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Note 13 - Segments
 12 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

13. SEGMENTS

 

The Company’s reportable segments consist of three types of real estate properties for which the Company’s chief operating decision maker (CODM), which is our Chief Executive Officer ("CEO"), as the CEO has the final decision when allocating capital and personnel to the various segments, internally evaluate operating performance and financial results: Office/Industrial Properties, Model Home Properties and Retail Properties. The Company also has certain corporate-level activities including accounting, finance, legal administration, and management information systems which are not considered separate operating segments.  There is no material inter-segment activity.

 

The CODM evaluates the performance of our segments based upon an internal net operating income (“NOI”), which is a non-GAAP supplemental financial measure on a quarterly basis as disclosed in the 10-Qs and 10-Ks. We believe that NOI is a widely accepted measure of comparative operating performance in the real estate community. However, our use of the term NOI may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount. The Company defines NOI for its segments as operating revenues (rental income, tenant reimbursements, parking income, and other operating income, net of provision for bad debt) less rental operating costs (property operating expenses, real estate taxes, insurance, utilities, repairs and maintenance, and asset management fees) excluding interest expense. NOI excludes certain items that are not considered to be controllable in connection with the management of an asset such as non-property income & expenses, depreciation & amortization, real estate acquisition fees & expenses, non-cash impairments and corporate general & administrative expenses. Quarterly the Company reviews and test for non-cash impairments, as required by GAAP, on all our properties ( i.e. Office/Industrial properties, Retail properties, and Model Home segments); however, the CODM does not consider those non-cash impairments with evaluating the segment’s cash operations and NOI.

 

The CODM uses NOI to evaluate and assess each segments' performance and in deciding how to allocate resources.  For Model Home performance the CODM also includes the gain or loss on sale of real estate assets net of any impairments, because they believe that is a major component in the operating success of the segment and part of the business model for Model Homes.  The gain on sale of model homes resulted in cash flows to the Company that the CODM can decide on how to allocate to future operations. 

 

The following tables compare the Company’s segment activity and NOI and adjusted NOI for Model Home income to its results of operations and financial position as of and for the years ended December 31, 2024 and 2023, respectively.  The line items listed in the below NOI tables include the significant expense considered by the CODM for cash allocations on future investments.  The Other Non-Segment & Consolidating Items represent corporate activity, the investment in Conduit Pharmaceutical, and other eliminating items for consolidation.  The information for Corporate and Other are presented to reconcile back to the consolidated statement of operations, but is not considered a reportable segment.  This includes the loss on Conduit marketable securities.

 

  

For the Year Ended December 31, 2024

 
                     
  

Retail

  

Office/Industrial

  

Model Homes

  

Corporate and Other

  

Total

 
                     

Rental revenue

 $1,595,464  $9,778,458  $4,368,169  $—  $15,742,091 

Recovery revenue

  463,158   2,318,564   —   —   2,781,722 

Other operating revenue

  62,041   241,530   68,084   29,807   401,462 

Total revenues

  2,120,663   12,338,552   4,436,253   29,807   18,925,275 
                     

Rental operating costs

  608,667   6,136,564   171,621   (660,775)  6,256,077 

Net Operating Income (NOI)

  1,511,996   6,201,988   4,264,632   690,582   12,669,198 
                     

Gain on Sale - Model Homes

  —   —   3,426,572   —   3,426,572 

Impairment of Model Homes

  —   —   (406,374)  —   (406,374)
                     

Adjusted NOI

 $1,511,996  $6,201,988  $7,284,830  $690,582  $15,689,396 

 

  

For the Year Ended December 31, 2023

 
                     
  

Retail

  

Office/Industrial

  

Model Homes

  

Corporate and Other

  

Total

 
                     

Rental revenue

 $1,488,167  $9,000,917  $4,142,765  $—  $14,631,849 

Recovery revenue

  393,612   2,366,936   —   —   2,760,548 

Other operating revenue

  2,551   207,102   (10,636)  44,200   243,217 

Total revenues

  1,884,330   11,574,955   4,132,129   44,200   17,635,614 
                     

Rental operating costs

  537,389   5,901,042   156,493   (632,006)  5,962,918 

Net Operating Income (NOI)

  1,346,941   5,673,913   3,975,636   676,206   11,672,696 
                     

Gain on Sale - Model Home

  —   —   3,240,200   —   3,240,200 

Impairment of Model Homes

  —   —   (431,984)  —   (431,984)
                     

Adjusted NOI

 $1,346,941  $5,673,913  $6,783,852  $676,206  $14,480,912 

 

Since a significant portion of the total operating expense for Retail and Office/Industrial are recouped as part of recovery revenue, the CODM looks at NOI as a whole when reviewing the segments.  For the Model Home segment, the properties are leased on a triple net basis and the tenants are responsible for a significant portion of the operating expenses.  Therefore the CODM focuses on Model Home revenue, any impairments and the gain on sale of model homes.

 

The CODM reviews on a regular basis the GAAP performance of each segment, including the significant segment expenses reported for GAAP shown in the table below. Our significant segment expenses include consolidated expense categories presented in our consolidated statements of operations, as well as rental operating costs.  This information is provided to the CODM and factors into the CODM’s decision making for company-wide strategy. The following tables compare the Company’s segment activity and to its results of GAAP operations and financial position as of and for the years ended December 31, 2024 and 2023, respectively.  The information for Corporate and Other are presented to reconcile back to the consolidated statement of operations, but is not considered a reportable segment as noted above.

