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Note 13 - Segments
 3 Months Ended
Mar. 31, 2025
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 tests for non-cash impairments, as required by GAAP, on all our properties (i.e., Office/Industrial Properties, Retail Properties, and Model Home Properties); 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 we 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 three months ended March 31, 2025 and 2024  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.

 

The following tables compare the Company's segment activity to its results of operations and financial position as of and for the three months ended March 31, 2025, and March 31, 2024:

 

 

  

For the Three Months Ended March 31, 2025

 
                     
  

Retail

  

Office/Industrial

  

Model Homes

  

Corporate and Other

  

Total

 
                     

Rental revenue

 $206,439  $2,467,551  $915,521  $—  $3,589,511 

Recovery revenue

  56,439   386,479   —   —   442,918 

Other operating revenue

  400   62,362   (1,754)  31,747   92,755 

Total revenues

  263,278   2,916,392   913,767   31,747   4,125,184 
                     

Rental operating costs

  100,568   1,618,365   48,157   (154,448)  1,612,642 

Net Operating Income (NOI)

  162,710   1,298,027   865,610   186,195   2,512,542 
                     

Gain on Sale - Model Homes

  —   —   240,899   —   240,899 

Impairment of Model Homes

  —   —   (26,943)  —   (26,943)
                     

Adjusted NOI

 $162,710  $1,298,027  $1,079,566  $186,195  $2,726,498 

 

 

 

  

For the Three Months Ended March 31, 2024

 
                     
  

Retail

  

Office/Industrial

  

Model Homes

  

Corporate and Other

  

Total

 
                     

Rental revenue

 $382,885  $2,364,141  $1,243,831  $—  $3,990,857 

Recovery revenue

  107,930   540,939   —   —   648,869 

Other operating revenue

  62,574   56,440   25,120   6,201   150,335 

Total revenues

  553,389   2,961,520   1,268,951   6,201   4,790,061 
                     

Rental operating costs

  139,954   1,545,563   41,230   (163,170)  1,563,577 

Net Operating Income (NOI)

  413,435   1,415,957   1,227,721   169,371   3,226,484 
                     

Gain on Sale - Model Home

  —   —   2,018,095   —   2,018,095 

Impairment of Model Homes

  —   —   (95,548)  —   (95,548)
                     

Adjusted NOI

 $413,435  $1,415,957  $3,150,268  $169,371  $5,149,031 

 

 

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 three months ended March 31, 2025 and 2024, 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 Three Months Ended March 31, 2025

 
                     
  

Retail

  

Office/Industrial

  

Model Homes

  

Corporate and Other

  

Total

 

Revenues:

                    

Rental income

 $262,878  $2,854,030  $915,521  $—  $4,032,429 

Fees and other income

  400   62,362   (1,754)  31,747   92,755 

Total revenue

  263,278   2,916,392   913,767   31,747   4,125,184 

Costs and expenses:

                    

Rental operating costs

  100,568   1,618,365   48,157   (154,448)  1,612,642 

General and administrative

  —   16,850   229,961   1,415,167   1,661,978 

Depreciation and amortization

  31,689   999,169   212,012   1,234   1,244,104 

Impairment of goodwill and real estate assets

  —   —   26,943   —   26,943 

Total costs and expenses

  132,257   2,634,384   517,073   1,261,953   4,545,667 

Other income (expense):

                    

Interest expense - mortgage notes

  (158,097)  (891,330)  (459,710)  (1,333)  (1,510,470)

Interest and other income, net

  —   —   8   5,141   5,149 

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

  —   —   —   (176,658)  (176,658)

Gain on sales of real estate, net

  4,213,068   —   240,900   —   4,453,968 

Income tax (expense) benefit

  —   —   (22,171)  47,580   25,409 

Total other income (expense), net

  4,054,971   (891,330)  (240,973)  (125,270)  2,797,398 

Net income (loss)

  4,185,992   (609,322)  155,721   (1,355,476)  2,376,915 

Less: Income attributable to noncontrolling interests

  —   (17,959)  (93,604)  —   (111,563)

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

 $4,185,992  $(627,281) $62,117  $(1,355,476) $2,265,352 

 

 

 

  

For the Three Months Ended March 31, 2024

 
                     
  

Retail

  

Office/Industrial

  

Model Homes

  

Corporate and Other

  

Total

 

Revenues:

                    

Rental income

 $490,815.00  $2,905,080.00  $1,243,831.00  $—  $4,639,726 

Fees and other income

  62,574   56,440   25,120   6,201   150,335 

Total revenue

  553,389   2,961,520   1,268,951   6,201   4,790,061 

Costs and expenses:

                    

Rental operating costs

  139,954   1,545,563   41,230   (163,170)  1,563,577 

General and administrative

  —   —   207,922   1,876,528   2,084,450 

Depreciation and amortization

  117,293   952,340   276,614   4,771   1,351,018 

Impairment of goodwill and real estate assets

  —   —   95,548   —   95,548 

Total costs and expenses

  257,247   2,497,903   621,314   1,718,129   5,094,593 

Other income (expense):

                    

Interest expense - mortgage notes

  (144,911)  (810,923)  (558,110)  (1,262)  (1,515,206)

Interest and other income, net

  —   —   8   4,638   4,646 

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

  —   —   —   (3,861,233)  (3,861,233)

Gain on sales of real estate, net

  —   —   2,018,095   —   2,018,095 

Income tax (expense) benefit

  —   —   (85,623)  6,058   (79,565)

Total other income (expense), net

  (144,911)  (810,923)  1,374,370   (3,851,799)  (3,433,263)

Net income (loss)

  151,231   (347,306)  2,022,007   (5,563,727)  (3,737,795)

Less: Income attributable to noncontrolling interests

  —   (24,154)  (1,479,714)  —   (1,503,868)

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

 $151,231  $(371,460) $542,293  $(5,563,727) $(5,241,663)

 

 

  

March 31,

  

December 31,

 

Assets by Reportable Segment:

 

2025

  

2024

 

Office/Industrial Properties:

        

Land, buildings and improvements, net (1)

 $73,912,734  $74,425,180 

Total assets (2)

 $74,742,379  $76,292,662 

Model Home Properties:

        

Land, buildings and improvements, net (1)

 $38,865,349  $37,416,000 

Total assets (2)

 $39,778,198  $38,166,964 

Retail Properties:

        

Land, buildings and improvements, net (1)

 $4,577,635  $15,743,789 

Total assets (2)

 $4,772,995  $16,673,605 

Reconciliation to Total Assets:

        

Total assets for reportable segments

 $119,293,572  $131,133,231 

Corporate and other assets:

        

Cash, cash equivalents and restricted cash

  4,980,910   564,922 

Other assets, net

  11,150,434   10,871,497 

Total Assets

 $135,424,916  $142,569,650 

 

(1)

Includes lease intangibles.

 

(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 Three Months Ended March 31,

 

Capital Expenditures by Reportable Segment

 

2025

  

2024

 

Office/Industrial Properties:

        

Capital expenditures and tenant improvements, office

 $360,708  $884,364 

Model Home Properties:

        

Acquisition of operating properties, model home

  4,270,192   2,238,497 

Retail Properties:

        

Capital expenditures and tenant improvements, retail

  —   148,084 

Totals:

        

Acquisition of operating properties, net

  4,270,192   2,238,497 

Capital expenditures and tenant improvements

  360,708   1,032,448 

Total real estate investments

 $4,630,900  $3,270,945