0001080657 Presidio Property Trust, Inc. false --12-31 Q2 2025 0.01 0.01 1,000,000 1,000,000 974,823 974,823 25.00 25.00 997,082 997,082 0.01 0.01 100,000,000 100,000,000 1,071,760 1,071,760 1,283,432 1,283,432 2 2 10 1 5 1 0 0 0 0 0 2 1 0 2 3 4 1 1 1 1 4 0.1 0 0 http://fasb.org/us-gaap/2025#OtherAssetsMiscellaneous http://fasb.org/us-gaap/2025#OtherAssetsMiscellaneous 5 2 66.67 0.01 0.01 0 1 1 1 5 5 0 0 0 2 3 10 1 3 3 298,644 4 false false false false These properties were sold during February 2025 and their loan balances were paid in full. As of June 30, 2025, there were five model homes included as real estate assets held for sale. Our model homes have stand-alone mortgage notes at interest rates ranging from 6.0% to 8.0% per annum as of June 30, 2025. 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. Includes lease intangibles and the land purchase option related to property acquisitions. As of June 30, 2025 and December 31, 2024, includes approximately $9.9 million and $11.4 million, respectively, of assets related to consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities. On May 5, 2023, the Company, through its subsidiary, refinanced the mortgage loan on our Grand Pacific Center property and entered into a construction loan related to the tenant improvement associated with the KLJ Engineering LLC lease to occupy 33,296 square feet of the building. The refinanced loan is for approximately $3.8 million, a term of 10 years, with an interest rate of 6.35%, for the first 60 months. The interest rate is subject to reset in year five on June 10, 2028. The construction loan is for approximately $2.7 million, a term of 10 years, and will begin amortizing in year three, with an interest rate of 6.35%, for the first 60 months. The interest rate is subject to reset in year five on June 10, 2028. As of June 30, 2025, we had fully drawn down the loan amount of approximately $2.7 million on the construction loan. The non-recourse loan on the Dakota Center property matured on July 6, 2024. Management has been in negotiations with the special servicer of the loan in modifying and/or extending the loan or possibly selling the building. We have not been able to come to an agreement regarding a situation in which the loan is modified or extended. During December 2024, the lender agreed to the broker the Company would use to sell the property to settle the non-recourse debt. As of June 30, 2025, the note payable is included in the mortgage notes payable related to properties held for sale, net on the consolidated balance sheet. The loan is considered non-recourse and we will not be required to make up the difference if the property sells for less than the loan balance. See Note 4. Real Estate Assets above for further discussion on impairment of the property. Interest rates as of June 30, 2025. On June 20, 2024, the Company, through its subsidiary, refinanced the mortgage loan on our West Fargo Industrial properties, and entered into a loan agreement for approximately $5.75 million, a term of five years, with an interest rate of 7.14%. The loan agreement has a Debt Service Coverage Ratio ("DSCR") minimum of 1.20 to 1.00 as calculated by Lender, in which: (a) the numerator is the Underwritten Net Cash Flow, and (b) the denominator is the annual Debt Service, tested at the end of each fiscal quarter. 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 six months ended June 30, 2025. These mortgage loans mature within the next twelve months and management is reviewing various options for the loan maturity, including but not limited to refinancing, restructuring and or selling these properties. As we get closer to the loan maturity date, the Company will finalize our plans. As of June 30, 2025, we have finalized terms sheets to refinance the loans on Genesis Plaza and One Park Centre from third party lenders, which are expected to close in August and September 2025. We have begun exploring options for the Shea Center II loan which matures in January 2026, although there can be no guarantee we will be successful in refinancing the properties. 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. 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 agreed to the broker the Company would use to sell the property to settle the non-recourse debt. As of June 30, 2025, the property was included in the real estate assets held for sale, net on the consolidated balance sheet. During July 2025, the lender approved a purchase offer from a third party for $5,125,000. In connection with the pending sale, we have impaired the property’s book value and recorded an impairment charge of approximately $3.3 million as of June 30, 2025. The sale is expected to take place during the third quarter 2025. During February 2025, Union Town Center and Research Parkway were sold to a single buyer for a combined $16.95 million and recorded a net gain of approximately $4.2 million, net of closing costs. 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 to other tenants and has reviewed various proposals for the remaining 46%. As of June 30, 2025, management is pursuing third party tenants who fit into our long-term plans, however, there is no guarantee we will be successful in signing new tenants. During the three months ended June 30, 2025, we have reassessed the value of the property and recorded an impairment charge of approximately $0.9 million. Includes Model Homes listed as held for sale as of June 30, 2025 and December 31, 2024. During the three and six months ended June 30, 2025, we recorded an impairment charge for model homes totaling $26,943, which reflects the estimated sales prices for these specific model homes. The short hold period, less than two years, and the builder changing their model style after we purchased the homes, contributed to the lower than expected sales price. 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. 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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________________________

FORM 10-Q

___________________________________________________________

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the period from _____ to _____

001-34049

(Commission File No.)

___________________________________________________________

PRESIDIO PROPERTY TRUST, INC.

(Exact name of registrant as specified in its charter)

___________________________________________________________

Maryland |  | 33-0841255
(State or other jurisdiction of incorporation or organization |  | (I.R.S. employer identification no.)

4995 Murphy Canyon Road, Suite 300, San Diego, CA 92123

(Address of principal executive offices)

(760) 471-8536

(Registrant's telephone number, including area code)

Title of each class of registered securities |  | Trading Symbol(s) |  | Name of each exchange on which registered
Series A Common Stock, |  | SQFT |  | The Nasdaq Stock Market LLC
$0.01 par value per share |  |  |  |
9.375% Series D Cumulative Redeemable Perpetual Preferred Stock, |  | SQFTP |  | The Nasdaq Stock Market LLC
$0.01 par value per share |  |  |  |
Series A Common Stock Purchase Warrants to |  | SQFTW |  | The Nasdaq Stock Market LLC
Purchase Shares of Common Stock |  |  |  |

________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☐ |  | Accelerated filer | ☐
Non-accelerated filer | ☒ |  | Smaller reporting company | ☒
Emerging Growth company | ☐ |  |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes No ☒

At August 12, 2025, registrant had issued and outstanding 1,451,088 shares of its Series A Common Stock, $0.01 par value per share.

Table of Contents

Index | Page
Part I. FINANCIAL INFORMATION: | 5
Item 1. FINANCIAL STATEMENTS: | 5
Consolidated Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024 | 5
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited) | 6
Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited) | 7
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 (unaudited) | 8
Notes to Consolidated Financial Statements (unaudited) | 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 35
Item 3. Quantitative and Qualitative Disclosures about Market Risk | 45
Item 4. Controls and Procedures | 45
Part II. OTHER INFORMATION | 46
Item 1. Legal Proceedings | 46
Item 1A. Risk Factors | 46
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 46
Item 3. Defaults Upon Senior Securities | 48
Item 4. Mine Safety Disclosures | 48
Item 5. Other Information | 48
Item 6. Exhibits | 49
Signatures | 50

2

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CAUTIONARY LANGUAGE REGARDING FORWARD-LOOKING STATEMENTS

This report contains "forward-looking statements" within the meaning of the federal securities laws that involve risks and uncertainties, many of which are beyond our control. Our actual results could differ materially and adversely from those anticipated in such forward-looking statements as a result of certain factors, including those set forth in this report and in our other filings with the Securities and Exchange Commission (the "SEC"). Forward-looking statements relate to matters such as our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, financial condition, liquidity, capital resources, cash flows, results of operations and other financial and operating information. Forward-looking statements included in this report include, but are not limited to, statements regarding purchases and sales of properties, plans for financing and refinancing our properties, the adequacy of our capital resources, changes to the markets in which we operate, our business plans and strategies, and our payment of dividends. When used in this report, the words "will," "may," "believe," "anticipate," "intend," "estimate," "expect," "should," "project," "plan," and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Important factors that may cause actual results to differ from projections include, but are not limited to:

| • | inherent risks associated with real estate investments and with the real estate industry;

| • | significant competition may decrease or prevent increases in our properties' occupancy and rental rates and may reduce the value of our properties;

| • | a decrease in demand for commercial space and model homes and/or an increase in operating costs;

| • | failure by any major tenant (or a substantial number of tenants) to make rental payments to us because of a deterioration of its financial condition, an early termination of its lease, a non-renewal of its lease, or a renewal of its lease on terms less favorable to us;

| • | challenging economic conditions facing us and our tenants may have a material adverse effect on our financial condition and results of operations;

| • | our failure to generate sufficient cash to pay dividends and to service or retire our debt obligations in a timely manner;

| • | our inability to borrow or raise sufficient capital to maintain or expand our real estate investment portfolio;

| • | adverse changes in the real estate financing markets, including potential increases in interest rates and/or borrowing costs;

| • | potential losses, including from adverse weather conditions, natural disasters and title claims, may not be covered by insurance;

| • | inability to complete acquisitions or dispositions and, even if these transactions are completed, failure to successfully operate acquired properties or sell properties without incurring significant defeasance costs;

| • | our reliance on third-party property managers to manage a substantial number of our properties and brokers and/or agents to lease our properties;

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| • | decrease in supply and/or demand for single family homes, inability to acquire additional model homes and increased competition to buy such properties;

| • | failure to continue to qualify as a REIT;

| • | adverse results of any legal proceedings;

| • | changes in laws, rules and regulations affecting our business including related to taxation, tariffs, real estate and zoning laws, and increases in real property tax rates;

| • | the possibility that if any of the banking institutions in which we deposit funds ultimately fails, we may lose any amounts of our deposits over federally insured levels which could reduce the amount of cash we have available to distribute or invest and could result in a decline in our value;

| • | the possibility that we may not comply with the continued listing requirements of the Nasdaq Capital Market ("Nasdaq"), which may result in our common stock being delisted, which could affect our common stock's market price and liquidity and reduce our ability to raise capital;
| • | actions of activist stockholders may cause us to incur substantial costs, divert management's attention and resources, and have an adverse effect on our business;
| • | the potential adverse effects of a resurgence of the COVID-19 pandemic or of new epidemics, pandemics or public health crises and ensuing economic turmoil on our financial condition, results of operations, cash flows and performance, particularly our ability to collect rent, on the financial condition, results of operations, cash flows and performance of our tenants, and on the global economy and financial markets, adverse economic conditions in the real estate market and overall financial market fluctuations; and
| • | the other risks and uncertainties discussed in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in this Quarterly Report on Form 10-Q, any subsequent filings with the SEC, and in the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 31, 2025.

