Presidio Property Trust, Inc. Q1 2024 Financial Report: Real Estate Assets, Loan Maturities, and Impairment Charges
Presidio Property Trust reported a $0.1 million impairment charge for four model homes, three of which had an impairment as of December 31, 2023. The short hold period and the builder changing their model style contributed to the lower than expected sales price. The company’s management is working to fill a 45,535 square foot space in one of their properties, and has leased approximately 20% of the space during 2023. The company is also reviewing various options for the loan maturity of some of their properties, including refinancing, restructuring, and selling.
Overview of Financial Performance
The company owns commercial properties and model homes located across the United States. As of March 31, 2024, the company had $135.3 million in net real estate assets.
The company’s revenue for the first quarter of 2024 was $4.8 million, compared to $4.1 million for the first quarter of 2023. The increase in revenue is mainly due to an increase in the average number of model homes held and an increase in model home transaction fees earned during the quarter.
| Revenue Segment | % of Q1 2024 Revenue | % of Q1 2023 Revenue |
|---|---|---|
| Office/Industrial | 62.0% | 68.5% |
| Model Homes | 11.5% | 11.0% |
| Retail | 26.5% | 20.5% |
Profit and Expenses
The company’s main expenses are rental operating costs, general and administrative expenses, depreciation and amortization, and interest expense.
Rental operating costs were flat at $1.6 million in Q1 2024 compared to Q1 2023. As a percentage of total revenue, rental operating costs decreased from 38.2% in Q1 2023 to 32.6% in Q1 2024.
General and administrative expenses decreased by $0.5 million in Q1 2024 compared to Q1 2023, mainly due to lower expenses related to the SPAC transaction in 2023.
Depreciation and amortization expense increased slightly from $1.3 million in Q1 2023 to $1.4 million in Q1 2024.
Interest expense increased from $0.9 million in Q1 2023 to $1.5 million in Q1 2024 due to an increase in mortgage debt.
Liquidity and Capital Resources
As of March 31, 2024, the company had $7.2 million of cash and cash equivalents, including $3.1 million of restricted cash.
The company has mortgage debt obligations of $74.1 million on its commercial properties and $28.9 million on its model homes. The debt to estimated market value on the commercial properties is approximately 61.0%.
During 2024, four commercial property loans totaling $25.9 million will mature. Management is in discussions to restructure, extend or refinance these loans.
The company did not pay cash dividends on common stock during Q1 2024 but paid $0.5 million in dividends to holders of Series D Preferred Stock.
Outlook
The company is exploring potential strategic alternatives to maximize shareholder value. Options being considered include an outright sale of the company, asset sales, joint ventures, or restructurings.
The company is also working to increase its model home properties and evaluate potential property acquisitions or sales.
Management believes the company has sufficient capital resources from operations, property sales, and refinancing abilities to meet its obligations for the next 12 months. However, an inability to refinance debt or raise additional capital could adversely impact operations.
