Item 2. Properties
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, 2023, we owned or had an equity interest in nine office/industrial buildings totaling approximately 758,175 rentable square feet and three retail centers totaling approximately 65,242 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 110 Model Home properties located in five 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, 2023 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 6.43% of total revenues for the year ended December 31, 2023.
Geographic Diversification Table
The following table shows a list of properties we owned as of December 31, 2023, 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
1
57,807
7.0
%
$
1,425,269
12.9
%
Colorado
5
324,245
39.4
%
4,883,335
44.2
%
Maryland
1
31,752
3.9
%
710,248
6.4
%
North Dakota (1)
4
399,113
48.4
%
3,687,043
33.5
%
Texas
1
10,500
1.3
%
335,973
3.0
%
Total
12
823,417
100.0
%
$
11,041,868
100.0
%
(1)
In December 2023, JLK Engineering moved into a North Dakota property under a 10-year lease, with rent commencing on February 28, 2024.
Model Home Properties:
Geographic Region
No. of Properties
Aggregate Square Feet
Approximate % of Square Feet
Current Base Annual Rent
Approximate % of Aggregate Annual Rent
Midwest
4
12,307
3.7
%
$
182,748
4.3
%
Southeast
4
9,875
2.9
%
172,428
4.0
%
Southwest
102
312,174
93.4
%
3,926,124
91.7
%
Total
110
334,356
100.0
%
$
4,281,300
100.0
%
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The following table summarizes information relating to our properties (excluding model homes) at December 31, 2023:
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
100.0
%
76.4
%
$
5,937
Dakota Center, Fargo, ND
119,554
05/11
1982
9,575
58.1
%
100.0
%
9,197
Grand Pacific Center, Bismarck, ND (3)
94,943
03/14
1976
5,350
89.7
%
100.0
%
5,471
Arapahoe Center, Colorado Springs, CO
79,023
12/14
2000
11,850
88.0
%
100.0
%
7,426
West Fargo Industrial, West Fargo, ND
150,099
08/15
1998/2005
7,900
96.0
%
100.0
%
3,923
300 N.P., West Fargo, ND
34,517
08/15
1922
3,850
66.4
%
100.0
%
-
One Park Centre, Westminster CO
69,174
08/15
1983
9,150
75.0
%
100.0
%
6,044
Shea Center II, Highlands Ranch, CO
121,306
12/15
2000
25,325
67.1
%
100.0
%
16,951
Baltimore, Baltimore, MD
31,752
12/21
2006
8,892
100.0
%
100.0
%
5,670
Total Office/Industrial Properties
758,175
$
91,892
81.0
%
$
60,619
Retail Properties:
Union Town Center, Colorado Springs, CO
44,042
12/14
2003
11,212
79.5
%
100.0
%
7,870
Research Parkway, Colorado Springs, CO
10,700
08/15
2003
2,850
100.0
%
100.0
%
1,589
Mandolin, Houston, TX (4)
10,500
08/21
2021
4,892
100.0
%
61.3
%
3,573
Total Retail Properties
65,242
$
18,954
86.2
%
$
13,032
(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 exp enses 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)
Grand Pacific Center, Bismarck, ND, was removed from held for sale after signing a major lease with KLJ Engineering on December 7, 2022 for approximately 33,296 usable square feet, a term of 122 months, and starting annualized rent of $532,736. KLJ Engineering moved into the building during December 2023, with rent commencing on February 28, 2024.
(4)
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.
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.
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As of March, 2023 Tenant
Number of Leases
Annualized Base Rent
% of Total Annualized Base Rent
John Hopkins University
1
710,248
6.43
%
KLJ Engineering LLC
(1)
1
536,080
4.85
%
Finastra USA Corporation
1
525,480
4.76
%
MasTec North America, Inc.
1
362,182
3.28
%
L&T Care LLC
1
335,973
3.04
%
Wells Fargo Bank, NA
1
293,742
2.66
%
Republic Indemnity of America
1
270,710
2.45
%
Nova Financial & Investment Corporation
1
269,155
2.44
%
Meissner Jacquet Real Estate Management Group, Inc.
1
255,177
2.31
%
Fredrikson & Byron P.A.
1
249,270
2.26
%
$
3,808,017
34.48
%
(1)
Grand Pacific Center, Bismarck, ND, signed a major lease with KLJ Engineering on December 7, 2022 for approximately 33,296 usable square feet, a term of 122 months, and starting annualized rent of $532,736. KLJ Engineering moved into the building during December 2023, with rent commencing on February 28, 2024.
Lease Expirations Tables
The following table sets forth lease expirations for our properties as of December 31, 2023, 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
2023
(1)
20
23,297
$
254,966
2.3
%
2024
27
61,354
1,021,491
9.3
%
2025
29
141,493
2,384,600
21.6
%
2026
34
207,887
3,179,628
28.8
%
2027
13
48,840
924,512
8.4
%
2028
18
73,658
1,481,512
13.4
%
Thereafter
14
101,459
1,795,159
16.2
%
Totals
155
657,988
$
11,041,868
100.0
%
(1)
One lease at our Dakota Center property in Fargo, ND expired on December 31, 2023 and was not renewed. This tenant made up less than 2% of our total portfolio rent, but accounted for approximately 20% of our Dakota Center rent. Management is looking into various options to replace the loss of this tenant.