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PART I — FINANCIAL INFORMATION

ITEM 1. Financial Statements

Presidio Property Trust, Inc. and Subsidiaries

Consolidated Balance Sheets

|  | June 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
|  |  | (unaudited) |  |  |  |  |
ASSETS |  |  |  |  |  |  |  |
Real estate assets and lease intangibles: |  |  |  |  |  |  |  |
Land |  | $ | 16,833,321 |  |  | $ | 15,983,323 |
Buildings and improvements |  |  | 106,094,790 |  |  |  | 102,862,977 |
Tenant improvements |  |  | 16,505,440 |  |  |  | 16,488,066 |
Lease intangibles |  |  | 3,475,531 |  |  |  | 3,776,654 |
Real estate assets and lease intangibles held for investment, cost |  |  | 142,909,082 |  |  |  | 139,111,020 |
Accumulated depreciation and amortization |  |  | (35,619,708 | ) |  |  | (33,700,262 | )
Real estate assets and lease intangibles held for investment, net |  |  | 107,289,374 |  |  |  | 105,410,758 |
Real estate assets held for sale, net |  |  | 7,286,923 |  |  |  | 22,185,742 |
Real estate assets, net |  |  | 114,576,297 |  |  |  | 127,596,500 |
Other assets: |  |  |  |  |  |  |  |
Cash, cash equivalents and restricted cash |  |  | 7,285,089 |  |  |  | 8,036,496 |
Deferred leasing costs, net |  |  | 1,425,887 |  |  |  | 1,666,135 |
Goodwill |  |  | 1,389,000 |  |  |  | 1,389,000 |
Investment in Conduit Pharmaceuticals marketable securities (see Notes 2 & 9) |  |  | 7,728 |  |  |  | 206,177 |
Deferred tax asset |  |  | 298,645 |  |  |  | 298,645 |
Other assets, net (see Note 6) |  |  | 3,417,767 |  |  |  | 3,376,697 |
Total other assets |  |  | 13,824,116 |  |  |  | 14,973,150 |
TOTAL ASSETS (1) |  | $ | 128,400,413 |  |  | $ | 142,569,650 |
LIABILITIES AND EQUITY |  |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |
Mortgage notes payable, net |  | $ | 84,003,364 |  |  | $ | 80,977,448 |
Mortgage notes payable related to properties held for sale, net |  |  | 10,600,440 |  |  |  | 21,116,646 |
Mortgage notes payable, total net |  |  | 94,603,804 |  |  |  | 102,094,094 |
Accounts payable and accrued liabilities |  |  | 3,037,530 |  |  |  | 3,290,170 |
Accrued real estate taxes |  |  | 1,133,318 |  |  |  | 1,972,477 |
Dividends payable |  |  | 190,393 |  |  |  | 194,784 |
Lease liability, net |  |  | 52,552 |  |  |  | 64,345 |
Below-market leases, net |  |  | 5,803 |  |  |  | 8,625 |
Total liabilities |  |  | 99,023,400 |  |  |  | 107,624,495 |
Commitments and contingencies (see Note 10) |  |  |  |  |  |  |  |
Equity: |  |  |  |  |  |  |  |
Series D Preferred Stock, $0.01 par value per share; 1,000,000 shares authorized; 974,823 shares issued and outstanding (liquidation preference $25.00 per share) as of June 30, 2025 and 997,082 shares issued and outstanding as of December 31, 2024 |  |  | 9,748 |  |  |  | 9,971 |
Series A Common Stock, $0.01 par value per share, shares authorized: 100,000,000; 1,071,760 shares and 1,283,432 shares were issued and outstanding at June 30, 2025 and December 31, 2024, respectively |  |  | 10,718 |  |  |  | 128,343 |
Additional paid-in capital |  |  | 184,578,728 |  |  |  | 185,770,842 |
Dividends and accumulated losses |  |  | (163,538,854 | ) |  |  | (159,374,010 | )
Total stockholders' equity before noncontrolling interest |  |  | 21,060,340 |  |  |  | 26,535,146 |
Noncontrolling interest |  |  | 8,316,673 |  |  |  | 8,410,009 |
Total equity |  |  | 29,377,013 |  |  |  | 34,945,155 |
TOTAL LIABILITIES AND EQUITY |  | $ | 128,400,413 |  |  | $ | 142,569,650 |

(1) As of June 30, 2025 and December 31, 2024, includes approximately $10.3 million and $11.4 million, respectively, of assets related to consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities.

See Notes to Consolidated Financial Statements

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Presidio Property Trust, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

|  | For the Three Months Ended June 30, |  |  | For the Six Months Ended June 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental income |  | $ | 4,281,753 |  |  | $ | 4,474,198 |  |  | $ | 8,314,182 |  |  | $ | 9,113,925 |
Fees and other income |  |  | 96,987 |  |  |  | 112,343 |  |  |  | 189,743 |  |  |  | 262,678 |
Total revenue |  |  | 4,378,740 |  |  |  | 4,586,541 |  |  |  | 8,503,925 |  |  |  | 9,376,603 |
Costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental operating costs |  |  | 1,462,605 |  |  |  | 1,492,495 |  |  |  | 3,075,248 |  |  |  | 3,056,072 |
General and administrative |  |  | 1,223,658 |  |  |  | 2,202,916 |  |  |  | 2,885,634 |  |  |  | 4,287,366 |
Depreciation and amortization |  |  | 1,211,691 |  |  |  | 1,351,370 |  |  |  | 2,455,796 |  |  |  | 2,702,388 |
Impairment of goodwill and real estate assets |  |  | 4,317,389 |  |  |  | 101,245 |  |  |  | 4,344,332 |  |  |  | 196,793 |
Total costs and expenses |  |  | 8,215,343 |  |  |  | 5,148,026 |  |  |  | 12,761,010 |  |  |  | 10,242,619 |
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense - mortgage notes |  |  | (1,477,870 | ) |  |  | (1,525,845 | ) |  |  | (2,988,341 | ) |  |  | (3,041,051 | )
Interest and other income, net |  |  | 5,206 |  |  |  | 5,206 |  |  |  | 10,354 |  |  |  | 9,852 |
Gain on sales of real estate, net |  |  | 323,359 |  |  |  | 811,903 |  |  |  | 4,777,327 |  |  |  | 2,829,998 |
Net loss in Conduit Pharmaceuticals marketable securities (see Note 9) |  |  | (7,802 | ) |  |  | (10,027,433 | ) |  |  | (184,459 | ) |  |  | (13,888,667 | )
Income tax expense |  |  | (53,910 | ) |  |  | (81,021 | ) |  |  | (28,501 | ) |  |  | (160,586 | )
Total other income (expense), net |  |  | (1,211,017 | ) |  |  | (10,817,190 | ) |  |  | 1,586,380 |  |  |  | (14,250,454 | )
Net loss |  |  | (5,047,620 | ) |  |  | (11,378,675 | ) |  |  | (2,670,705 | ) |  |  | (15,116,470 | )
Less: Income attributable to noncontrolling interests |  |  | (228,905 | ) |  |  | (469,365 | ) |  |  | (340,468 | ) |  |  | (1,973,233 | )
Net loss attributable to Presidio Property Trust, Inc. stockholders |  | $ | (5,276,525 | ) |  | $ | (11,848,040 | ) |  | $ | (3,011,173 | ) |  | $ | (17,089,703 | )
Less: Series D Preferred Stock dividends |  |  | (574,096 | ) |  |  | (543,331 | ) |  |  | (1,153,671 | ) |  |  | (1,065,363 | )
Net loss attributable to Presidio Property Trust, Inc. common stockholders |  | $ | (5,850,621 | ) |  | $ | (12,391,371 | ) |  | $ | (4,164,844 | ) |  | $ | (18,155,066 | )
Net loss per share attributable to Presidio Property Trust, Inc. common stockholders: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic & Diluted |  | $ | (5.13 | ) |  | $ | (9.97 | ) |  | $ | (3.42 | ) |  | $ | (14.69 | )
Weighted average number of common shares outstanding - basic & dilutive |  |  | 1,139,437 |  |  |  | 1,242,879 |  |  |  | 1,217,332 |  |  |  | 1,236,099 |

See Notes to Consolidated Financial Statements

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Presidio Property Trust, Inc. and Subsidiaries

Consolidated Statements of Changes in Equity

For the six months ended June 30, 2025 and 2024

(Unaudited)

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Additional |  |  | Dividends and |  |  | Total |  |  | Non- |  |  |  |  |
|  | Series D Preferred Stock |  |  | Common Stock |  |  | Paid-in |  |  | Accumulated |  |  | Stockholders’ |  |  | controlling |  |  | Total |
|  | Shares |  |  | Amount |  |  | Shares |  |  | Amount |  |  | Capital |  |  | Losses |  |  | Equity |  |  | Interests |  |  | Equity |
Balance, December 31, 2024 |  |  | 997,082 |  |  | $ | 9,971 |  |  |  | 1,283,432 |  |  | $ | 128,343 |  |  | $ | 185,770,842 |  |  | $ | (159,374,010 | ) |  | $ | 26,535,146 |  |  | $ | 8,410,009 |  |  | $ | 34,945,155 |
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,265,352 |  |  |  | 2,265,352 |  |  |  | 111,563 |  |  |  | 2,376,915 |
Dividends to Series D preferred stockholders |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (579,575 | ) |  |  | (579,575 | ) |  |  | — |  |  |  | (579,575 | )
Distributions |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (216,659 | ) |  |  | (216,659 | )
Restricted stock-based compensation |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 229,502 |  |  |  | — |  |  |  | 229,502 |  |  |  | — |  |  |  | 229,502 |
Repurchase of Series D preferred stock, at cost |  |  | (12,844 | ) |  |  | (129 | ) |  |  | — |  |  |  | — |  |  |  | (194,843 | ) |  |  | — |  |  |  | (194,972 | ) |  |  | — |  |  |  | (194,972 | )
Balance, March 31, 2025 |  |  | 984,238 |  |  | $ | 9,842 |  |  |  | 1,283,432 |  |  | $ | 128,343 |  |  | $ | 185,805,501 |  |  | $ | (157,688,233 | ) |  | $ | 28,255,453 |  |  | $ | 8,304,913 |  |  | $ | 36,560,366 |
Net (loss) income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (5,276,525 | ) |  |  | (5,276,525 | ) |  |  | 228,905 |  |  |  | (5,047,620 | )
Dividends to Series D preferred stockholders |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (574,096 | ) |  |  | (574,096 | ) |  |  | — |  |  |  | (574,096 | )
Distributions |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (217,145 | ) |  |  | (217,145 | )
Restricted stock-based compensation |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 314,874 |  |  |  | — |  |  |  | 314,874 |  |  |  | — |  |  |  | 314,874 |
Repurchase of Series A Common Stock, at cost |  |  | — |  |  |  | — |  |  |  | (4,091 | ) |  |  | (41 | ) |  |  | (18,511 | ) |  |  | — |  |  |  | (18,552 | ) |  |  | — |  |  |  | (18,552 | )
Repurchase of Series D preferred stock, at cost |  |  | (9,415 | ) |  |  | (94 | ) |  |  | — |  |  |  | — |  |  |  | (132,721 | ) |  |  | — |  |  |  | (132,815 | ) |  |  | — |  |  |  | (132,815 | )
Repurchase of Series A Common Stock, Tender Offer |  |  | — |  |  |  | — |  |  |  | (214,412 | ) |  |  | (21,441 | ) |  |  | (1,486,558 | ) |  |  | — |  |  |  | (1,507,999 | ) |  |  | — |  |  |  | (1,507,999 | )
Par Value adjustment post 1 for 10 reverse split from $0.10 to $0.01 |  |  | — |  |  |  | — |  |  |  | 505 |  |  |  | (96,206 | ) |  |  | 96,206 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Vesting of Restricted Series A Common Stock |  |  | — |  |  |  | — |  |  |  | 6,326 |  |  |  | 63 |  |  |  | (63 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Balance, June 30, 2025 |  |  | 974,823 |  |  | $ | 9,748 |  |  |  | 1,071,760 |  |  | $ | 10,718 |  |  | $ | 184,578,728 |  |  | $ | (163,538,854 | ) |  | $ | 21,060,340 |  |  | $ | 8,316,673 |  |  | $ | 29,377,013 |

