Presidio Property Trust, Inc. (NASDAQ: SQFT)

Presidio Property Trust, Inc. is an internally managed real estate investment trust that acquires owns and manages a diversified portfolio of commercial office and industrial properties and model home properties across the United States. The company was incorporated in California in 1999 reincorporated in Maryland in 2010 and adopted its current name in October 2017. Presidio Property Trust, Inc. operates through a series of wholly owned subsidiaries and affiliated partnerships to hold fee simple interests in ten commercial properties and partial interests in two additional commercial properties through DownREIT structures. The firm also controls a model home business that purchases newly built single family homes from homebuilders and leases them back under triple net arrangements. The company’s primary objective is to maximize long term stockholder value through active property management selective redevelopment and disciplined acquisition of assets that offer accretive economic returns.

Presidio Property Trust, Inc. generates revenue principally from rental income derived from its commercial office and industrial tenants and from lease payments received under triple net agreements with homebuilders for its model home portfolio. In addition the company earns management fees acquisition fees and disposition fees from its advisory subsidiaries NetREIT Advisors LLC and Dubose Advisors LLC which provide services to the limited partnerships that hold model home assets. Interest income from mortgage notes and occasional gains from the sale of properties also contribute to earnings. The firm’s cash flow is supported by a diversified tenant base that includes approximately 131 individual commercial occupants and a group of homebuilder clients that lease model homes for marketing their residential developments.

The company operates through the following segments:

• Office and Industrial Properties – This segment comprises the firm’s fee simple interests in ten commercial buildings located in Colorado North Dakota California Maryland and Texas. The properties are multi tenant assets that provide office space industrial warehouses and mixed use facilities. Presidio Property Trust, Inc. handles leasing property maintenance and capital improvements for these assets either directly or through third party property managers. The segment aims to generate stable rental income while pursuing selective redevelopment initiatives to enhance property values and attract higher quality tenants.

• Model Home Properties – This segment consists of newly constructed single family homes that are purchased from homebuilders and leased back under triple net leases for use as marketing models in residential subdivisions. The model home portfolio is held through three affiliated limited partnerships and one wholly owned corporation NetREIT Model Homes, Inc. Presidio Property Trust, Inc. provides management services to these entities via its advisory subsidiaries and earns fees based on assets under management acquisition activity and disposition events. The segment focuses on geographic diversification builder size variation and purchase price differentiation to reduce concentration risk and enhance overall returns.

Presidio Property Trust, Inc. competes within the broader real estate investment trust sector alongside other REITs private equity real estate funds pension funds insurance companies and developers that target similar office industrial and residential rental assets. Many of these competitors possess greater financial resources and can pursue higher priced acquisitions while still meeting their return objectives. Presidio Property Trust, Inc. differentiates itself through an internally managed structure that reduces external advisory costs a focus on regionally dominant markets with strong employment growth and barriers to entry and a disciplined approach to leverage that favors non recourse financing to protect equity across its asset base. The company’s expertise in the model home niche and its ability to source homes directly from builders provide a distinct competitive edge in a specialized segment of the residential real estate market.

The company serves a varied customer base that includes approximately 131 individual commercial tenants ranging from professional services firms light industrial operators and retail occupants to month to month lessees. Its model home business leases properties to homebuilders who use the homes as showcase units for their subdivision projects. Notable homebuilder clients are not disclosed in the filing but the portfolio indicates that roughly sixty nine percent of model homes are leased to a single homebuilder indicating a concentrated relationship within that segment. Overall Presidio Property Trust, Inc. relies on a diversified mix of corporate commercial occupants and residential homebuilders to generate its rental revenue stream.