Model Home Properties:
Expiration Year (1)
Number of Leases Expiring
Square Footage
Annual Rental From Lease
Percent of Total
2024
71
214,566
2,396,376
56.0
%
2025
39
119,790
1,884,924
44.0
%
110
334,356
$
4,281,300
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.
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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 31st for each of the last five years.
Date
Percentage Occupancy as of the Year Ended December 31,
Acquired
2019
2020
2021
2022
2023
Office/ Industrial Properties:
Garden Gateway Plaza (1)
03/07
76.4
%
76.4
%
N/A
N/A
N/A
Executive Office Park (1)
07/08
100.0
%
97.7
%
N/A
N/A
N/A
Genesis Plaza
08/10
78.5
%
74.7
%
85.6
%
96.2
%
100.0
%
Dakota Center
05/11
86.0
%
86.0
%
73.5
%
71.8
%
58.1
%
Grand Pacific Center
03/14
71.8
%
74.2
%
56.6
%
56.4
%
89.7
%
Arapahoe Center
12/14
100.0
%
100.0
%
100.0
%
100.0
%
88.0
%
West Fargo Industrial
08/15
77.1
%
82.0
%
90.8
%
94.3
%
100.0
%
300 N.P.
08/15
73.0
%
72.8
%
64.8
%
75.5
%
66.4
%
Highland Court (1)(2)
08/15
70.1
%
64.5
%
N/A
N/A
N/A
One Park Centre
08/15
79.1
%
84.8
%
80.5
%
84.9
%
75.0
%
Shea Center II
12/15
90.9
%
91.2
%
91.6
%
95.4
%
67.1
%
Baltimore
12/21
N/A
N/A
100.0
%
100.0
%
100.0
%
Retail Properties:
World Plaza (1)
09/07
100.0
%
100.0
%
100.0
%
N/A
N/A
Waterman Plaza (1)
08/08
90.7
%
85.9
%
N/A
N/A
N/A
Union Town Center
12/14
100.0
%
100.0
%
87.4
%
72.9
%
79.5
%
Research Parkway
08/15
100.0
%
100.0
%
100.0
%
88.8
%
100.0
%
Mandolin (2)
08/21
N/A
N/A
100.0
%
100.0
%
100.0
%
(1)
Property was sold prior in previous periods.
(2)
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.
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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, 2023.
Annualized Base Rent per Square Foot (1) For the Years Ended December 31,
2019
2020
2021
2022
2023
Annualized Base Rent (2)
Net Rentable Square Feet
Office/ Industrial Properties:
Garden Gateway Plaza (3)
$
12.62
$
13.45
N/A
N/A
N/A
N/A
115,052
Executive Office Park (3)
$
13.29
$
13.65
N/A
N/A
N/A
N/A
49,864
Genesis Plaza (4)
$
28.15
$
22.97
$
25.71
$
26.26
$
29.34
$
1,425,269
57,807
Dakota Center
$
12.87
$
13.24
$
13.22
$
14.09
$
15.45
$
1,073,530
119,554
Grand Pacific Center (5)
$
13.97
$
13.71
$
13.79
$
13.90
$
14.57
$
1,240,771
94,943
Arapahoe Center
$
14.69
$
15.18
$
11.87
$
13.75
$
14.43
$
1,003,734
79,023
West Fargo Industrial
$
6.65
$
6.77
$
6.81
$
6.80
$
7.09
$
1,021,825
150,099
300 N.P.
$
13.67
$
14.86
$
14.89
$
16.72
$
15.32
$
350,917
34,517
Highland Court (3)(6)
$
19.33
$
22.33
N/A
N/A
N/A
N/A
93,536
One Park Centre
$
19.51
$
21.85
$
23.42
$
20.35
$
23.81
$
1,234,697
69,174
Shea Center II (4)
$
18.47
$
19.24
$
20.37
$
19.40
$
19.17
$
1,502,576
121,306
Baltimore
N/A
N/A
21.50
$
21.93
$
22.37
$
710,248
31,752
Retail Properties:
World Plaza (3)
$
13.63
$
9.93
$
14.28
N/A
N/A
N/A
55,810
Waterman Plaza (3)
$
16.30
$
12.42
N/A
N/A
N/A
N/A
21,170
Union Town Center
$
25.63
$
23.73
$
23.86
$
25.22
$
24.65
$
888,278
44,042
Research Parkway
$
22.58
$
29.09
$
22.69
$
23.53
$
23.74
$
254,050
10,700
Mandolin (6)
N/A
N/A
30.75
$
31.37
$
32.00
$
335,973
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, 2023.
(3)
Property was sold during prior periods.
(4)
Annualized base rent at Genesis Plaza and Shea Center II does not include space rent by the Company, which totals 9,224 square feet at Genesis Plaza and 2,972 square feet at Shea Center II.
(5)
Grand Pacific Center, Bismarck, ND, signed a major lease with KLJ Engineering on December 7, 2022 for approximately 33,296 usable square feet, a term of 122 months, and starting annualized rent of $532,736. KLJ Engineering moved into the building during December 2023, with rent commencing on February 28, 2024.
(6)
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.
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