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Additional |  |  | Dividends and |  |  | Total |  |  | Non- |  |  |  |  |
|  | Series D Preferred Stock |  |  | Common Stock |  |  | Paid-in |  |  | Accumulated |  |  | Stockholders’ |  |  | controlling |  |  | Total |
|  | Shares |  |  | Amount |  |  | Shares |  |  | Amount |  |  | Capital |  |  | Losses |  |  | Equity |  |  | Interests |  |  | Equity |
Balance, December 31, 2023 |  |  | 890,946 |  |  |  | 8,909 |  |  |  | 1,226,507 |  |  |  | 122,651 |  |  |  | 182,331,408 |  |  |  | (131,508,785 | ) |  |  | 50,954,183 |  |  |  | 10,367,887 |  |  |  | 61,322,070 |
Net (loss) income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (5,241,663 | ) |  |  | (5,241,663 | ) |  |  | 1,503,868 |  |  |  | (3,737,795 | )
Dividends to Series D preferred stockholders |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (522,032 | ) |  |  | (522,032 | ) |  |  | — |  |  |  | (522,032 | )
Distributions in excess of contributions received |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,603,357 | ) |  |  | (1,603,357 | )
Restricted stock-based compensation |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 341,921 |  |  |  | — |  |  |  | 341,921 |  |  |  | — |  |  |  | 341,921 |
Vesting of restricted stock |  |  | — |  |  |  | — |  |  |  | 16,409 |  |  |  | 1,640 |  |  |  | 198,360 |  |  |  | — |  |  |  | 200,000 |  |  |  | — |  |  |  | 200,000 |
Balance, March 31, 2024 |  |  | 890,946 |  |  | $ | 8,909 |  |  |  | 1,242,916 |  |  | $ | 124,291 |  |  | $ | 182,871,689 |  |  | $ | (137,272,480 | ) |  | $ | 45,732,409 |  |  | $ | 10,268,398 |  |  | $ | 56,000,807 |
Net (loss) income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (11,848,040 | ) |  |  | (11,848,040 | ) |  |  | 469,365 |  |  |  | (11,378,675 | )
Dividends to Series D preferred stockholders |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (543,331 | ) |  |  | (543,331 | ) |  |  | — |  |  |  | (543,331 | )
Distributions |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,002,976 | ) |  |  | (1,002,976 | )
Issuance of Series D preferred stock, net of issuance costs |  |  | 109,054 |  |  |  | 1,091 |  |  |  | — |  |  |  | — |  |  |  | 1,194,764 |  |  |  | — |  |  |  | 1,195,855 |  |  |  | — |  |  |  | 1,195,855 |
Restricted stock-based compensation |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 343,108 |  |  |  | — |  |  |  | 343,108 |  |  |  | — |  |  |  | 343,108 |
Repurchase of Series A Common Stock, at cost |  |  | — |  |  |  | — |  |  |  | (1,045 | ) |  |  | (104 | ) |  |  | (7,509 | ) |  |  | — |  |  |  | (7,613 | ) |  |  | — |  |  |  | (7,613 | )
Balance, June 30, 2024 |  |  | 1,000,000 |  |  | $ | 10,000 |  |  |  | 1,241,871 |  |  | $ | 124,187 |  |  | $ | 184,402,052 |  |  | $ | (149,663,851 | ) |  | $ | 34,872,388 |  |  | $ | 9,734,787 |  |  | $ | 44,607,175 |

See Notes to Consolidated Financial Statements

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Presidio Property Trust, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

|  | For the Six Months Ended June 30, |
|  | 2025 |  |  | 2024 |
Cash flows from operating activities: |  |  |  |  |  |  |  |
Net loss |  | $ | (2,670,705 | ) |  | $ | (15,116,470 | )
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 2,455,796 |  |  |  | 2,702,388 |
Stock compensation |  |  | 544,376 |  |  |  | 885,029 |
Gain on sale of real estate assets, net |  |  | (4,777,327 | ) |  |  | (2,829,998 | )
Net loss in Conduit Pharmaceuticals fair value marketable securities |  |  | 184,459 |  |  |  | 13,888,667 |
Net loss (gain) in fair value marketable securities |  |  | — |  |  |  | 560 |
Impairment of goodwill and real estate assets |  |  | 4,344,332 |  |  |  | 196,793 |
Amortization of financing costs |  |  | 137,749 |  |  |  | 214,071 |
Amortization of below-market leases |  |  | (2,266 | ) |  |  | (2,487 | )
Straight-line rent adjustment |  |  | (27,948 | ) |  |  | (95,602 | )
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Other assets |  |  | 36,322 |  |  |  | 588,866 |
Accounts payable and accrued liabilities |  |  | (397,856 | ) |  |  | (877,612 | )
Accrued real estate taxes |  |  | (839,159 | ) |  |  | (855,233 | )
Net cash used in operating activities |  |  | (1,012,227 | ) |  |  | (1,301,028 | )
Cash flows from investing activities: |  |  |  |  |  |  |  |
Real estate acquisitions |  |  | (9,444,465 | ) |  |  | (5,740,918 | )
Additions to buildings and tenant improvements |  |  | (741,071 | ) |  |  | (1,417,990 | )
Proceeds from sale of marketable securities |  |  | 13,990 |  |  |  | 60,467 |
Proceeds from sales of real estate, net |  |  | 21,544,343 |  |  |  | 20,058,923 |
Net cash provided by investing activities |  |  | 11,372,797 |  |  |  | 12,960,482 |
Cash flows from financing activities: |  |  |  |  |  |  |  |
Proceeds from mortgage notes payable, net of issuance costs |  |  | 6,592,396 |  |  |  | 10,663,089 |
Payment of debt issuance costs |  |  | (247,882 | ) |  |  | (182,798 | )
Repayment of mortgage notes payable |  |  | (14,014,678 | ) |  |  | (17,282,249 | )
Payment of deferred offering costs |  |  | — |  |  |  | (349,589 | )
Distributions to noncontrolling interests |  |  | (433,804 | ) |  |  | (2,806,333 | )
Contributions from noncontrolling interests |  |  | — |  |  |  | 200,000 |
Issuance of Series D Preferred Stock, net of offering costs |  |  | — |  |  |  | 1,195,855 |
Repurchase of Series A Common Stock, at cost |  |  | (1,526,551 | ) |  |  | (7,613 | )
Repurchase of Series D Preferred Stock, at cost |  |  | (327,787 | ) |  |  | — |
Dividends paid to Series D Preferred Stockholders |  |  | (1,153,671 | ) |  |  | (1,065,363 | )
Net cash used in financing activities |  |  | (11,111,977 | ) |  |  | (9,635,001 | )
Net (decrease) increase in cash equivalents and restricted cash |  |  | (751,407 | ) |  |  | 2,024,453 |
Cash, cash equivalents and restricted cash - beginning of period |  |  | 8,036,496 |  |  |  | 6,510,428 |
Cash, cash equivalents and restricted cash - end of period |  | $ | 7,285,089 |  |  | $ | 8,534,881 |
Supplemental disclosure of cash flow information: |  |  |  |  |  |  |  |
Income taxes paid |  | $ | 46,511 |  |  | $ | — |
Interest paid-mortgage notes payable |  | $ | 2,998,056 |  |  | $ | 2,810,393 |
Non-cash financing activities: |  |  |  |  |  |  |  |
Paid building and tenant improvements from prior year |  | $ | (207,847 | ) |  | $ | (295,567 | )
Unpaid building and tenant improvements |  | $ | 176,307 |  |  | $ | 91,513 |
Dividends payable - Series D Preferred Stock |  | $ | 190,393 |  |  | $ | 195,310 |

See Notes to Consolidated Financial Statements

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Presidio Property Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

June 30, 2025

1. ORGANIZATION AND BASIS OF PRESENTATION

Organization. Presidio Property Trust, Inc. ("we", "our", "us" or the "Company") is an internally-managed real estate investment trust ("REIT"), with holdings in office, industrial, retail and model home properties. We were incorporated in the State of California on September 28, 1999, and in August 2010, we reincorporated as a Maryland corporation. In October 2017, we changed our name from "NetREIT, Inc.," to "Presidio Property Trust, Inc." Through Presidio Property Trust, Inc., its subsidiaries, and its partnerships, we own 10 commercial properties in fee interest, two of which we own as a partial interest in various affiliates, in which we serve as general partner, member and/or manager, and a special purpose acquisition company (until deconsolidation in September 2023) as noted below.

The Company or one of its affiliates operates the following partnerships during the periods covered by these consolidated financial statements:

| • | The Company is the sole general partner and limited partner in two limited partnerships (NetREIT Palm Self-Storage LP and NetREIT Casa Grande LP), both of which, at June 30, 2025, had ownership interests in an entity that owns income producing real estate. The Company refers to these entities collectively as the "NetREIT Partnerships".
| • | The Company is the general and limited partner in six limited partnerships that purchase model homes and lease them back to homebuilders as commercial tenants (Dubose Model Home Investors #202, LP, Dubose Model Home Investors #203, LP, Dubose Model Home Investors #204, LP, Dubose Model Home Investors #205, LP, Dubose Model Home Investors #206, LP, and Dubose Model Home Investors #207, LP). The Company refers to these entities collectively as the "Model Home Partnerships". As of June 30, 2025, Dubose Model Home Investors #202, LP and Dubose Model Home Investors #206, LP had no remaining assets.