 

  

For the Year Ended December 31, 2024

 
                     
  

Retail

  

Office/Industrial

  

Model Homes

  

Corporate and Other

  

Total

 

Revenues:

                    

Rental income

 $2,058,622  $12,097,022  $4,368,169  $—  $18,523,813 

Fees and other income

  62,041   241,530   68,084   29,807   401,462 

Total revenue

  2,120,663   12,338,552   4,436,253   29,807   18,925,275 

Costs and expenses:

                    

Rental operating costs

  608,667   6,136,564   171,621   (660,775)  6,256,077 

General and administrative

  —   2,330   820,217   6,704,128   7,526,675 

Depreciation and amortization

  394,461   4,154,769   952,627   13,661   5,515,518 

Impairment of goodwill and real estate assets

  —   1,377,937   406,374   185,000   1,969,311 

Total costs and expenses

  1,003,128   11,671,600   2,350,839   6,242,014   21,267,581 

Other income (expense):

                    

Interest expense - mortgage notes

  (577,761)  (3,457,360)  (2,009,641)  (5,434)  (6,050,196)

Interest and other income, net

  —   (171,734)  (23,890)  44,268   (151,356)

Net loss in Conduit Pharmaceuticals marketable securities (see footnote 9)

  —   —   —   (17,925,723)  (17,925,723)

Gain on deconsolidation of SPAC (see footnote 9)

  —   —   —   —   — 

Gain on sales of real estate, net

  —   —   3,426,572   —   3,426,572 

Income tax (expense) benefit

  —   —   (55,543)  (5,312)  (60,855)

Total other income, net

  (577,761)  (3,629,094)  1,337,498   (17,892,201)  (20,761,558)

Net income (loss)

  539,774   (2,962,142)  3,422,912   (24,104,408)  (23,103,864)

Less: Income attributable to noncontrolling interests

  —   (86,686)  (2,437,979)  —   (2,524,665)

Net income (loss) attributable to Presidio Property Trust, Inc. stockholders

 $539,774  $(3,048,828) $984,933  $(24,104,408) $(25,628,529)

 

 

 

  

For the Year Ended December 31, 2023

 
                     
  

Retail

  

Office/Industrial

  

Model Homes

  

Corporate and Other

  

Total

 

Revenues:

                    

Rental income

 $1,881,780  $11,367,853  $4,142,764  $—  $17,392,397 

Fees and other income

  2,550   207,102   (10,635)  44,200   243,217 

Total revenue

  1,884,330   11,574,955   4,132,129   44,200   17,635,614 

Costs and expenses:

                    

Rental operating costs

  537,389   5,901,042   156,493   (632,006)  5,962,918 

General and administrative

  —   18,691   865,368   5,906,373   6,790,432 

Depreciation and amortization

  456,277   3,912,202   1,015,691   41,569   5,425,739 

Impairment of goodwill and real estate assets

  —   1,966,113   431,984   849,000   3,247,097 

Total costs and expenses

  993,666   11,798,048   2,469,536   6,164,936   21,426,186 

Other income (expense):

                    

Interest expense - mortgage notes

  (588,405)  (2,744,996)  (1,668,855)  (2,633)  (5,004,889)

Interest and other income, net

  —   —   (27,775)  1,463,073   1,435,298 

Net gain in Conduit Pharmaceuticals marketable securities (see footnote 9)

  —   —   —   (23,359,774)  (23,359,774)

Gain on deconsolidation of SPAC (see footnote 9)

  —   —   —   40,321,483   40,321,483 

Gain on sales of real estate, net

  —   —   3,240,200   —   3,240,200 

Income tax (expense) benefit

  —   —   400,464   (64,684)  335,780 

Total other income, net

  (588,405)  (2,744,996)  1,944,034   18,357,465   16,968,098 

Net income (loss)

  302,259   (2,968,089)  3,606,627   12,236,729   13,177,526 

Less: Income attributable to noncontrolling interests

  —   (94,500)  (2,936,580)  —   (3,031,080)

Net income (loss) attributable to Presidio Property Trust, Inc. stockholders

 $302,259  $(3,062,589) $670,047  $12,236,729  $10,146,446 

 

  

December 31,

  

December 31,

 

Assets by Reportable Segment:

 

2024

  

2023

 

Office/Industrial Properties:

        

Land, buildings and improvements, net (1)

 $74,425,180  $77,472,724 

Total assets (2)

 $76,292,662  $78,140,372 

Model Home Properties:

        

Land, buildings and improvements, net (1)

 $37,416,000  $50,790,147 

Total assets (2)

 $38,166,964  $51,456,292 

Retail Properties:

        

Land, buildings and improvements, net (1)

 $15,743,789  $15,877,190 

Total assets (2)

 $16,673,605  $16,539,399 

Reconciliation to Total Assets:

        

Total assets for reportable segments

 $131,133,231  $146,136,063 

Corporate and other assets:

        

Cash, cash equivalents and restricted cash

  564,922   277,143 

Other assets, net

  10,871,497   29,549,432 

Total Assets

 $142,569,650  $175,962,638 

 

(1)

Includes lease intangibles and the land purchase option related to property acquisitions.

(2)

Includes land, buildings and improvements, cash, cash equivalents, and restricted cash, current receivables, deferred rent receivables and deferred leasing costs and other related intangible assets, all shown on a net basis.

 

  

For the Year Ended December 31,

 

Capital Expenditures by Reportable Segment

 

2024

  

2023

 

Office/Industrial Properties:

        

Capital expenditures and tenant improvements, office

 $2,044,704  $6,217,027 

Model Home Properties:

        

Acquisition of operating properties, model home

  9,729,351   21,909,963 

Retail Properties:

        

Capital expenditures and tenant improvements, retail

  217,121   150,522 

Totals:

        

Acquisition of operating properties, net

  9,729,351   21,909,963 

Capital expenditures and tenant improvements

  2,261,825   6,367,549 

Total real estate investments

 $11,991,176  $28,277,512