Benzinga | Aug 22, 2021 11:21AM EDT

SQFT: Growing Lease Demand; Expect Upcoming Transactions To Enhance Portfolio

By M. Marin

NASDAQ:SQFT

READ THE FULL SQFT RESEARCH REPORT

Presidio Property Trust (NASDAQ:SQFT), an internally-managed REIT that has a diversified portfolio of commercial and industrial properties and model homes, reported 2Q21 results last week. Same-store rental revenue was $7.5 million compared to $7.8 million. Same-store occupancy was 85.1% at the end of 2Q21, in-line with 85.2% on the same basis at the end of 2Q20. Presidio achieved an average rental collection rate of 96% during the period.

Management attributes its high rate of revenue collection to the diversified nature of its property portfolio. SQFT's strategy is to focus on smaller markets that are less dependent on mass transport for daily commuting and generally characterized by strong economic and population growth. The company sold four properties in 2Q21, recording a net gain of about $2.6 million and further validating the strategy to enhance portfolio and shareholder value.

Positive trends in leasing demand continue

The company recorded an uptick in lease activity, which management believes bodes well for resumed growth. SQFT signed 12 new or renewed office and / or industrial leases in the quarter and 29 in 1H21. Roughly a third of the 1H21 lease transactions were with new tenants. The others were lease renewals or extensions with existing tenants.

Preferred share issuance consistent with goal to minimize dilution on common shares

SQFT raised capital through a preferred stock offering and common equity offering, ending 2Q21 with $29.3 million in cash, cash equivalents and restricted cash. The 1H21 offerings strengthened the company's balance sheet, helping to position SQFT for portfolio growth. The preferred share issuance also consistent with SQFT's goal to minimize potential dilution to public common stockholders.

Contributes to strong cash balance to help grow the portfolio

With a strong cash balance, SQFT is well-positioned to add to its real estate portfolio and expects to announce at least one property acquisition in the near-term leveraging the capital that it raised recently. SQFT has several other potential acquisitions currently in the due diligence process.

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