The Company has determined that the limited partnerships, in which it owns less than 100%, should be included in the Company's consolidated financial statements as the Company directs their activities and has control of such limited partnerships.

Unit-based information used herein (such as references to square footage or property occupancy rates) is unaudited.

We have elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), for federal income tax purposes. To maintain our qualification as a REIT, we are required to distribute at least 90% of our REIT taxable income to our stockholders and meet the various other requirements imposed by the Code relating to such matters as operating results, asset holdings, distribution levels, and diversity of stock ownership. Provided we maintain our qualification for taxation as a REIT, we are generally not subject to corporate-level income tax on the earnings distributed currently to our stockholders that we derive from our REIT qualifying activities. If we fail to maintain our qualification as a REIT in any taxable year and are unable to avail ourselves of certain savings provisions set forth in the Code, all our taxable income would be subject to federal income tax at regular corporate rates, including any applicable alternative minimum tax. We are subject to certain state and local income taxes.

We, together with one of our entities, have elected to treat certain subsidiaries as a taxable REIT subsidiary (a "TRS") for federal income tax purposes. Certain activities that we undertake must be conducted by a TRS, such as non-customary services for our commercial tenants, and holding assets that we cannot hold directly. A TRS is subject to federal and state income taxes. The Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. Neither the Company nor its subsidiaries have been assessed any significant interest or penalties for tax positions by any tax jurisdictions.

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On April 8, 2025, we commenced the Offer, a fixed price self-tender offer to purchase for cash all odd lots plus up to 200,000 shares of the Company’s Series A common stock, par value $0.01 per share, properly tendered and not properly withdrawn prior to the expiration date, subject to the Company’s ability to increase the number of shares accepted for payment in the Offer by up to 2% of the Company’s outstanding common stock (resulting in an increase of up to approximately 28,308 shares) without amending or extending the Offer in accordance with rules promulgated by the SEC, at $6.80 per share, net to the seller in cash, less any applicable withholding taxes and without interest. The Offer expired at 11:59 P.M., New York City time, on May 5, 2025. Based on the final count by the depositary for the Offer, 214,412 shares of Class A common stock were validly and successfully tendered and not properly withdrawn, including tenders of shares for which the tender was defective but for which the Company waived such defects. Pursuant to the terms of the Offer, the Company accepted for purchase 214,412 shares of Class A common stock, including 1,209 odd lot shares. Total cash required to complete the tender offer was approximately $1,458,000, excluding fees and expenses related to the Offer.

Effective on May 19, 2025, the Company amended its charter by filing Articles of Amendment with the State Department of Assessments and Taxation of Maryland in order to effect a 1-for-10 reverse stock split of its outstanding shares of common stock (the “Reverse Stock Split”). As a result of the reverse stock split, every 10 shares of the Company’s common stock issued or outstanding were automatically reclassified into one new share of common stock, par value $0.10 per share,, subject to the treatment of fractional shares as described below, without any action on the part of the holders. All historical share and per-share amounts reflected throughout the accompanying consolidated financial statements and other financial information in this Quarterly Report on Form 10-Q have been retroactively adjusted to reflect the 2025 Reverse Stock Split as if the split occurred as of the earliest period presented. The Reverse Stock Split did not affect the number of authorized shares of common stock. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who would otherwise have been entitled to receive fractional shares as a result of the Reverse Stock Split were rounded up to the nearest whole share. All equity awards and warrants outstanding immediately prior to the Reverse Stock Split were proportionately adjusted to reflect the Reverse Stock Split. Effective immediately after the Reverse Stock Split, the Company decreased the par value of the shares of Series A Common Stock from $0.10 per share back to $0.01 per share.

Liquidity. The Company's anticipated future sources of liquidity may include existing cash and cash equivalents, cash flows from operations, refinancing of existing mortgages, future real estate sales, new borrowings, and the sale of equity or debt securities. Future capital needs include paying down existing borrowings, maintaining our existing properties, funding tenant improvements on our commercial buildings, p aying lease commissions (to the extent they are not covered by lender-held reserve deposits), and the payment of dividends to our stockholders. The Company is also seeking investments that are likely to produce income and achieve long-term gains in order to pay dividends to our stockholders. To ensure that we can effectively execute these objectives, we routinely review our liquidity requirements and continually evaluate all potential sources of liquidity. If necessary, the Company may seek other short-term liquidity alternatives, such as bridge loans, refinancing property loans or a bank line of credit depending on the credit environment. See Note 11 Stockholders' Equity for additional information on sale of securities.

Short-term liquidity needs include paying our current operating costs, satisfying the debt service requirements of existing mortgages, completing ten ant improvements o n our commercial buildings, paying leasing commissions, distributions to noncontrolling interests, and funding dividends, if any, to stockholders. Future principal payments due on mortgage notes payable, during the last two quarters of 2025 and in the year ending December 31, 2026 total approximately $24.4 million and $19.7 million, respectively, of which $3.7 million in 2025 and $3.0 million in 2026 are related to model home properties. See Note 7. Mortgage Notes Payable for additional information on the Dakota Center loan that matured on July 6, 2024. Management expects certain model home properties can be sold, and that the underlying mortgage notes will be paid off with sales proceeds while other mortgage notes can be refinanced, as the Company has historically been able to do in the past with all model home properties. Additional principal payments will be made with cash flows from ongoing operations.

As the Company continues its operations, it may re-finance or seek additional financing. However, there can be no assurance that any such re-financing or additional financing will be available to the Company on acceptable terms, if at all. If events or circumstances occur such that the Company does not obtain additional funding, it will most likely be required to reduce its plans and/or certain discretionary spending, which could have a material adverse effect on the Company's ability to achieve its intended business objectives. Management believes that the combination of working capital on hand and the ability to refinance commercial and model home mortgages will fund operations through at least the next twelve months from the date of the issuance of these unaudited interim financial statements.

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2. SIGNIFICANT ACCOUNTING POLICIES

There have been no significant changes to the Company’s accounting policies since it filed its audited financial statements in the 2024 year end Annual Report. For further information about the Company’s accounting policies, refer to the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2024, included in the Company’s 2024 year end Annual Report.

Basis of Presentation. The accompanying consolidated financial statements have been prepared by the Company's management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and the instructions to Form 10-Q and Article 8 of Regulation S-X. Certain information and footnote disclosures required for annual consolidated financial statements have been excluded pursuant to rules and regulations of the SEC. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of our financial position as of June 30, 2025 and December 31, 2024, as well as results of our operations, and cash flows as of, and for the six months ended June 30, 2025 and 2024, respectively. However, the results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2025, due to real estate market fluctuations, available mortgage lending rates and other unknown factors. These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the 2024 year end Annual Report. The consolidated balance sheet as of December 31, 2024 has been derived from the audited consolidated financial statements included in the 2024 year end Annual Report.

Principles of Consolidation. The accompanying consolidated financial statements include the accounts of Presidio Property Trust, Inc. and its subsidiaries, NetREIT Advisors, LLC and Dubose Advisors LLC (collectively, the “Advisors”), and NetREIT Dubose Model Home REIT, Inc. The consolidated financial statements also include the results of the NetREIT Partnerships and the Model Home Partnerships. As used herein, references to the “Company” include references to Presidio Property Trust, Inc., its subsidiaries, and the partnerships. All significant intercompany balances and transactions have been eliminated in consolidation.

The Company classifies the noncontrolling interests in the NetREIT Partnerships as part of consolid ated net (loss) income in 2025 and 2024 and has included the accumulated amount of noncontrolling interests as part of equity since inception in February 2010. If a change in ownership of a consolidated subsidiary results in loss of control and deconsolidation, any retained ownership interest will be remeasured, with the gain or loss reported in the consolidated statements of operations. Management has evaluated the noncontrolling interests and determined that they do not contain any redemption features.

Use of Estimates. The consolidated financial statements were prepared in conformity with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant estimates include private warrants, the allocation of purchase price paid for property acquisitions between the components of land, building and intangible assets acquired including their useful lives, valuation of long-lived assets, and the allowance for doubtful accounts, which is based on an evaluation of the tenants’ ability to pay. Actual results could differ from those estimates.

Real Estate Assets and Lease Intangibles. Land, buildings and improvements are recorded at cost, including tenant improvements and lease acquisition costs (including leasing commissions, space planning fees, and legal fees). The Company capitalizes any expenditure that replaces, improves, or otherwise extends the economic life of an asset, while ordinary repairs and maintenance are expensed as incurred. The Company allocates the purchase price of acquired properties between the acquired tangible assets and liabilities (consisting of land, buildings, tenant improvements, and long-term debt) and identified intangible assets and liabilities (including the value of above-market and below-market leases, the value of in-place leases, unamortized lease origination costs and tenant relationships), in each case based on their respective fair values.

The Company allocates the purchase price to tangible assets of an acquired property based on the estimated fair values of those tangible assets, assuming the property was vacant. Estimates of fair value for land, building and building improvements are based on many factors, including, but not limited to, comparisons to other properties sold in the same geographic area and independent third-party valuations. In estimating the fair values of the tangible assets, intangible assets, and liabilities acquired, the Company also considers information obtained about each property as a result of its pre‑acquisition due diligence, marketing and leasing activities.

The value allocated to acquired lease intangibles is based on management’s evaluation of the specific characteristics of each tenant’s lease. Characteristics considered by management in allocating these values include, but are not limited, to the nature and extent of the existing business relationships with the tenant, growth prospects for developing new business with the tenant, the remaining term of the lease, the tenant’s credit quality, and other factors.

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The value attributable to the above-market or below-market component of an acquired in-place lease is determined based upon the present value (using a market discount rate) of the difference between (i) the contractual rents to be paid pursuant to the lease over its remaining term, and (ii) management’s estimate of rents that would be paid using fair market rates over the remaining term of the l ease. The amounts allocated to above or below-market leases are amortized on a straight-line basis as an increase or reduction of rental income over the remaining non-cancelable term of the respective leases. Amortization of above and below-market rents resulted in a net increase in rental income of approximately $1,244 and $2,265, respectively, for the three and six months ended June 30, 2025. Amortization of above and below-market rents resulted in a net increase in rental income of approximately $1,244 and $2,487, respectively, for the three and six months ended June 30, 2024.
The value of in-place leases and unamortized lease origination costs a re amortized to expenses over the remaining term of the respective leases, which range from less than a year to ten years. The amount allocated to acquired in-place leases is determined based on management’s assessment of lost revenue and costs incurred for the period required to lease the “assumed vacant” property to the occupancy level when purchased.

