Presidio Property Trust, Inc. Announces Earnings for the Year Ended December 31, 2021
SAN DIEGO, CA / ACCESSWIRE / March 31, 2022 / Presidio Property Trust, Inc. (NASDAQ:SQFT)(NASDAQ:SQFTP) (the "Company"), an internally managed, diversified real estate investment trust ("REIT"), today reported earnings for the year ended December 31, 2021.
"We are pleased to report our 2021 earnings, continuing the strong rent collections that we saw throughout 2020 and the first parts of 2021," said Jack Heilbron, the Company's President and Chief Executive Officer. "We also took advantage of strong market conditions to sell three office properties and one retail property, as well as 44 model homes. We repositioned the commercial portfolio with our Houston day care and Baltimore medical office acquisitions, in addition to buying 18 new model homes during the year."
"50 office, retail, and industrial leases were signed in 2021, with 18 new tenants and 32 existing tenant renewals," noted Gary Katz, the Company's Chief Investment Officer. "We expect to see solid leasing demand continue in the markets where our properties are located in the coming year."
Year Ended December 31, 2021 Financial Results
Net loss attributable to the Company's common stockholders for 2021 was approximately $4.8 million, or $0.46 basic and diluted share, compared to a net loss of approximately $7.7 million, or $0.85 per basic and diluted share for 2020. The improvement in 2021 in net income attributable to the Company's common stockholders was primarily the result of:
A decline in 2021 interest expense of approximately $4 million, or 45%, compared to 2020, due to property sales and the elimination of mezzanine debt
A decline in 2021 rental operating costs of approximately $2.6 million or 30%, compared to 2020 due to property sales
A decline in 2021 general and administrative expenses of approximately $566,000, or 11, compared to 2020
Core FFO (non-GAAP) for the year ended December 31, 2021 increased by approximately $1 million to $2.5 million compared to approximately $1.5 million for the year ended December 31, 2020. A reconciliation of Core FFO to net income, the most directly comparable GAAP financial measure, is attached to this press release. However, because Core FFO excludes depreciation and amortization as well as the changes in the value of the Company's properties that result from use or market conditions, each of which has real economic effects and could materially impact the Company's results from operations, the utility of Core FFO as a measure of the Company's performance is limited.
Acquisitions and Dispositions during 2021
Waterman Plaza, which was sold on January 28, 2021 for approximately $3.5 million and the Company recognized a loss of approximately $0.2 million.
Garden Gateway, which was sold on February 19, 2021 for approximately $11.2 million and the Company recognized a loss of approximately $1.4 million.
Highland Court, which was sold on May 20, 2021 for approximately $10.23 million and the Company recognized a loss of approximately $1.6 million.
Executive Office Park, which was sold on May 21, 2021, 2021 for approximately $8.1 million and the Company recognized a gain of approximately $2.5 million.
During 2021, the Company acquired 28 model homes for approximately $8.4 million. The purchase price was paid through cash payments of approximately $2.7 million and mortgage notes of approximately $5.7 million.
During 2021, the Company disposed of 46 model homes for approximately $18.1 million and recognized a gain of approximately $1.6 million.
Earnings Conference Call
The Company will hold a conference call at 1:30 pm Pacific Time on March 31, 2022, to discuss the Company's financial results. A supplemental financial package to accompany the discussion of the results will be posted on the Company's website www.presidiopt.com.
Webcast
To listen to the conference call over the Internet, and to be able to submit questions to the Company, click on the link under "Presentations" in the "Investor" section of the Company's website at www.presidiopt.com
Telephone Conference Call
Toll-Free: 888-506-0062
International: 973-528-0011
Entry code: 849173
To listen to the call by phone, participants can reference the Presidio Property Q3 2021 Earnings Call. Please dial in at least 10 minutes before the scheduled start time.
