Presidio Property Trust, Inc. 10-K

ITEM 2. PROPERTIES     General Information   We invest in a diverse multi-tenant portfolio of real estate assets primarily consisting of office/industrial, retail, and model home properties located in the western United States. As of December 31, 2020, we owned or had an equity interest in 11 office/industrial buildings totaling approximately 982,796 rentable square feet and four retail centers totaling approximately 131,722 rentable square feet. In addition, through our Model Home subsidiary and our investments in six limited partnerships and one corporation, we own a total of 118 Model Home properties located in 6 states. We directly manage the operations and leasing of our properties. Substantially all of our revenues consist of base rents received under leases that generally have terms that range from one to five years. We estimate that approximately 69% of our existing leases as of December 31, 2020 contain contractual rent increases that provide for increases in the base rental payments. Our tenants consist of local, regional and national businesses. Our properties generally attract a mix of diversified tenants creating lower risk in periods of economic fluctuations. Our largest tenant represented less than 7% of total revenues for the year ended December 31, 2020.   19 Table of Contents   Geographic Diversification Table   The following table shows a list of properties we owned as of December 31, 2020, grouped by the state where each of our investments is located.   Office/Industrial and Retail Properties:   State   No. of Properties     Aggregate Square Feet     Approximate % of Square Feet     Current Base Annual Rent     Approximate % of Aggregate Annual Rent   California   3       134,787       12.1 %   $ 1,771,681       12.3 % Colorado   8       582,692       52.3 %     9,160,664       63.4 % North Dakota   4       397,039       35.6 %     3,513,042       24.3 % Total   15       1,114,518       100 %   $ 14,445,387       100 %   Model Home Properties:   Region   No. of Properties     Aggregate Square Feet     Approximate % of Square Feet     Current Base Annual Rent     Approximate % of Aggregate Annual Rent   Southwest   97       290,702       84.7 %   $ 2,822,928       81.1 % Southeast   16       37,374       10.9 %     447,192       12.8 % Midwest   2       6,602       1.9 %     99,276       2.9 % East   1       2,395       0.7 %     30,636       0.9 % Northeast   2       6,153       1.8 %     80,844       2.3 % Total   118       343,226       100 %   $ 3,480,876       100 %   20 Table of Contents   The following table summarizes information relating to our properties (excluding model homes) at December 31, 2020:   Property Summary ($ in000's) Property Location   Sq., Ft.   Date Acquired   Year Property Constructed     Purchase Price (1)     Occupancy     Percent Ownership     Mortgage On property     Estimated Renovation or Improvement Cost (2)   Office/Industrial Properties:                                                       Garden Gateway, Colorado Springs, CO (5) (7)   115,052   03/07   1982/2006     $ 15,126       76.4 %     100.0 %   $ 5,862     $ -   Executive Office Park, Colorado Springs, CO (5)   49,864   07/08   2000       10,126       97.7 %     100.0 %     2,986       175   Genesis Plaza, San Diego, CA (3)   57,807   08/10   1989       10,000       74.7 %     76.4 %     6,276       707   Dakota Center, Fargo, ND   119,434   05/11   1982       9,575       86.0 %     100.0 %     9,900       769   Grand Pacific Center, Bismarck, ND   93,058   03/14   1976       5,350       74.2 %     100.0 %     3,738       186   Arapahoe Center, Colorado Springs, CO   79,023   12/14   2000       11,850       100.0 %     100.0 %     7,932       632   West Fargo Industrial, West Fargo, ND   150,030   08/15   1998/2005       7,900       82.0 %     100.0 %     4,263       296   300 N.P., West Fargo, ND   34,517   08/15   1922       3,850       72.8 %     100.0 %     2,274       243   Highland Court, Centennial CO (4)   93,536   08/15   1984       13,050       64.5 %     84.5 %     6,275       863   One Park Centre, Westminster CO   69,174   08/15   1983       9,150       84.8 %     100.0 %     6,385       944   Shea Center