
2022 9,826,391
2023 1,542,085
2024 1,602,019
Thereafter 65,039,696
Total 94,884,603
Model Home Properies Notes Payable [Member]  
Long-Term Debt, Maturity, Remainder of Fiscal Year 1,112,728
Long-Term Debt, Maturity, Year One 11,306,633
2022 11,667,980
2023 5,427,322
2024 0
Thereafter 0
Total $ 29,514,663
v3.20.2
Note 8 - Notes Payable (Details Textual) - USD ($)
9 Months Ended
Aug. 17, 2020
Apr. 30, 2020
Apr. 22, 2020
Sep. 30, 2020
Sep. 30, 2019
Sep. 01, 2020
Sep. 17, 2019
Amortization of Debt Issuance Costs       $ 992,705 $ 592,598    
Payments of Extension Costs on Note Payable       351,025 $ (0)    
Economic Injury Disaster Loan [Member]              
Proceeds from Issuance of Unsecured Debt $ 150,000   $ 10,000        
SBA CARES Act Paycheck Protection Program [Member]              
Proceeds from Issuance of Unsecured Debt   $ 462,000          
Polar Multi-Strategy Master Fund [Member] | Notes Payable to Banks [Member]              
Debt Instrument, Face Amount             $ 14,000,000.0
Debt Instrument, Interest Rate, Stated Percentage             8.00%
Long-term Debt, Total       8,800,000   $ 8,800,000  
Debt Instrument, Renewal Fee Percentage             4.00%
Repayments of Notes Payable, Including Interest       7,400,000      
Debt Instrument, Unamortized Discount, Total       0     $ 1,400,000
Accretion Expense       1,000,000.0      
Debt Issuance Costs, Gross             $ 1,100,000
Amortization of Debt Issuance Costs       748,000      
Payments of Extension Costs on Note Payable       $ 351,000      
Debt Instrument, Covenant, Debt to Property Fair Value Ratio             75.00%
v3.20.2
Note 10 - Series B Mandatorily Redeemable Preferred Stock (Details Textual) - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Dec. 31, 2019
Interest Expense, Total $ 2,143,960 $ 2,830,858 $ 6,971,162 $ 7,867,932  
Redeemable Convertible Preferred Stock Series B [Member]          
Stock Redeemed or Called During Period, Shares (in shares)         16,900
Stock Redeemed or Called During Period, Value         $ 16,900,000
Preferred Stock, Shares Outstanding, Ending Balance (in shares) 0   0   0
Interest Expense, Total     $ 0 $ 122,000  
Unamortized Deferred Stock Costs $ 0   $ 0   $ 0
v3.20.2
Note 11 - Stockholders' Equity (Details Textual)
3 Months Ended 9 Months Ended 12 Months Ended 104 Months Ended
Jan. 23, 2012
USD ($)
$ / shares
shares
Sep. 30, 2020
USD ($)
$ / shares
shares
Jun. 30, 2020
USD ($)
Sep. 30, 2019
USD ($)
Sep. 30, 2020
USD ($)
$ / shares
shares
Sep. 30, 2019
USD ($)
$ / shares
Dec. 31, 2016
Sep. 30, 2020
USD ($)
$ / shares
shares
Dec. 31, 2019
$ / shares
shares
Preferred Stock, Shares Authorized (in shares)   1,000,000     1,000,000     1,000,000  
Maximum Individual Common Stock Ownership, Percentage   9.80%     9.80%     9.80%  
Dividends, Common Stock, Cash | $         $ 0 $ 2,200,000      
Common Stock, Dividends, Per Share, Cash Paid (in dollars per share) | $ / shares           $ 0.12      
Number of Real Estate Properties   128     128     128  
Number of Limited Partnerships in which Company is Sole General Partner             1    
Number of Limited Liability Companies             4    
Number of Put Options Exercised (in shares)         2        
Stock Issued During Period, Value, New Issues | $     $ 0   $ 59,274        
Registered Shares of Common Stock Pursuant to Dividend Reinvestment Plan (in shares) 3,000,000                
Common Stock, Percentage of Purchase Price Per Share 95.00%                
Shares Issued, Price Per Share (in dollars per share) | $ / shares $ 19.00                
Payment of Sales, Commission or Dealer Manager Fee | $ $ 0                
Notice Period for Amendments to Dividend Reinvestment Plan (Day) 30 days                
Stock Issued During Period, Value, Dividend Reinvestment Plan | $               $ 17,400,000  
Stock Issued During Period, Shares, Dividend Reinvestment Plan (in shares)         0     917,074  
Share-based Payment Arrangement, Expense | $   $ 181,000   $ 193,000 $ 542,000 $ 809,000      
Noncontrolling Interest [Member]                  
Minority Interest, Decrease from Issuance of Stock for Limited Partnership Interests | $     $ 1,247,990   $ 1,200,000        
Commercial Property [Member] | Wholly Owned Properties [Member]                  
Number of Real Estate Properties   15     15     15  
Commercial Property [Member] | Partially Owned Properties [Member]                  
Number of Real Estate Properties   2     2     2  
Common Class A [Member]                  
Common Stock, Shares Authorized (in shares)   100,000,000     100,000,000     100,000,000 100,000,000
Common Stock, Par or Stated Value Per Share (in dollars per share) | $ / shares   $ 0.01     $ 0.01     $ 0.01 $ 0.01