Conference Call Replay
Toll Free: 877-481-4010
International: 919-882-2331
Replay Passcode: 44721
The telephone replay of the call will be available later in the day on March 31, 2022, continuing through April 14, 2022. A replay will also be available at the webcast link under "Presentations" in the "Investor" section of the Company's website until March 31, 2023.
About Presidio Property Trust
Presidio is an internally managed, diversified REIT with holdings in model home properties which are triple-net leased to homebuilders, office, industrial, and retail properties. Presidio's model homes are leased to homebuilders located primarily in Texas and Florida. Our office, industrial and retail properties are located primarily in Colorado, with properties also located in Maryland, North Dakota, Texas, and Southern 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 these discrete geographic areas, including those that have developed as a result of COVID-19. Presidio is also the sponsor of the Special Purpose Acquisition Company (SPAC) Murphy Canyon Acquisition Corp. (MURFU), which currently holds approximately $140 million in trust. Murphy Canyon Acquisition Corp. is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The SPAC intends to focus on companies in the real estate industry, including construction, homebuilding, real estate owners and operators, arrangers of financing, insurance, and other services for real estate, and adjacent businesses and technologies targeting the real estate space with an aggregate combined enterprise value of approximately $300 million to $1.2 billion. For more information on Presidio, please visit the Company's website at https://www.PresidioPT.com
Definitions
Non-GAAP Financial Measures
Funds from Operations ("FFO") - The Company evaluates performance based on Funds From Operations, which we refer to as FFO, as management believes that FFO represents the most accurate measure of activity and is the basis for distributions paid to equity holders. The Company defines FFO as net income or loss (computed in accordance with GAAP), excluding gains (or losses) from sales of property, hedge ineffectiveness, acquisition costs of newly acquired properties that are not capitalized and lease acquisition costs that are not capitalized plus depreciation and amortization, including amortization of acquired above and below market lease intangibles and impairment charges on properties or investments in non-consolidated REITs, and after adjustments to exclude equity in income or losses from, and, to include the proportionate share of FFO from, non-consolidated REITs.
However, because FFO excludes depreciation and amortization as well as the changes in the value of the Company's properties that result from use or market conditions, each of which has real economic effects and could materially impact the Company's results from operations, the utility of FFO as a measure of the Company's performance is limited. In addition, other REITs may not calculate FFO in accordance with the NAREIT definition as the Company does, and, accordingly, the Company's FFO may not be comparable to other REITs' FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of the Company's performance.
Core Funds from Operations ("Core FFO") - We calculate Core FFO by using FFO as defined by NAREIT and adjusting for certain other non-core items. We also exclude from our Core FFO calculation acquisition costs, loss on early extinguishment of debt, changes in the fair value of the earn-out, changes in fair value of contingent consideration and the amortization of stock-based compensation.
We believe Core FFO provides a useful metric in comparing operations between reporting periods and in assessing the sustainability of our ongoing operating performance. Other equity REITs may calculate Core FFO differently or not at all, and, accordingly, the Company's Core FFO may not be comparable to such other REITs' Core FFO.
Cautionary Note Regarding Forward-Looking Statements
This press release contains statements that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and other federal securities laws. Forward-looking statements are statements that are not historical, including statements regarding management's intentions, beliefs, expectations, representations, plans or predictions of the future, and are typically identified by such words as "believe," "expect," "anticipate," "intend," "estimate," "may," "will," "should" and "could." Because such statements include risks, uncertainties and contingencies, actual results may differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based upon the Company's present expectations, but these statements are not guaranteed to occur. Except as required by law, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Investors should not place undue reliance upon forward-looking statements. For further discussion of the factors that could affect outcomes, please refer to the " Risk Factors" section of the Company's documents filed with the SEC, copies of which are available on the SEC's website, www.sec.gov.
Investor Relations Contacts:
Presidio Property Trust, Inc.