II, Highlands Ranch, CO   121,301   12/15   2000       25,325       91.2 %     100.0 %     17,728       425   Total Office/Industrial Properties   982,796             $ 121,302       82.2 %           $ 73,619     $ 5,240   Retail Properties:                                                       World Plaza, San Bernardino, CA (5)   55,810   09/07   1974       7,650       100.0 %     100.0 %     5,803       —   Waterman Plaza, San Bernardino, CA (5) (6)   21,170   08/08   2008       7,164       85.9 %     100.0 %     3,207       25   Union Town Center, Colorado Springs, CO   44,042   12/14   2003       11,212       100.0 %     100.0 %     8,316       207   Research Parkway, Colorado Springs, CO   10,700   08/15   2003       2,850       100.0 %     100.0 %     1,760       20   Total Retail Properties   131,722             $ 28,876       96.5 %           $ 19,086     $ 252     (1) Prior to January 1, 2009, “Purchase Price” includes our acquisition related costs and expenses for the purchase of the property. After January 1, 2009, acquisition related costs and expenses were expensed when incurred. (2) Expected capital expenditures over the next 12 months. (3) Genesis Plaza is owned by two tenants-in-common, each of which 57% and 43%, respectively, and we beneficially own an aggregate of 76.4%. (4) Highland Court is owned by two tenants-in-common, each of which 60% and 40%, respectively, and we beneficially own an aggregate of 84.5%. (5) Property held for sale as of December 31, 2020. (6) Waterman Plaza sold on January 28, 2021 for approximately $3.5 million. (7) Garden Gateway sold on February 19, 2021 for approximately $11.2 million.   21 Table of Contents   Top Ten Tenants Physical Occupancy Table   The following table sets forth certain information with respect to our top 10 tenants at our Office/Industrial and Retail Properties.   As of December 31, 2020 Tenant   Number of Leases     Annualized Base Rent     % of Total Annualized Base Rent   Halliburton Energy Services, Inc.   1       899,316       6.2 % Finastra USA Corporation   1       630,576       4.4 % The College for Financial Planning, Inc. (1)   1       471,787       3.3 % Restaurant Technology Services   1       412,824       2.9 % MasTec North America, Inc.   1       361,190       2.5 % Wells Fargo Bank, N.A.   1       334,026       2.3 % Cobham Colorado Springs (2)   1       315,296       2.2 % MGA Home Healthcare Colorado, Inc. (2)   1       260,832       1.8 % Merrill Lynch   1       251,409       1.7 % Fredrikson & Byron P.A.   1       234,999       1.6 %           $ 4,172,255       28.88 %   (1) T his tenant occupies space in the Highla nd Court, which was classified as held for sale as of December 31, 2020. (2) T his tenant occupies space in the Garden Gateway Plaza , which was classified as held for sale as of December 31, 2020.   Lease Expirations Tables   The following table sets forth lease expirations for our properties as of December 31, 2020, assuming that none of the tenants exercise their renewal options.   Office/Industrial and Retail Properties:   Expiration Year   Number of Leases Expiring     Square Footage     Annual Rental From Lease     Percent of Total   2021   48       193,119     $ 3,259,261       22.6 % 2022   47       230,130       3,406,500       23.6 % 2023   36       157,916       2,564,601       17.8 % 2024   21       68,291       1,211,331       8.4 % 2025   19       83,826       1,526,142       10.6 % Thereafter   21       179,669       2,477,552       17.2 % Totals   192       912,951     $ 14,445,387       100 %   Model Home Properties:   Expiration Year (1)   Number of Leases Expiring     Square Footage     Annual Rental From Lease     Percent of Total   2021   91       258,763     $ 2,784,108       80.0 % 2022   27       84,463       696,768       20.0 %     118       343,226     $ 3,480,876       100.0 %   (1) These leases are subject to extensions by the home builder depending on sales of the total development.  All model homes are sold at the end of the lease period.   22 Table of Contents   Physical Occupancy Table for Last 5 Years   The following table presents the percentage occupancy for each of our properties, excluding our Model Home Properties, as of December 31 for each of the last five years.       