What changed in this filing

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Item 2. Properties

2025-03-31 compared with 2024-04-16 · 36 added, 67 removed, 77 unchanged (57% of the section changed)

2 unchanged sentences

As of December 31, 2024, 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.

In addition, through our Model Home subsidiary and our investments in six limited partnerships and one corporation, we own a total of 78 Model Home Properties located in three states, totaling approximately 236,955 square feet.

Of the 78 Model Home Properties in our portfolio, 55 of them are wholly owned by the Company through NetREIT Model Homes, Inc .

We directly manage the operations and leasing of our properties.

12 unchanged sentences

Approximate % of Aggregate Annual Rent

North Dakota (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

of Properties

27 unchanged sentences

Total Retail Properties

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.

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.

Genesis Plaza is owned by two tenants-in-common, NetREIT Genesis and NetREIT Genessis II, each of which own 57% and 43%, respectively, and we beneficially own an aggregate of 92.0%, based on our ownership of each entity.

We have 100% ownership of NetREIT Genesis and 81.5% ownership of NetREIT Genesis II, and we have control of both entities.

During July 2024, the Company completed a minority ownership conversion option as result of a death in a noncontrolling trust within NetREIT Genesis II.

The Company issued the trust 86,232 shares of SQFT Series A Common Stock in exchange for their 36.4% ownership in NetREIT Genesis II, as per the original exchange agreement.

The non-recourse loan on the Dakota Center property matured on July 6, 2024.

During October 2024, management has agreed with the lender to sell the property to settle the loan balance.

Due to the uncertainties in the Fargo market, we have impaired the property’s book value and recorded an impairment charge of approximately $0.7 million as of September 30, 2024.

During December 2024, the lender had agreed on the broker the Company would use to sell the property to settle the non-recourse debt.

As of December 31, 2024, the property was included in the real estate assets held for sale, net on the consolidated balance sheet.

Any purchase offers will be subject to lender approval.

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.

KLJ Engineering moved into the building during December 2023, with rent that commenced on February 28, 2024.

As of September 30, 2024, Union Town Center and Research Parkway have been listed for sale, and included in the real estate assets held for sale, net on the consolidated balance sheet as of December 31, 2024.

The sale of UTC and Research Parkway took place in February 2025, to a single buyer for a combined sales price of $16.95 million, and the Company recorded a combined gain of approximately $4.0 million.

During the year ended December 31, 2023, we recorded a $2.0 million impairment charge for One Park Center that reflects management’s revised estimate of the fair market value based on sales comparable of like properties in the same geographical area as well as an evaluation of future cash flows or an executed purchase sale agreement.

No additional impairment was deemed necessary during the year ended December 31, 2024.

On December 31, 2022, the lease for our largest tenant, Halliburton, expired.

Halliburton was located in our Shea Center II property in Colorado, and made up approximately $536,080 of our annual base rent.

Halliburton did not renew the lease and we placed approximately $1.1 million in a reserve account with our lender to cover future mortgage payments, if necessary, none of which has been used as of December 31, 2023.

Our management team is working to fill the 45,535 square foot space and has leased approximately 54% of the space as of February 2025 and has reviewed various proposals for the remaining 46%.

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.

For the years ended December 31, 2024 and 2023, depreciation and amortization expense totaled approximately $5.5 million and $5.4 million, respectively.

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 March, 2023 Tenant

As of December 31, 2024 Tenant

Number of Leases

2 unchanged sentences

John Hopkins University

KLJ Engineering LLC

Finastra USA Corporation

KLJ Engineering LLC

MasTec North America, Inc.

2 unchanged sentences

Nova Financial & Investment Corporation

Meissner Jacquet Real Estate Management Group, Inc.

Meissner Commercial Real Estate Services

Fredrikson & Byron P.A.

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.

Nova Financial & Investment Corporation was subleasing to OnPoint Medical Group Holdings, LLC (“OnPoint”), until their lease expired in January 2025.

Since October 2024, OnPoint had also been directly leasing a 2,543 square foot space in our Shea Center building.

In January 2025, OnPoint took over 11,831 square foot space from Nova Financial & Investment Corporation, signing an additional 3-year lease for that space.

Genesis Plaza's occupancy at December 31, 2024 was at 95.6%.

During the year, the Company invested approximately $74 thousand in building and tenant improvements for the property, expanded the space for Meissner and extended the term of their lease to 2035, and reduced the space used by the Company.

On January 1, 2025, Meissner took possession of the expanded space and Genesis Plaza was 100% leased.

Lease Expirations Tables

6 unchanged sentences

Percent of Total

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.

Two of these leases expired on December 31, 2024 and were located in our One Park Centre property, and accounted for approximately 3% of One Park Centre's annual rent and totaled approximately 2,045 square feet.

The remaining leases are mainly for month to month storage, parking and other miscellaneous space.

Model Home Properties:

6 unchanged sentences

All model homes are sold at the end of the lease period.

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.

Percentage Occupancy as of the Year Ended December 31,

Office/ Industrial Properties:

Garden Gateway Plaza (1)

Executive Office Park (1)

Genesis Plaza

Dakota Center

Grand Pacific Center

Arapahoe Center

West Fargo Industrial

Highland Court (1)(2)

One Park Centre

Shea Center II

Retail Properties:

World Plaza (1)

Waterman Plaza (1)

Union Town Center

Research Parkway

Property was sold prior in previous periods.

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.

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,

Annualized Base Rent (2)

Net Rentable Square Feet

Office/ Industrial Properties:

Garden Gateway Plaza (3)

Executive Office Park (3)

Genesis Plaza (4)

Dakota Center

Grand Pacific Center (5)

Arapahoe Center

West Fargo Industrial

Highland Court (3)(6)

One Park Centre

Shea Center II (4)

Retail Properties:

World Plaza (3)

Waterman Plaza (3)

Union Town Center

Research Parkway

Annualized Base Rent (defined as cash rent including abatements) divided by the percentage occupied divided by rentable square feet.

Annualized Base Rent is based upon actual rents due as of December 31, 2023.

Property was sold during prior periods.

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.

KLJ Engineering moved into the building during December 2023, with rent commencing on February 28, 2024.

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.

These properties came off lease during 2024 and are listed as held for sale as of December 31, 2024.

As of December 31, 2024 we had nine model homes listed for sale, and included in the real estate assets held for sale, net on the consolidated balance sheet as of December 31, 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 2. Properties