The amount allocated to unamortized lease origination costs is determined by what the Company would have paid to a third-party to secure a new tenant reduced by the expired term of the respective lease. The amount allocated to tenant relationships is the benefit resulting from the likelihood of a tenant renewing its lease. Amortization expense related to these assets was approximately $4,382 and $8,763, respectively, for the three and six months ended June 30, 2025. Amortization expense related to these assets was approximately $4,382 and $8,763, respectively, for the three and six months ended June 30, 2024.

Deferred Leasing Costs. Costs incurred in connection with successful property leases are capitalized as deferred leasing costs and amortized to leasing commission expense on a straight-line basis over the terms of the related leases which generally range from one to five years. Deferred leasing costs consist of third-party leasing commissions. Management re-evaluates the remaining useful lives of leasing costs as the creditworthiness of the tenants and economic an d market conditions change. If management determines the estimated remaining life of the respective lease has changed, the amortization period is adjusted. At June 30, 2025 and December 31, 2024, the Company had net deferred leasing costs of approximately $1.4 million and $1.7 million, respectively. Total amortization expense for the three and six months ended June 30, 2025 was approximately $82,657 and $217,433, respectively. Total amortization expense for the three and six months ended June 30, 2024 was approximately $119,278 and $244,099, respectively.

Cash, Cash Equivalents and Restricted Cash. At June 30, 2025 and December 31, 2024, we had approximately $7.3 million and $8.0 million in cash, cash equivalents and restricted cash, respectively, of which approximately $3.6 million and $5.0 million represented restricted cash, respectively. The Company considers all short-term, highly liquid investments that are both readily convertible to cash and have an original maturity of three months or less at the date of purchase to be cash equivalents. Items classified as cash equivalents include money market funds and short-term bonds. Cash balances in individual banks may exceed the federally insured limit of $250,000 by the Federal Deposit Insurance Corporation (the "FDIC"). No losses have been experienced related to such accounts. Restricted cash consists of cash held in escrow by lenders pursuant to certain loan agreements, which are for payment of property taxes, insurance, leasing costs, future debt payments, and capital expenditures.

Real Estate Held for Sale and Discontinued Operations. We generally reclassify assets to "held for sale" when the disposition has been approved, it is available for immediate sale in its present condition, we are actively seeking a buyer, and the disposition is considered probable within one year. Additionally, real estate sold during the current period is classified as “real estate assets held for sale” for all prior periods presented in the accompanying consolidated financial statements. Mortgage notes payable related to the real estate sold during the current period are classified as “mortgage notes payable related to properties held for sale” for all prior periods presented in the accompanying consolidated financial statements. Additionally, we record the operating results related to real estate that has been disposed of as discontinued operations for all periods presented if the operations have been eliminated and represent a strategic shift and we will not have any significant continuing involvement in the operations of the property following the sale. As of June 30, 2025, one commercial property, Dakota Center, and five model homes were classified as "held for sale".

Deferred Offering Costs. Deferred offering costs represent legal, accounting and other direct costs related to our offerings. As of June 30, 2025 and December 31, 2024, we had no deferred offering costs.

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Impairments of Real Estate Assets. We regularly review for impairment on a property-by-property basis. Impairment is recognized on a property held for use when the expected undiscounted cash flows for a property are less than the carrying amount at which time the property is written-down to fair value. Impairment is recognized on a property held for sale when the fair value less costs to sell is less than the carrying amount. The calculation of both discounted and undiscounted cash flows requires management to make estimates of future cash flows that are determined based on a number of inputs and assumptions such as the intended hold period, market rental rates, leasing assumptions, capitalization rates and discount rates. Actual results could be significantly different from the estimates. Although our strategy is to hold our properties over the long-term, if our strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized to reduce the property to fair value and such loss could be material.
We review the carrying value of each of our real estate properties regularly to determine if circumstances indicate an impairment in the carrying value of these investments exists. During the six months ended June 30, 2025 and 2024, we recognized non-cash impairment charges of approximately $0.1 million and $0.2 million, respectively, related to model homes. Additionally, during the six months ended June 30, 2025 and 2024, we recognized non-cash impairment charges of approximately $4.2 million and zero, respectively, on commercial properties, specifically Dakota Center and Shea Center II.

The new impairment charges for the model homes, during the three months ended June 30, 2025, reflects the estimated sales prices for these specific model homes in July and August 2025 as a result of an abnormally short hold period, less than two years. As noted below in Note 3 - Recent Real Estate Transactions, during the six months ended June 30, 2025, we sold 13 model homes for approximately $5.9 million, net of sales costs, and the Company recognized a net gain of approximately $0.6 million.

Fair Value Measurements. Certain assets and liabilities are required to be carried at fair value, or if long-lived assets are deemed to be impaired, to be adjusted to reflect this condition. The guidance requires disclosure of fair values calculated under each level of inputs within the following hierarchy:

| • | Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

| • | Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

| • | Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

When available, we utilize quoted market prices from independent third-party sources to determine fair value and classify such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require us to make a significant adjustment to derive a fair value measurement.

Additionally, in an inactive market, a market price quoted from an independent third-party may rely more on models with inputs based on information available only to that independent third-party. When we determine the market for a financial instrument owned by us to be illiquid or when market transactions for similar instruments do not appear orderly, we use several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establish a fair value by assigning weights to the various valuation sources. As of June 30, 2025, we did not hold any marketable securities, excluding our investments in common stock warrants of Conduit Pharmaceuticals, Inc. (“Conduit”). As of December 31, 2024, we did not hold any marketable securities (excluding our investments in Conduit's common stock and common stock warrants). There were no financial liabilities measured at fair value as of June 30, 2025 and December 31, 2024.

On April 22, 2024, the Company entered into a lockup agreement with Conduit pursuant to which the Company agreed not to transfer or sell 2,700,000 of its 4,015,250 shares of Conduit common stock for a period of one year. In consideration for entering into the lockup agreement, Conduit issued the Company a warrant ("Private CDT Warrants") to purchase 540,000 shares of common stock at an exercise price of $3.12 per share, with a two year term and exercisable one year after the date of issue. The Private CDT Warrants meet the ASC 321, Investments - Equity Securities ("ASC 321") scope exception for derivative instruments and are accounted for as a derivative under ASC 815, Derivatives and Hedging ("ASC 815"). As such, the Private CDT Warrants were recorded at fair value on the date of issuance and subsequently measured at fair value each period, with changes in fair value reported in gain or loss on Conduit Pharmaceuticals marketable securities. As of April 22, 2024, the Private CDT Warrants were valued at $891,000 based on a Level 3 fair value measurement, and subsequently adjusted to zero during the third quarter of 2024. During the six months ended June 30, 2025, we sold all of our remaining shares of CDT on the open market for a total of $13,990.

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As of June 30, 2025 and December 31, 2024, the Private CDT Warrants fair value, using Level 3 inputs, was zero for both periods, and is included in the total Investment in Conduit Pharmaceuticals marketable securities on the consolidated balance sheets. Our investments in Conduit's public common stock warrants (CDTTW) presented on the consolidated balance sheets were measured at fair value using Level 1 market prices, taking into account the adoption of ASU 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, and totaled approximately $7,728 and $0.2 million as of June 30, 2025 and December 31, 2024, respectively. The adjustments to the fair value of our investment in Conduit Pharmaceuticals marketable securities are recorded in net loss in Conduit Pharmaceuticals marketable securities on our consolidated statement of operations.

Earnings per share (“EPS”). The EPS on common stock has been computed pursuant to the guidance in FASB ASC Topic 260, Earnings Per Share. The guidance requires the classification of the Company’s unvested restricted stock, which contains rights to receive non-forfeitable dividends, as participating securities requiring the two-class method of computing net income per share of common stock. In accordance with the two-class method, earnings per share have been computed by dividing the net income less net income attributable to unvested restricted shares by the weighted average number of shares of common stock outstanding less unvested restricted shares. Diluted earnings per share is computed by dividing net income by the weighted average shares of common stock and potentially dilutive securities outstanding in accordance with the treasury stock method.

Dilutive common stock equivalents include the dilutive effect of in-the-money stock equivalents, which are calculated based on the average share price for each period using the treasury stock method, excluding any common stock equivalents if their effect would be anti-dilutive. In periods in which a net loss has been incurred, all potentially dilutive common stock shares are considered anti-dilutive and thus are excluded from the calculation. Securities that are excluded from the calculation of weighted average dilutive common stock, because their inclusion would have been antidilutive, are:

|  | For the Three Months Ended June 30, |  |  | For the Six Months Ended June 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Common Stock Warrants |  |  | 200,000 |  |  |  | 200,000 |  |  |  | 200,000 |  |  |  | 200,000 |
Placement Agent Warrants |  |  | 8,000 |  |  |  | 8,000 |  |  |  | 8,000 |  |  |  | 8,000 |
Series A Warrants |  |  | 1,445,007 |  |  |  | 1,445,007 |  |  |  | 1,445,007 |  |  |  | 1,445,007 |
Unvested Common Stock Grants |  |  | 208,498 |  |  |  | 203,466 |  |  |  | 208,498 |  |  |  | 203,466 |
Total potentially dilutive shares |  |  | 1,861,505 |  |  |  | 1,856,473 |  |  |  | 1,861,505 |  |  |  | 1,856,473 |

Variable Interest Entity. We determine whether an entity is a Variable Interest Entity ("VIE") and, if so, whether it should be consolidated by utilizing judgments and estimates that are inherently subjective. Our determination of whether an entity in which we hold a direct or indirect variable interest is a VIE is based on several factors, including whether we participated in the design of the entity and whether the entity’s total equity investment at risk upon inception is sufficient to finance the entity’s activities without additional subordinated financial support. We make judgments regarding the sufficiency of the equity at risk based first on a qualitative analysis, and then a quantitative analysis, if necessary.

We analyze any investments in VIEs to determine if we are the primary beneficiary. In evaluating whether we are the primary beneficiary, we evaluate our direct and indirect economic interests in the entity. A reporting entity is determined to be the primary beneficiary if it holds a controlling financial interest in the VIE. Determining which reporting entity, if any, has a controlling financial interest in a VIE is primarily a qualitative approach focused on identifying which reporting entity has both: (i) the power to direct the activities of a VIE that most significantly impact such entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits from such entity that could potentially be significant to such entity. Performance of that analysis requires the exercise of judgment.