Date   Percentage Occupancy as of the Year Ended December 31,       Acquired   2016     2017     2018     2019     2020   Office/ Industrial Properties:                                             Garden Gateway Plaza (1) (3)   03/07     71.6 %     64.8 %     68.1 %     76.4 %     76.4 % Executive Office Park (1)   07/08     77.5 %     90.4 %     99.9 %     100.0 %     97.7 % Genesis Plaza   08/10     87.0 %     92.3 %     58.3 %     78.5 %     74.7 % Dakota Center   05/11     99.3 %     100.0 %     98.2 %     86.0 %     86.0 % Grand Pacific Center   03/14     80.0 %     77.0 %     72.6 %     71.8 %     74.2 % Arapahoe Center   12/14     100.0 %     100.0 %     100.0 %     100.0 %     100.0 % West Fargo Industrial   08/15     90.4 %     87.1 %     75.9 %     77.1 %     82.0 % 300 N.P.   08/15     86.1 %     98.4 %     82.3 %     73.0 %     72.8 % Highland Court (1)   08/15     89.5 %     89.3 %     78.5 %     70.1 %     64.5 % One Park Centre   08/15     83.4 %     87.7 %     72.7 %     79.1 %     84.8 % Shea Center II   12/15     96.0 %     92.8 %     88.2 %     90.9 %     91.2 % Retail Properties:                                             World Plaza (1)   09/07     81.8 %     34.6 %     22.6 %     100.0 %     100.0 % Waterman Plaza (1) (2)   08/08     100.0 %     100.0 %     100.0 %     90.7 %     85.9 % Union Town Center   12/14     96.8 %     100.0 %     100.0 %     100.0 %     100.0 % Research Parkway   08/15     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %   (1) Property held for sale as of December 31, 2020. (2) Waterman Plaza was sold on January 28, 2021. (3) Garden Gateway was sold on February 19, 2021.   23 Table of Contents   Annualized Base Rent Per Square Foot for Last 5 Years   The following table presents the average effective annual rent per square foot for each of our properties, excluding our Model Home Properties, as of December 31, 2020.       Annualized Base Rent per Square Foot (1) For the Years Ended December 31,                       2016     2017     2018     2019     2020     Annualized Base Rent (2)     Net Rentable Square Feet   Office/ Industrial Properties:                                                         Garden Gateway Plaza (3)   $ 11.25     $ 12.66     $ 10.60     $ 12.62     $ 13.45     $ 1,181,359       115,052   Executive Office Park (3)   $ 12.41     $ 12.42     $ 12.34     $ 13.29     $ 13.65     $ 665,157       49,864   Genesis Plaza   $ 24.07     $ 27.43     $ 20.62     $ 28.15     $ 22.97     $ 991,675       57,807   Dakota Center   $ 11.38     $ 12.06     $ 14.21     $ 12.87     $ 13.24     $ 1,359,446       119,434   Grand Pacific Center   $ 13.39     $ 13.18     $ 14.29     $ 13.97     $ 13.71     $ 947,046       93,058   Arapahoe Center   $ 12.79     $ 13.20     $ 14.22     $ 14.69     $ 15.18     $ 1,199,886       79,023   West Fargo Industrial   $ 6.03     $ 6.65     $ 6.78     $ 6.65     $ 6.77     $ 833,121       150,030   300 N.P.   $ 11.49     $ 12.63     $ 16.51     $ 13.67     $ 14.86     $ 373,428       34,517   Highland Court (3)   $ 19.57     $ 21.14     $ 24.59     $ 19.33     $ 22.33     $ 1,347,278       93,536   One Park Centre   $ 22.40     $ 18.48     $ 20.27     $ 19.51     $ 21.85     $ 1,281,907       69,174   Shea Center II   $ 17.02     $ 15.34     $ 18.53     $ 18.47     $ 19.24     $ 2,128,507       121,301   Retail Properties:                                                         World Plaza (3)   $ 20.24     $ 16.63     $ 4.64     $ 13.63     $ 9.93     $ 554,074       55,810   Waterman Plaza (3)   $ 24.70     $ 25.29     $ 18.88     $ 16.30     $ 12.42     $ 225,932       21,170   Union Town Center   $ 21.04     $ 20.36     $ 24.91     $ 25.63     $ 23.73     $ 1,045,321       44,042   Research Parkway   $ 21.12     $ 21.61     $ 22.07     $ 22.58     $ 29.09     $ 311,250       10,700     (1) Annualized Base Rent (defined as cash rent including abatements) divided by the percentage occupied divided by rentable square feet. (2) Annualized Base Rent is based upon actual rents due as of December 31, 2020. (3) Property held for sale as of December 31, 2020. (4) Waterman Plaza was sold on January 28, 2021. (5) Garden Gateway was sold on February 19, 2021.