Presidio Property Trust, Inc. Q3 FY2021 earnings call

• Acquired a single tenant triple net property in Houston, a daycare business in Cypresswood, Houston. - Executed 43 leases covering ~170,000 square feet in the first three quarters, with ~19 additional prospective lease transactions in pipeline. - Sold 3 Colorado office properties and 1 California retail property in 2021, with remaining California retail center on the market. - Model Homes division collected 100% of billed rents in first three quarters of 2021, sold 39 Model Homes for ~$19 million and recognized ~$2.9 million gain, acquired 6 Model Home properties and recently 3 more. - Emphasized diversification as a benefit, with strong revenue collection during turmoil.

For the third quarter of 2021, core FFO was $1.67 million for the first three quarters, up 8% compared to $1.55 million in the first three quarters of 2020. Model Homes and Office Properties saw 197% of budget revenue collected. Industrial properties had 81% of budgeted rents collected (temporary), and Retail had 92% collected, with a retail tenant back to full rent in Q4. Model Homes, Retail, and Office Properties account for 94% of the quarter’s rents.

• Expect to invest nearly all cash by next meeting. - Hope to grow the company with equity and use debt prudently. - Optimistic about current leasing demand and potential for Model Homes business growth as market stabilizes.

• Potential impact of another COVID lockdown on retail, with some tenant workouts in the past but primarily needs-based retail tenants. - Temporary challenges in industrial property related to tenant turnover. - Inflationary pressure currently muted but monitored.

Q: If you would say a few words about the recent $10 million purchase plan, is there a time limit and can you help us think about when you would look to repurchase shares?

A: Jack Heilbron said they have already repurchased some shares and will continue over the next 12 months if the stock sells down to unattractive levels. Gary Katz discussed the range of lease rates in the diversified portfolio.

Q: Same-store occupancy was down a few percent in 2021 compared to 2020, question if you see that as transitory or when we might expect same-store occupancy to improve?

A: Gary Katz said it's transitory, a function of market conditions, not structural vacancy, and expected occupancy to increase in coming quarters.

Q: If you expect further declines in interest rates that might impact the Model Home activity?

A: Steve Hightower said he doesn't expect substantial decline in interest rates, expects stabilization, and as rates level off, might see additional interest in Model Home activity.

Q: Any markets we weren’t looking at before that might be worth looking at now and sense about inflationary pressure?

A: Jack Heilbron said looking at different markets and optimistic about closing transactions there, and inflationary pressure muted through the year, likely ending in first and second quarters of next year.

Q: Could provide a little more color on the Model Home business, is there an opportunity to further scale the business?

A: Steve Hightower said there's opportunity for continued growth as labor and material shortages improve, leading to more product on the ground and opportunities from clients.

Q: If there would be another COVID related lockdown, how that might affect our business and our properties?

A: Gary Katz said retail would be most impacted, but most tenants did well during lockdowns, with only one tenant still in throes, and Jack Heilbron noted their philosophy of avoiding major cities helped as their properties weren't as affected by lockdowns.