We consider a variety of factors in identifying the entity that holds the power to direct matters that most significantly impact the VIE’s economic performance, including, but not limited to, the ability to direct operating decisions and activities. In addition, we consider the rights of other investors to participate in those decisions. We determine whether we are the primary beneficiary of a VIE at the time we become involved with a variable interest entity and reconsider that conclusion continually. We consolidate any VIE of which we are the primary beneficiary.

Immaterial Error Corrections. During the fourth quarter of 2024, management determined that its prior treatment of including amortization of model home transactions fees in fees and other income should be reclassified to rental income on the consolidated statement of operations. For the three and six months ended June 30, 2024, the total fees reclassified amounted to $211,256 and $431,876, respectively. Amortization of model home transaction fees during the fourth quarter of 2023, first quarter of 2024, the second quarter of 2024, third quarter of 2024 and fourth quarter of 2024 totaled approximately, $194,884, $220,620, $211,256, $165,983 and $159,845, respectively. There was no change to total revenues in either period.

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For the six months ended June 30, 2024, $295,567 for paid building and tenant improvements from prior year and $91,513 for unpaid building and tenant improvements should have been included in supplemental disclosure of cash flow information. The net adjustment of $204,054 is reflected in accounts payable and accrued liabilities and additions to buildings and tenant improvements. Additionally, payment of debt issuance costs included in accounts payable and accrued liabilities, totaling $182,798, should have been presented under cash flows from financing activities for the six months ended June 2024, along with a prepayment penalty of $171,734. These errors impact the consolidated statement of cash flows and do not affect the consolidated balance sheets, consolidated statement of operations and consolidated statements of changes in equity.

As such, the Company’s consolidated statement of cash flows for the six months ended June 30, 2024, reflects an adjustment to reduce net cash used in operating activities by $562,458, a decrease in net cash provided by investing activities by $207,926 and an increase in cash used in financings activities by $354,532.

Reclassifications. Certain prior year balance sheet, statement of operations and statement of cash flows accounts have been reclassified to conform with the current year presentation. The reclassifications did not affect net income in the prior year's consolidated statement of operations.

Subsequent Events. We evaluate subsequen t events up until the date the consolidated financial statements are issued.

Recently Issued and Adopted Accounting Pronouncements. In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes, to enhance income tax disclosures, provide more information about tax risks and opportunities present in worldwide operations, and to disaggregate existing income tax disclosures. The guidance is effective for annual periods beginning after December 15, 2024 on a prospective basis, with the option to apply the standard retrospectively. Early adoption is permitted. We have adopted ASU 2023-09 and have updated our financial statement disclosures accordingly.

In November 2023, the FASB issued Accounting Standards Update ASU 2023-07, Segment Reporting, establishing improvements to reportable segments disclosures to enhance segment reporting under Topic 280. This ASU aims to change how public entities identify and aggregate operating segments and apply quantitative thresholds to determine their reportable segments. This ASU also requires public entities that operate as a single reportable segment to provide all segment disclosures in Topic 280, not just entity level disclosures. The guidance will be effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024 and the amendments should be applied retrospectively to all periods presented in the financial statements. We have adopted ASU 2023-07 and have updated our segment financial statement disclosures accordingly.

In March 2024, the SEC issued final climate-disclosure rules to enhance and standardize climate‐related disclosures by public companies. With regards to financial statements, the rules requires disclosure of (i) capitalized costs, expenditures expensed, charges, and losses incurred as a result of severe weather events and other natural conditions, subject to applicable one percent and de minimis disclosure thresholds; (ii) capitalized costs, expenditures expensed, and losses related to carbon offsets and renewable energy credits or certificates (RECs) if used as a material component of a company's plans to achieve its disclosed climate-related targets or goals; and (iii) if the estimates and assumptions the company uses to produce the financial statements were materially impacted by risks and uncertainties associated with severe weather events and other natural conditions or any disclosed climate-related targets or transition plans, a qualitative description of how the development of such estimates and assumptions was impacted. The rules are effective for annual periods beginning January 1, 2025 and are to be applied prospectively. On April 4, 2024, the SEC voluntarily stayed the rules pending judicial review as a result of litigation. On March 27, 2025, the SEC voted to end its defense of the rules requiring disclosure of climate-related risks and greenhouse gas emissions. However, the Eighth Circuit may still rule on the legal challenges to the rules, and if so could decide to uphold the rules in whole or in part or remand them to the SEC for further consideration.

In November 2024, the FASB issued Accounting Standards Update ASU 2024-03, Income Statement—Reporting Comprehensive, Income—Expense Disaggregation Disclosures, Disaggregation of Income Statement Expenses (“ASU 2024-03”). This ASU is to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, SG&A, and research and development). The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. In January 2025, this was updated by ASU 2025-01—Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. The amendment in this Update amends the effective date of Update 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of Update 2024-03 is permitted. We have not yet adopted ASU 2024-03 and are currently evaluating the impact on our financial statement disclosures.

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3. RECENT REAL ESTATE TRANSACTIONS

Acquisitions during the six months ended June 30, 2025:

| • | The Company acquired 22 model homes for approximately $9.4 million. The purchase price was paid through cash payments of approximately $2.8 million and mortgage notes of approximately $6.6 million.

Acquisitions during the six months ended June 30, 2024:

| • | The Company acquired 12 model homes for approximately $5.7 million. The purchase price was paid through cash payments of approximately $1.7 million and mortgage notes of approximately $4.0 million.

Dispositions during the six months ended June 30, 2025:

| • | On February 7, 2025, the Company sold two commercial properties, Union Town Center and Research Parkway, to a single buyer for approximately $17.0 million and recognized a net gain of approximately $4.2 million, net of closing costs.
| • | The Company sold 13 model homes for approximately $5.9 million, net of sales costs, and recognized a gain of approximately $0.6 million.

Dispositions during the six months ended June 30, 2024:

| • | The Company sold 42 model homes for approximately $20.1 million, net of sales costs, and recognized a gain of approximately $2.8 million.

4. REAL ESTATE ASSETS

The Company owns a diverse portfolio of real estate assets. The primary types of properties the Company invests in are office, industrial, retail, and triple-net leased model home properties. We have three commercial properties located in Colorado, four in North Dakota, one in Southern California, one in Texas and one in Maryland. Our model home properties are located in four states. As of June 30, 2025, the Company owned or had an equity interest in:

| • | Eight office buildings and one industrial property (“Office/Industrial Properties”) which total approximately 758,175 rentable square feet (unaudited);
| • | One retail building (“Retail Property”) with approximately 10,500 rentable square feet (unaudited); and
| • | 87 model home residential properties (“Model Homes” or “Model Home Properties”), totaling approximately 260,227 square feet (unaudited), leased back on a triple-net basis to homebuilders, that are owned by four affiliated limited partnerships and one wholly-owned corporation, all of which we control. As of June 30, 2025, all of the model homes in Dubose Model Home Investors #202, LP and Dubose Model Home Investors #206, LP had been sold.

A summary of the properties owned by the Company, including their lease intangibles, as of June 30, 2025 and December 31, 2024 is as follows:

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|  | Date |  |  |  | Real estate assets and lease intangibles, net |
Property Name |  | Acquired |  | Location |  | June 30, 2025 |  |  | December 31, 2024 |
Genesis Plaza (1) |  | August 2010 |  | San Diego, CA |  | $ | 7,274,090 |  |  | $ | 7,363,571 |
Dakota Center (2) |  | May 2011 |  | Fargo, ND |  |  | 4,838,139 |  |  |  | 8,154,951 |
Grand Pacific Center |  | March 2014 |  | Bismarck, ND |  |  | 8,332,564 |  |  |  | 8,413,926 |
Arapahoe Center |  | December 2014 |  | Centennial, CO |  |  | 9,058,658 |  |  |  | 9,298,534 |
Union Town Center (3) |  | December 2014 |  | Colorado Springs, CO |  |  | — |  |  |  | 8,922,943 |
West Fargo Industrial |  | August 2015 |  | Fargo, ND |  |  | 6,469,043 |  |  |  | 6,599,953 |
300 N.P. |  | August 2015 |  | Fargo, ND |  |  | 1,990,914 |  |  |  | 1,963,000 |
Research Parkway (3) |  | August 2015 |  | Colorado Springs, CO |  |  | — |  |  |  | 2,220,284 |
One Park Center (4) |  | August 2015 |  | Westminster, CO |  |  | 5,482,703 |  |  |  | 5,580,950 |
Shea Center II (5) |  | December 2015 |  | Highlands Ranch, CO |  |  | 17,595,866 |  |  |  | 18,820,370 |
Mandolin (6) |  | August 2021 |  | Houston, TX |  |  | 4,554,707 |  |  |  | 4,600,562 |
Baltimore |  | December 2021 |  | Baltimore, MD |  |  | 8,129,102 |  |  |  | 8,241,456 |
Commercial properties |  |  |  |  |  |  |  | 73,725,786 |  |  |  | 90,180,500 |
Model Home properties (7) |  | 2019 - 2025 |  | AZ, TN, TX, AL |  |  | 40,850,511 |  |  |  | 37,416,000 |
Total real estate assets and lease intangibles, net |  |  |  |  |  |  | $ | 114,576,297 |  |  | $ | 127,596,500 |

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(1) | 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 78,215 shares of SQFT Series A Common Stock in exchange for their 36.4% ownership in NetREIT Genesis II, as per the original exchange agreement.
(2) | The non-recourse loan on the Dakota Center property matured on July 6, 2024. During December 2024, the lender agreed to the broker the Company would use to sell the property to settle the non-recourse debt. As of June 30, 2025, the property was included in the real estate assets held for sale, net on the consolidated balance sheet. During July 2025, the lender approved a purchase offer from a third party for $5,125,000. In connection with the pending sale, we have impaired the property’s book value and recorded an impairment charge of approximately $3.3 million as of June 30, 2025. The sale is expected to take place during the third quarter 2025.
(3) | During February 2025, Union Town Center and Research Parkway were sold to a single buyer for a combined $16.95 million and recorded a net gain of approximately $4.2 million, net of closing costs.
(4) | 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 six months ended June 30, 2025.
(5) | 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 June 30, 2025. Our management team is working to fill the 45,535 square foot space and has leased approximately 54% of the space to other tenants and has reviewed various proposals for the remaining 46%. As of June 30, 2025, management is pursuing third party tenants who fit into our long-term plans, however, there is no guarantee we will be successful in signing new tenants. During the three months ended June 30, 2025, we have reassessed the value of the property and recorded an impairment charge of approximately $0.9 million.
(6) | 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.
(7) | Includes Model Homes listed as held for sale as of June 30, 2025 and December 31, 2024. During the three and six months ended June 30, 2025, we recorded an impairment charge for model homes totaling $0.1 million, which reflects the estimated sales prices for these specific model homes. The short hold period, less than two years, and the builder changing their model style after we purchased the homes, contributed to the lower than expected sales price.

