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 primarily in the western United States. As of December 31, 2021, we owned or had an equity interest in nine office/industrial buildings totaling approximately 757,578 rentable square feet and four retail centers totaling approximately 121,052 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 92 Model Home properties located in four 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. th e majority of our ex isting leases as of December 31, 2021 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 approximately 8.0% of total revenues for the year ended December 31, 2021.   36 Table of Contents   Geographic Diversification Table   The following table shows a list of properties we owned as of December 31, 2021, 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     2       113,617       12.9 %   $ 1,805,085       15.6 % Colorado     5       325,676       37.1 %     5,603,269       48.5 % Maryland     1       31,752       3.6 %     682,668       5.9 % North Dakota     4       397,085       45.2 %     3,151,646       27.3 % Texas     1       10,500       1.2 %     322,875       2.8 % Total     13       878,630       100 %   $ 11,565,543       100 %   Model Home Properties:   Geographic Region   No. of Properties     Aggregate Square Feet     Approximate % of Square Feet     Current Base Annual Rent     Approximate % of Aggregate Annual Rent   Southwest     88       266,228       95.6 %   $ 2,501,580       94.0 % Southeast     1       2,381       0.9 %     22,524       0.8 % Midwest     1       3,663       1.3 %     57,420       2.2 % Northeast     2       6,153       2.2 %     80,844       3.0 % Total     92       278,425       100 %   $ 2,662,368       100 %   37 Table of Contents   The following table summarizes information relating to our properties (excluding model homes) at December 31, 2021:   Property Summary   ($ in000's) Property Location   Sq., Ft.   Date Acquired   Year Property Constructed     Purchase Price (1)     Occupancy     Percent Ownership     Mortgage On property   Office/Industrial Properties:                                                 Genesis Plaza, San Diego, CA (2)     57,807   08/10   1989       10,000       85.6 %     76.4 %     6,169   Dakota Center, Fargo, ND     119,538   05/11   1982       9,575       73.5 %     100.0 %     9,677   Grand Pacific Center, Bismarck, ND (3)     93,000   03/14   1976       5,350       56.6 %     100.0 %     3,620   Arapahoe Center, Colorado Springs, CO     79,023   12/14   2000       11,850       100.0 %     100.0 %     7,771   West Fargo Industrial, West Fargo, ND     150,030   08/15   1998/2005       7,900       90.8 %     100.0 %     4,148   300 N.P., West Fargo, ND     34,517   08/15   1922       3,850       64.8 %     100.0 %     2,233   One Park Centre, Westminster CO     69,174   08/15   1983       9,150       80.5 %     100.0 %     6,277   Shea Center II, Highlands Ranch, CO     122,737   12/15   2000       25,325       91.6 %     100.0 %     17,495   Baltimore, Baltimore, MD     31,752   12/21   2006       8,892       100.0 %     100.0 %     8,892   Total Office/Industrial Properties     757,578             $ 91,892       82.8 %           $ 66,282                                                     Retail Properties:                                                 World Plaza, San Bernardino, CA (4)     55,810   09/07   1974       7,650       100.0 %     100.0 %     —   Union Town Center, Colorado Springs, CO     44,042   12/14   2003       11,212       87.4 %     100.0 %     8,174   Research Parkway, Colorado Springs, CO     10,700   08/15   2003       2,850       100.0 %     100.0 %     1,705   Mandolin, Houston, TX     10,500   08/21   2021       4,892       100.0 %     61.3 %     —   Total Retail Properties     121,052             $ 26,604       95.4 %           $ 9,879                                                           878,630             $ 118,496       84.6 %           $ 76,161     (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) Genesis Plaza is owned by two tenants-in-common, each of which own 57% and 43%, respectively, and we beneficially own an aggregate of 76.4%, based on our ownership percentages of each tenant-in-common. (3) Property was listed as held for sale during the February 2022. (4) Property held for sale as of December 31, 2021.    38 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, 2021 Tenant   Number of Leases     Annualized Base Rent     % of Total Annualized Base Rent   Halliburton Energy Services, Inc.     1       922,084       8.0 % Johns Hopkins University     1       682,668       5.9 % Finastra USA Corporation     1       607,020       5.3 % Rachas, Inc. (1)     1       449,182       3.9 % L&T Care LLC     1       322,875       2.8 % Wells Fargo Bank, N.A. (2)     1       282,960       2.5 % Nova Financial & Investment Corporation     1       257,324       2.2 % Republic Indemnity of America     1       255,170       2.2 % Meissner Jacquet Real Estate Management Group, Inc.     1       240,240       2.1 % Fredrikson & Byron P.A.     1       234,999       2.0 %             $ 4,254,522       36.8 %   (1) T his tenant occupies space in the World Plaza , which was classified as held for sale as of December 31, 2021. (2) T his tenant occupies space in the Grand Pacific Center , which was classified as held for sale in February 2022.   