Lowell Hartkorn, Investor Relations
LHartkorn@presidiopt.com
Telephone: (760) 471-8536 x1244
Presidio Property Trust, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
December 31, | December 31, | |||||||
2021 | 2020 | |||||||
ASSETS | ||||||||
Real estate assets and lease intangibles: | ||||||||
Land | $ | 21,136,379 | $ | 18,827,000 | ||||
Buildings and improvements | 119,224,375 | 115,409,423 | ||||||
Tenant improvements | 12,752,518 | 11,960,018 | ||||||
Lease intangibles | 4,110,139 | 4,110,139 | ||||||
Real estate assets and lease intangibles held for investment, cost | 157,223,411 | 150,306,580 | ||||||
Accumulated depreciation and amortization | (30,589,969 | ) | (26,551,789 | ) | ||||
Real estate assets and lease intangibles held for investment, net | 126,633,442 | 123,754,791 | ||||||
Real estate assets held for sale, net | 11,431,494 | 42,499,176 | ||||||
Real estate assets, net | 138,064,936 | 166,253,967 | ||||||
Cash, cash equivalents and restricted cash | 14,702,089 | 11,540,917 | ||||||
Deferred leasing costs, net | 1,348,234 | 1,927,951 | ||||||
Goodwill | 2,423,000 | 2,423,000 | ||||||
Other assets, net | 4,658,504 | 3,422,781 | ||||||
TOTAL ASSETS | $ | 161,196,763 | $ | 185,568,616 | ||||
LIABILITIES AND EQUITY | ||||||||
Liabilities: | ||||||||
Mortgage notes payable, net | $ | 87,324,319 | $ | 94,664,266 | ||||
Mortgage notes payable related to properties held for sale, net | 1,535,513 | 25,365,430 | ||||||
Mortgage notes payable, total net | 88,859,832 | 120,029,696 | ||||||
Note payable, net | - | 7,500,086 | ||||||
Accounts payable and accrued liabilities | 4,585,036 | 5,126,199 | ||||||
Accrued real estate taxes | 1,940,913 | 2,548,686 | ||||||
Dividends payable preferred stock | 179,685 | - | ||||||
Lease liability, net | 75,547 | 102,323 | ||||||
Below-market leases, net | 73,130 | 139,045 | ||||||
Total liabilities | 95,714,143 | 135,446,035 | ||||||
Commitments and contingencies (Note 9) | ||||||||
Equity: | ||||||||
Series D Preferred Stock, $0.01 par value per share; 1,000,000 shares authorized; 920,000 and 0 shares issued and outstanding (liquidation preference $25.00 per share) as of December 31, 2021 and December 31, 2020, respectively | 9,200 | - | ||||||
Series A Common Stock, $0.01 par value per share, shares authorized: 100,000,000; 11,599,720 shares and 9,508,363 shares were issued and outstanding at December 31, 2021 and December 31, 2020, respectively | 115,997 | 95,038 | ||||||
Additional paid-in capital | 186,492,012 | 156,463,146 | ||||||
Dividends and accumulated losses | (130,947,434 | ) | (121,674,505 | ) | ||||
Total stockholders' equity before noncontrolling interest | 55,669,775 | 34,883,679 | ||||||
Noncontrolling interest | 9,812,845 | 15,238,902 | ||||||
Total equity | 65,482,620 | 50,122,581 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 161,196,763 | $ | 185,568,616 | ||||
Presidio Property Trust, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
For the Year Ended December 31, | ||||||||
2021 | 2020 | |||||||
Revenues: | ||||||||
Rental income | $ | 18,420,257 | $ | 23,444,119 | ||||
Fees and other income | 810,852 | 907,673 | ||||||
Total revenue | 19,231,109 | 24,351,792 | ||||||
Costs and expenses: | ||||||||
Rental operating costs | 6,183,189 | 8,818,283 | ||||||
General and administrative | 6,225,510 | 5,751,754 | ||||||