For the three and six months ended June 30, 2025, depreciation expense totaled approximately $1.1 million and $2.2 million, respectively. For the three and six months ended June 30, 2024, depreciation expense totaled approximately $1.2 million and $2.4 million, respectively.

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5. LEASE INTANGIBLES

The following table summarizes the net value of other intangible assets acquired and the accumulated amortization for each class of intangible asset:

|  | June 30, 2025 |  |  | December 31, 2024 |
|  | Lease Intangibles |  |  | Accumulated Amortization |  |  | Lease Intangibles, net |  |  | Lease Intangibles |  |  | Accumulated Amortization |  |  | Lease Intangibles, net |
In-place leases |  | $ | 2,377,414 |  |  | $ | (2,371,840 | ) |  | $ | 5,574 |  |  | $ | 2,515,264 |  |  | $ | (2,504,799 | ) |  | $ | 10,465 |
Leasing costs |  |  | 1,098,117 |  |  |  | (1,092,677 | ) |  |  | 5,440 |  |  |  | 1,261,390 |  |  |  | (1,252,078 | ) |  |  | 9,312 |
Above-market leases |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 333,485 |  |  |  | (333,485 | ) |  |  | — |
|  | $ | 3,475,531 |  |  | $ | (3,464,517 | ) |  | $ | 11,014 |  |  | $ | 4,110,139 |  |  | $ | (4,090,362 | ) |  | $ | 19,777 |

At June 30, 2025 and December 31, 2024, there were no gross lease intangible assets and accumulated amortization related to the lease intangible assets included in real estate assets held for sale.

The net value of acquired intangible liabilities was approximately $5,803 and $8,625 relating to below-market leases at June 30, 2025 and December 31, 2024, respectively.

Future aggregate approximate amortization expense for the Company's lease intangible assets is as follows:

Years ending December 31: |  |  |  |
2025 |  | $ | 6,910 |
2026 |  |  | 4,104 |
Total |  | $ | 11,014 |

6. OTHER ASSETS

Other assets consist of the following:

|  | June 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Deferred rent receivable |  | $ | 1,880,640 |  |  | $ | 2,126,609 |
Prepaid expenses, deposits and other |  |  | 956,919 |  |  |  | 406,494 |
Notes receivable |  |  | 316,374 |  |  |  | 316,374 |
Accounts receivable, net |  |  | 211,921 |  |  |  | 463,194 |
Right-of-use assets, net |  |  | 51,913 |  |  |  | 64,026 |
Total other assets |  | $ | 3,417,767 |  |  | $ | 3,376,697 |

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7. MORTGAGE NOTES PAYABLE

Mortgage notes payable consist of the following:

|  | Principal as of |  |  |  |  |  |  |  |  |  |
|  | June 30, |  |  | December 31, |  | Loan |  | Interest |  |  |  |  |
Mortgage note property |  | 2025 |  |  | 2024 |  | Type |  | Rate (1) |  |  | Maturity |
Dakota Center (2) |  | $ | 8,873,095 |  |  | $ | 9,091,395 |  | Fixed |  |  | 4.74 | % |  | 7/6/2024 |
Research Parkway (3) |  | - |  |  | 1,526,860 |  | N/A |  | N/A |  |  | N/A |
Arapahoe Service Center |  |  | 8,670,000 |  |  |  | 8,670,000 |  | Fixed |  |  | 6.75 | % |  | 12/5/2029 |
Union Town Center (3) |  | - |  |  | 7,709,746 |  | N/A |  | N/A |  |  | N/A |
One Park Centre (6) |  |  | 5,854,250 |  |  |  | 5,919,517 |  | Fixed |  |  | 4.77 | % |  | 9/5/2025 |
Genesis Plaza (6) |  |  | 5,749,126 |  |  |  | 5,813,843 |  | Fixed |  |  | 4.71 | % |  | 9/6/2025 |
Shea Center II (6) |  |  | 16,507,833 |  |  |  | 16,660,803 |  | Fixed |  |  | 4.92 | % |  | 1/5/2026 |
West Fargo Industrial (4) |  |  | 5,750,000 |  |  |  | 5,750,000 |  | Fixed |  |  | 7.14 | % |  | 7/6/2029 |
Grand Pacific Center (5) |  |  | 6,424,930 |  |  |  | 6,460,405 |  | Fixed |  |  | 6.35 | % |  | 5/10/2033 |
Baltimore |  |  | 5,670,000 |  |  |  | 5,670,000 |  | Fixed |  |  | 4.67 | % |  | 4/6/2032 |
Mandolin |  |  | 3,474,942 |  |  |  | 3,508,702 |  | Fixed |  |  | 4.35 | % |  | 4/20/2029 |
Subtotal, Presidio Property Trust, Inc. Properties |  | $ | 66,974,176 |  |  | $ | 76,781,271 |  |  |  |  |  |  |  |  |  |
Model Home mortgage notes (7) |  |  | 28,445,612 |  |  |  | 26,060,798 |  | Fixed |  |  | 6.00% - 8.00% |  |  | 2025 - 2030 |
Mortgage Notes Payable |  | $ | 95,419,788 |  |  | $ | 102,842,069 |  |  |  |  |  |  |  |  |  |
Unamortized loan costs |  |  | (815,984 | ) |  |  | (747,975 | ) |  |  |  |  |  |  |  |  |
Mortgage Notes Payable, net |  | $ | 94,603,804 |  |  | $ | 102,094,094 |  |  |  |  |  |  |  |  |  |

(1) | Interest rates as of June 30, 2025.
(2) | The non-recourse loan on the Dakota Center property matured on July 6, 2024. Management has been in negotiations with the special servicer of the loan in modifying and/or extending the loan or possibly selling the building. We have not been able to come to an agreement regarding a situation in which the loan is modified or extended. During December 2024, the lender agreed to the broker the Company would use to sell the property to settle the non-recourse debt. As of June 30, 2025, the note payable is included in the mortgage notes payable related to properties held for sale, net on the consolidated balance sheet. The loan is considered non-recourse and we will not be required to make up the difference if the property sells for less than the loan balance. See Note 4. Real Estate Assets above for further discussion on impairment of the property.
(3) | These properties were sold during February 2025 and their loan balances were paid in full.
(4) | On June 20, 2024, the Company, through its subsidiary, refinanced the mortgage loan on our West Fargo Industrial properties, and entered into a loan agreement for approximately $5.75 million, a term of five years, with an interest rate of 7.14%. The loan agreement has a Debt Service Coverage Ratio ("DSCR") minimum of 1.20 to 1.00 as calculated by Lender, in which: (a) the numerator is the Underwritten Net Cash Flow, and (b) the denominator is the annual Debt Service, tested at the end of each fiscal quarter.
(5) | On May 5, 2023, the Company, through its subsidiary, refinanced the mortgage loan on our Grand Pacific Center property and entered into a construction loan related to the tenant improvement associated with the KLJ Engineering LLC lease to occupy 33,296 square feet of the building. The refinanced loan is for approximately $3.8 million, a term of 10 years, with an interest rate of 6.35%, for the first 60 months. The interest rate is subject to reset in year five on June 10, 2028. The construction loan is for approximately $2.7 million, a term of 10 years, and will begin amortizing in year three, with an interest rate of 6.35%, for the first 60 months. The interest rate is subject to reset in year five on June 10, 2028. As of June 30, 2025, we had fully drawn down the loan amount of approximately $2.7 million on the construction loan.
(6) | These mortgage loans mature within the next twelve months and management is reviewing various options for the loan maturity, including but not limited to refinancing, restructuring and or selling these properties. As we get closer to the loan maturity date, the Company will finalize our plans. As of June 30, 2025, we have finalized terms sheets to refinance the loans on Genesis Plaza and One Park Centre from third party lenders. The Genesis Plaza loan closed on August 6, 2025 and the One Park Centre loan is expected to close in September 2025. We have begun exploring options for the Shea Center II loan which matures in January 2026, although there can be no guarantee we will be successful in refinancing the properties.
(7) | As of June 30, 2025, there were five model homes included as real estate assets held for sale. Our model homes have stand-alone mortgage notes at interest rates ranging from 6.0% to 8.0% per annum as of June 30, 2025.

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The loan agreement between NetREIT Model, Homes, Inc. (“NRMH”) and its Lender has a covenant for a Fixed Charge Coverage Ratio (“FCCR”) as defined for NRMH as of any date that equals (a) the sum of (i) EBITDA for the period ended as of such date minus (ii) distributions for the period ended as of such date divided by (b) the sum of (i) principal payments paid for the period ended as of such date plus (ii) interest expense for period ended as of such date. The FCCR is to be no less than 1.10 to 1.00, tested at the end of each fiscal quarter. As of June 30, 2025, NRMH was in compliance with this covenant. The Company and standalone subsidiaries have other various quarterly and annual reporting requirements to the individual property lenders and the Company is in compliance with all material conditions and covenants on those mortgage notes payable as of June 30, 2025, with the exception for Dakota Center's loan maturity.

Scheduled principal payments of mortgage notes payable were as follows as of June 30, 2025:

|  | Commercial |  |  | Model |  |  |  |  |
|  | Properties |  |  | Homes |  |  | Total Principal |
Years ending December 31: |  | Notes Payable |  |  | Notes Payable |  |  | Payments |
2025 |  | $ | 20,695,521 |  |  | $ | 3,665,513 |  |  | $ | 24,361,034 |
2026 |  |  | 16,645,343 |  |  |  | 3,031,062 |  |  |  | 19,676,405 |
2027 |  |  | 302,885 |  |  |  | 626,929 |  |  |  | 929,814 |
2028 |  |  | 322,652 |  |  |  | 9,075,310 |  |  |  | 9,397,962 |
2029 |  |  | 17,292,071 |  |  |  | 6,207,711 |  |  |  | 23,499,782 |
Thereafter |  |  | 11,715,704 |  |  |  | 5,839,087 |  |  |  | 17,554,791 |
Total |  | $ | 66,974,176 |  |  | $ | 28,445,612 |  |  | $ | 95,419,788 |

8. NOTES PAYABLE

On April 22, 2020, the Company received an Economic Injury Disaster Loan of $10,000 from the Small Business Administration ("SBA") to provide economic relief during the COVID-19 pandemic. This loan advance is not required to be repaid, has no stipulations on use, and has been recorded as fees and other income in the consolidated statements of operations during fiscal 2020. On August 17, 2020, we received an additional Economic Injury Disaster Loan ("EIDL") of $150,000, for which principal and interest payments are deferred for twelve months from the date of issuance, and interest accrues at 3.75% per year. The loan matures on August 17, 2050. We have used the funds for general corporate purposes to alleviate economic damage caused by the COVID-19 pandemic, which economic injury included abating or deferring rent to certain tenants (primarily retail tenants). As of June 30, 2025 and December 31, 2024, the principal balance on the SBA loan was approximately $142,375 and $144,089, respectively.