Common Stock, Shares, Issued, Total (in shares)   8,922,036     8,922,036     8,922,036 8,881,842
Common Class B [Member]                  
Common Stock, Shares Authorized (in shares)   1,000     1,000     1,000  
Common Stock, Shares, Issued, Total (in shares)   0     0     0  
Common Class C [Member]                  
Common Stock, Shares Authorized (in shares)   9,000,000     9,000,000     9,000,000  
Common Stock, Shares, Issued, Total (in shares)   0     0     0  
Common Stock, Number of Entitled Votes   1     1     1  
v3.20.2
Note 12 - Segments (Details Textual)
9 Months Ended
Sep. 30, 2020
Number of Reportable Segments 3
v3.20.2
Note 12 - Segments - Operating Income by Segment (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2020
Jun. 30, 2020
Mar. 31, 2020
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Sep. 30, 2020
Sep. 30, 2019
Rental, fees and other income $ 5,663,568     $ 7,000,870     $ 18,814,123 $ 21,301,121
Property and related expenses (2,108,621)     (2,533,064)     (6,489,547) (7,822,616)
General and administrative expenses (1,366,380)     (1,451,873)     (3,996,696) (4,632,244)
Depreciation and amortization (1,626,917)     (1,755,253)     (4,823,673) (5,714,446)
Interest expense (2,143,960)     (2,830,858)     (6,971,162) (7,867,932)
Other income (expense), net (12,270)     9,294     (10,865) 19,227
Income tax expense (122,602)     (338,713)     (257,602) (611,952)
Gain on sale of real estate 332,715     4,853,186     656,975 6,243,819
Net (loss) income (1,384,468) $ (1,607,534) $ (932,119) 2,953,589 $ (1,076,674) $ (961,937) (3,924,121) 914,977
Operating Segments [Member]                
Net operating income, as defined 3,554,946     4,467,806     11,478,902 13,478,505
Office/Industrial Properties [Member] | Operating Segments [Member]                
Rental, fees and other income 4,098,892     5,137,114     13,334,595 16,087,363
Property and related expenses (1,813,950)     (2,237,392)     (5,539,320) (7,041,306)
Net operating income, as defined 2,284,942     2,899,722     7,795,275 9,046,057
Model Home Properties [Member] | Operating Segments [Member]                
Rental, fees and other income 1,058,329     1,083,470     3,268,074 3,167,072
Property and related expenses (58,897)     (42,258)     (160,688) (140,866)
Net operating income, as defined 999,432     1,041,212     3,107,386 3,026,206
Retail Properties [Member] | Operating Segments [Member]                
Rental, fees and other income 548,392     780,286     2,305,412 2,046,686
Property and related expenses (277,820)     (253,414)     (1,729,171) (640,444)
Net operating income, as defined $ 270,572     $ 526,872     $ 576,241 $ 1,406,242
v3.20.2
Note 12 - Segments - Assets by Reportable Segment (Details) - USD ($)
Sep. 30, 2020
Dec. 31, 2019
Total assets $ 191,817,949 $ 220,784,408
Cash, cash equivalents and restricted cash 10,006,026 10,391,275
Other assets, net 3,715,172 5,709,586
Operating Segments [Member]    
Total assets 174,822,456 209,158,266
Segment Reconciling Items [Member]    
Total assets 191,817,949 220,784,408
Cash, cash equivalents and restricted cash 1,913,279 1,591,041
Other assets, net 15,082,214 10,035,101
Office/Industrial Properties [Member] | Operating Segments [Member]    
Land, buildings and improvements, net [1] 102,805,132 126,421,648
Total assets [2] 103,137,364 131,180,612
Model Home Properties [Member] | Operating Segments [Member]    
Land, buildings and improvements, net [1] 45,945,657 48,466,371
Total assets [2] 45,235,619 51,389,400
Retail Properties [Member] | Operating Segments [Member]    
Land, buildings and improvements, net [1] 25,125,813 25,318,601
Total assets [2] $ 26,449,473 $ 26,588,254
[1] Includes lease intangibles and the land purchase option related to property acquisitions.
[2] Includes land, buildings and improvements, cash, cash equivalents, and restricted cash, current receivables, deferred rent receivables and deferred leasing costs and other related intangible assets, all shown on a net basis.
v3.20.2
Note 12 - Segments - Capital Expenditures by Reportable Segment (Details) - USD ($)
9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Capital expenditures and tenant improvements $ 2,510,152 $ 5,182,033
Acquisition of operating properties 8,996,248 6,116,035
Total real estate investments 11,506,400 11,298,068
Office/Industrial Properties [Member]    
Capital expenditures and tenant improvements 2,501,075 5,161,786
Model Home Properties [Member]    
Acquisition of operating properties 8,996,248 6,116,035
Retail Properties [Member]    
Capital expenditures and tenant improvements $ 9,077 $ 20,247
v3.20.2
Note 13 - Subsequent Events (Details Textual)
Nov. 02, 2020
$ / shares
Subsequent Event [Member]  
Common Stock, Dividends, Per Share, Declared (in dollars per share) $ 0.10