Lease Expirations Tables   The following table sets forth lease expirations for our properties as of December 31, 2021, 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   2022     37       207,284     $ 3,362,188       29.3 % 2023     34       123,637       1,990,408       17.4 % 2024     23       69,953       1,136,825       9.9 % 2025     15       66,865       1,210,653       10.6 % 2026     18       148,317       2,218,671       19.4 % Thereafter     12       99,210       1,540,799       13.4 % Totals     139       715,266     $ 11,459,544       100 %   Model Home Properties:   Expiration Year (1)   Number of Leases Expiring     Square Footage     Annual Rental From Lease     Percent of Total   2022     75       224,479     $ 2,121,864       79.7 % 2023     17       53,946       540,504       20.3 %       92       278,425     $ 2,662,368       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.   39 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   2017     2018     2019     2020     2021   Office/ Industrial Properties:                                           Garden Gateway Plaza (2) 03/07     64.8 %     68.1 %     76.4 %     76.4 %     N/A   Executive Office Park (2) 07/08     90.4 %     99.9 %     100.0 %     97.7 %     N/A   Genesis Plaza 08/10     92.3 %     58.3 %     78.5 %     74.7 %     85.6 % Dakota Center 05/11     100.0 %     98.2 %     86.0 %     86.0 %     73.5 % Grand Pacific Center (3) 03/14     77.0 %     72.6 %     71.8 %     74.2 %     56.6 % Arapahoe Center 12/14     100.0 %     100.0 %     100.0 %     100.0 %     100.0 % West Fargo Industrial 08/15     87.1 %     75.9 %     77.1 %     82.0 %     90.8 % 300 N.P. 08/15     98.4 %     82.3 %     73.0 %     72.8 %     64.8 % Highland Court (2)(4) 08/15     89.3 %     78.5 %     70.1 %     64.5 %     N/A   One Park Centre 08/15     87.7 %     72.7 %     79.1 %     84.8 %     80.5 % Shea Center II 12/15     92.8 %     88.2 %     90.9 %     91.2 %     91.6 % Baltimore 12/21     N/A       N/A       N/A       N/A       100.0 % Retail Properties:                                           World Plaza (1) 09/07     34.6 %     22.6 %     100.0 %     100.0 %     100.0 % Waterman Plaza (2) 08/08     100.0 %     100.0 %     90.7 %     85.9 %     N/A   Union Town Center 12/14     100.0 %     100.0 %     100.0 %     100.0 %     87.4 % Research Parkway 08/15     100.0 %     100.0 %     100.0 %     100.0 %     100.0 % Mandolin (4) 08/21     N/A       N/A       N/A       N/A       100.0 %   (1) Property held for sale as of December 31, 2021. (2) Property was sold during the year ended December 31, 2021. (3) Property was listed as held for sale in February 2022. (4) A portion of the proceeds from the sale of Highland Court were used in like-kind exchange transactions pursued under Section 1031 of the Code for the acquisition of our Mandolin property. Mandolin is owned by NetREIT Palm Self-Storage LP, through its wholly owned subsidiary NetREIT Highland LLC, and the Company is the sole general partner and owns 61.3% of NetREIT Palm Self-Storage LP.   40 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, 2021.       Annualized Base Rent per Square Foot (1) For the Years Ended December 31,                       2017     2018     2019     2020     2021     Annualized Base Rent (2)     Net Rentable Square Feet   Office/ Industrial Properties:                                                         Garden Gateway Plaza (3)   $ 12.66     $ 10.60     $ 12.62     $ 13.45       N/A       N/A       115,052   Executive Office Park (3)   $ 12.42     $ 12.34     $ 13.29     $ 13.65       N/A       N/A       49,864   Genesis Plaza   $ 27.43     $ 20.62     $ 28.15     $ 22.97     $ 25.71     $ 1,272,733       57,807   Dakota Center   $ 12.06     $ 14.21     $ 12.87     $ 13.24     $ 13.22     $ 1,163,982       119,434   Grand Pacific Center (4)   $ 13.18     $ 14.29     $ 13.97     $ 13.71     $ 13.79     $ 726,256       93,058   Arapahoe Center   $ 13.20     $ 14.22     $ 14.69     $ 15.18     $ 11.87     $ 938,090       79,023   West Fargo Industrial   $ 6.65     $ 6.78     $ 6.65     $ 6.77     $ 6.81     $ 926,827       150,030   300 N.P.   $ 12.63     $ 16.51     $ 13.67     $ 14.86     $ 14.89     $ 332,831       34,517   Highland Court (3)(5)   $ 21.14     $ 24.59     $ 19.33     $ 22.33       N/A       N/A       93,536   One Park Centre   $ 18.48     $ 20.27     $ 19.51     $ 21.85     $ 23.42     $ 1,304,809       69,174   Shea Center II   $ 15.34     $ 18.53     $ 18.47     $ 19.24     $ 20.37     $ 2,291,285       121,301   Baltimore     N/A       N/A       N/A       N/A     $ 21.50     $ 682,668       31,752   Retail Properties:                                                         World Plaza (3)   $ 16.63     $ 4.64     $ 13.63     $ 9.93     $ 14.28     $ 796,896       55,810   Waterman Plaza (3)   $ 25.29     $ 18.88     $ 16.30     $ 12.42       N/A       N/A       21,170   Union Town Center   $ 20.36     $ 24.91     $ 25.63     $ 23.73     $ 23.86     $ 919,087       44,042   Research Parkway   $ 21.61     $ 22.07     $ 22.58     $ 29.09     $ 22.69     $ 242,750       10,700   Mandolin (5)     N/A       N/A       N/A       N/A     $ 30.75     $ 322,875       10,500     (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, 2021. (3) Property was sold during the year ended December 31, 2021. (4) Property was listed as held for sale in February 2022. (5) A portion of the proceeds from the sale of Highland Court were used in like-kind exchange transactions pursued under Section 1031 of the Code for the acquisition of our Mandolin property. Mandolin is owned by NetREIT Palm Self-Storage LP, through its wholly owned subsidiary NetREIT Highland LLC, and the Company is the sole general partner and owns 61.3% of NetREIT Palm Self-Storage LP. (6) Property held for sale as of December 31, 2021.       41 Table of Contents