Depreciation and amortization | 5,397,498 | 6,274,321 | ||||||
Impairment of real estate assets | 608,000 | 1,730,851 | ||||||
Total costs and expenses | 18,414,197 | 22,575,209 | ||||||
Other income (expense): | ||||||||
Interest expense-mortgage notes | (4,542,712 | ) | (6,097,834 | ) | ||||
Interest expense - note payable | (279,373 | ) | (2,715,233 | ) | ||||
Interest and other income (expense), net | (3,417 | ) | (20,636 | ) | ||||
Gain on sales of real estate, net | 2,487,528 | 1,245,460 | ||||||
Gain on extinguishment of government debt | 10,000 | 451,785 | ||||||
Deferred offering costs | - | (530,639 | ) | |||||
Income tax credit (expense) | 47,620 | (370,884 | ) | |||||
Total other income (expense), net | (2,280,354 | ) | (8,037,981 | ) | ||||
Net loss | (1,463,442 | ) | (6,261,398 | ) | ||||
Less: Income attributable to noncontrolling interests | (2,162,140 | ) | (1,412,507 | ) | ||||
Net loss attributable to Presidio Property Trust, Inc. stockholders | $ | (3,625,582 | ) | $ | (7,673,905 | ) | ||
Less: Preferred Stock Series D dividends | (1,173,948 | ) | - | |||||
Net loss attributable to Presidio Property Trust, Inc. common stockholders | $ | (4,799,530 | ) | $ | (7,673,905 | ) | ||
Net loss per share attributable to Presidio Property Trust, Inc. common stockholders: | ||||||||
Basic & Diluted | $ | (0.46 | ) | $ | (0.85 | ) | ||
Weighted average number of common shares outstanding - basic and diluted | 10,340,975 | 9,023,914 | ||||||
Presidio Property Trust, Inc. and Subsidiaries
Reconciliation of Net Income to FFO and Core FFO
(Unaudited)
For the Years Ended | ||||||||
12/31/2021 | 12/31/2020 | |||||||
Net (loss) income attributable to Presidio Property Trust, Inc. common stockholders | $ | (4,799,530 | ) | $ | (7,673,905 | ) | ||
Adjustments: | ||||||||
Income attributable to noncontrolling interests | 2,162,140 | 1,412,507 | ||||||
Depreciation and amortization | 5,397,498 | 6,274,321 | ||||||
Amortization of above and below market leases, net | (18,139 | ) | (120,204 | ) | ||||
Impairment of real estate assets | 608,000 | 1,730,851 | ||||||
Loss (gain) on sale of real estate assets, net | (2,487,528 | ) | (1,245,460 | ) | ||||
FFO | $ | 862,441 | $ | 378,110 | ||||
Restricted stock compensation | 1,614,228 | 1,105,272 | ||||||
Core FFO | $ | 2,476,669 | $ | 1,483,381 | ||||
Weighted average number of common shares outstanding - basic and diluted | 10,340,975 | 9,023,914 | ||||||
Core FFO / Wgt Avg Share | $ | 0.24 | $ | 0.16 | ||||
Presidio Property Trust, Inc. and Subsidiaries
Same Store Net Operating Income - Commercial Properties
(Unaudited)
For the Years Ended December 31, | Variance | |||||||||||||||
2021 | 2020 | % | ||||||||||||||
Rental revenues | $ | 14,920,335 | $ | 14,981,535 | $ | (61,200 | ) | (0.4 | )% | |||||||
Rental operating costs | 6,173,340 | 6,162,440 | 10,900 | 0.2 | % | |||||||||||
Same Store Net operating income | $ | 8,746,995 | $ | 8,819,095 | $ | (72,100 | ) | 0.9 | % | |||||||
Operating Ratios: | ||||||||||||||||
Number of same properties | 11 | 11 | ||||||||||||||
Occupancy, end of period | 83.9 | % | 86.7 | % | (2.7 | )% | ||||||||||
Operating costs as a percentage of total revenues | 41.4 | % | 41.1 | % | 0.2 | % | ||||||||||
SOURCE: Presidio Property Trust
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