During 2023, we had issued one promissory note to our majority owned subsidiary, Dubose Model Home Investors 202 LP, for the refinancing of one model home property in Texas, for approximately $0.3 million with an interest rate of 5.55% per annum and original maturity date of August 15, 2024, which was extended for another year with an interest rate of 8.0% per annum. This note payable and note receivable, including interest expense and interest income related to this promissory note, is eliminated through consolidation on our financial statements. This property was subsequently sold in October 2024, and the loan was paid in full. As of June 30, 2025, there were no other notes payable.

9. INVESTMENT IN CONDUIT PHARMACEUTICALS

Sponsorship of Special Purpose Acquisition Company. As of December 31, 2024, the Company, through our wholly-owned subsidiary Murphy Canyon Acquisition Sponsor, LLC (the "Sponsor"), owned 2,944,514 shares ("CDT") of Conduit, a publicly traded company, 709,000 public common stock warrants ("CDTTW") and 540,000 of Conduit private warrants, with a combined value of approximately $0.2 million. On January 22, 2025, Conduit filed a certificate of amendment to the Company’s Second Amended and Restated Certificate of Incorporation (the “Amendment”) with the Secretary of State of the State of Delaware to effectuate a 1-for-100 reverse stock split (the “Conduit Reverse Stock Split”) of the outstanding shares of Conduit’s common stock. The Conduit Reverse Stock Split became effective on January 24, 2025 at 5:00 p.m., Eastern Time (the “Effective Time”) and the new CDT shares began trading on The Nasdaq Global Market on a split-adjusted basis on January 27, 2025 at market open under the existing ticker symbol, “CDT.” As of the Effective Time, every 100 shares of the Conduit's issued and outstanding common stock was combined into one share of common stock. After the Conduit Reverse Stock Split, our remaining shares of CDT totaled 29,431, with the fractional shares being paid out in cash, totaling $0.63. During May 2025, the Company sold all the remaining shares of CDT common stock for $13,990.

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As of June 30, 2025, we held 709,000 public common stock warrants of CDTTW, and 540,000 private common stock warrants, with a combined value of approximately $7,728. Conduit's public common stock warrants (CDTTW) and Private CDT Warrants presented on the consolidated balance sheets were measured at fair value using Level 1 and Level 3 market prices, taking into account the adoption of ASU 2022-03 Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.

10. COMMITMENTS AND CONTINGENCIES

The Company is obligated under certain tenant leases to fund tenant improvements and the expansion of the underlying leased properties. As of June 30, 2025 , approximately $1.6 million is estimated for such capital expenditures on existing properties, net of any construction financing, during the rest of the year.
Activist stockholder activities could adversely affect our business because responding to proxy contests and reacting to other actions by activist stockholders can be costly and time-consuming, disrupt our operations and divert the attention of management and our employees. We have or in the future may retain the services of various professionals to advise us on activist stockholder matters, including legal, financial, strategic and communication advisors, the costs of which may negatively impact our future financial results. In addition, perceived uncertainties as to our future direction, strategy or leadership created as a consequence of activist stockholders' initiatives may result in the loss of potential business opportunities, harm our ability to attract new investors, business partners, and employees, and cause our stock price to experience periods of volatility or stagnation. On March 13, 2024, a stockholder activist group announced its intention to file a preliminary proxy statement and accompanying WHITE universal proxy card with the SEC to be used to solicit votes for the election of director nominees at our next annual meeting of stockholders. On May 9, 2024, the Company entered into a cooperation agreement with this stockholder group pursuant to which Elena Piliptchak was appointed to our board of directors, effective immediately, as a Class III director with a term expiring at Presidio's 2026 Annual Meeting of Stockholders. Pursuant to the agreement, the stockholder group agreed to withdraw the director nominations it had previously submitted and support our board's slate of directors at the 2024 Annual Meeting of Stockholders, which was held on June 27, 2024. The stockholder group has also agreed to certain customary standstill provisions and voting commitments. We have evaluated this contingency and have determined a material loss is not probable or estimable at this time.
Litigation. From time to time, we may become involved in various lawsuits or legal proceedings which arise in the ordinary course of business. Neither the Company nor any of the Company's properties are presently subject to any material litigation nor, to the Company's knowledge, is there any material threatened litigation.

Environmental matters. The Company monitors its properties for the presence of hazardous or toxic substances. While there can be no assurance that a material environmental liability does not exist, the Company is not currently aware of any environmental liability with respect to the properties that would have a material effect on the Company's financial condition, results of operations and cash flow. Further, the Company is not aware of any environmental liability or any unasserted claim or assessment with respect to an environmental liability that the Company believes would require additional disclosure or recording of a loss contingency.

Financial Markets. The Company monitors concerns over economic recession, interest rate increases, policy priorities of the U.S. presidential administration, trade wars, labor shortages, and inflation, any of which may contribute to increased volatility and diminished expectations for the economy and markets. Additionally, the economic and geopolitical ramifications of the military conflicts in the Middle East and Ukraine, including sanctions, retaliatory sanctions, nationalism, supply chain disruptions and other consequences, could impact commercial real estate fundamentals and result in lower occupancy, lower rental rates, and declining values in our real estate portfolio and in the collateral securing our loan investments. We have not currently experienced a direct material impact to our Company or operations; however, we will continue to monitor the financial markets for events that could impact our commercial real estate properties.

11. STOCKHOLDERS' EQUITY

Preferred Stock. The Company is authorized to issue up to 1,000,000 shares of Preferred Stock (the "Preferred Stock"). The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is authorized to fix the number of shares of any series of the Preferred Stock, to determine the designation of any such series, and to set the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each series of Preferred Stock.

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On June 15, 2021, the Company completed its secondary offering of 800,000 shares of our Series D Preferred Stock for cash consideration of $25.00 per share to a syndicate of underwriters led by The Benchmark Company, LLC, as representative, resulting in approximately $18.1 million in net proceeds, after deducting the underwriting discounts and commissions and the offering expenses paid by the Company. The Company granted the underwriters a 45-day option to purchase up to an additional 120,000 shares of Series D Preferred Stock to cover over-allotments, which they exercised on June 17, 2021, resulting in approximately $2.7 million in net proceeds, after deducting the underwriting discounts and commissions and the offering expenses paid by the Company. In total, the Company issued 920,000 shares of Series D Preferred Stock with net proceeds of approximately $20.5 million, after deducting the underwriting discounts and commissions and the offering expenses paid by the Company and deferred offering costs. The Series D Preferred Stock is listed for trading on The Nasdaq Capital Market under the symbol SQFTP. The Company has used these proceeds for general corporate and working capital purposes, including acquiring additional properties.

On June 20, 2024, the Company entered into an underwriting agreement with The Benchmark Company, LLC pursuant to which the Company issued and sold in an underwritten public offering 109,054 shares of the Company’s Series D Preferred Stock. The shares of Series D Preferred Stock were sold to the public at a price of $16.00 per share. The Company agreed to an underwriting discount of 7% of the public offering price of the shares of Series D Preferred Stock sold in the offering. The offering closed on June 24, 2024, generating gross proceeds of approximately $1.74 million, before deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. The Company intends to use the net proceeds from the offering for general corporate and working capital purposes, including to potentially acquire additional properties. Below are some of the key terms of the Series D Preferred Stock:

Dividends:

Holders of shares of the Series D Preferred Stock are entitled to receive cumulative cash dividends at a rate of 9.375% per annum of the $25.00 per share liquidation preference (equivalent to $2.34375 per annum per share). Dividends will be payable monthly on the 15th day of each month (each, a "Dividend Payment Date"), provided that if any Dividend Payment Date is not a business day, then the dividend that would otherwise have been payable on that Dividend Payment Date may be paid on the next succeeding business day without adjustment in the amount of the dividend.

Voting Rights:

Holders of shares of the Series D Preferred Stock will generally have no voting rights. However, if the Company does not pay dividends on the Series D Preferred Stock for eighteen or more monthly dividend periods (whether or not consecutive), the holders of the Series D Preferred Stock (voting separately as a class with the holders of all other classes or series of the Company's preferred stock it may issue upon which like voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series D Preferred Stock in the election referred to below) will be entitled to vote for the election of two additional directors to serve on the Company's Board of Directors until the Company pays, or declares and sets apart funds for the payment of, all dividends that it owes on the Series D Preferred Stock, subject to certain limitations.

In addition, the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series D Preferred Stock (voting together as a class with all other series of parity preferred stock the Company may issue upon which like voting rights have been conferred and are exercisable) is required at any time for the Company to (i) authorize or issue any class or series of its stock ranking senior to the Series D Preferred Stock with respect to the payment of dividends or the distribution of assets on liquidation, dissolution or winding up or (ii) to amend any provision of the Company charter so as to materially and adversely affect any rights of the Series D Preferred Stock or to take certain other actions.

Liquidation Preference:

In the event of the Company's voluntary or involuntary liquidation, dissolution or winding up, the holders of shares of Series D Preferred Stock will be entitled to be paid out of the assets the Company has legally available for distribution to its stockholders, subject to the preferential rights of the holders of any class or series of its stock the Company may issue ranking senior to the Series D Preferred Stock with respect to the distribution of assets upon liquidation, dissolution or winding up, a liquidation preference of $25.00 per share, plus any accumulated and unpaid dividends to, but not including, the date of payment, before any distribution of assets is made to holders of the Company's common stock or any other class or series of the Company's stock it may issue that ranks junior to the Series D Preferred Stock as to liquidation rights.

In the event that, upon any such voluntary or involuntary liquidation, dissolution or winding up, the Company's available assets are insufficient to pay the amount of the liquidating distributions on all outstanding shares of Series D Preferred Stock and the corresponding amounts payable on all shares of other classes or series of the Company's stock that it issues ranking on parity with the Series D Preferred Stock in the distribution of assets, then the holders of the Series D Preferred Stock and all other such classes or series of stock shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled.

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Redemption:

Commencing on or after June 15, 2026, the Company may redeem, at its option, the Series D Preferred Stock, in whole or in part, at a cash redemption price equal to $25.00 per share, plus any accumulated and unpaid dividends to, but not including the redemption date. Prior to June 15, 2026, upon a Change of Control (as defined in the Articles Supplementary), the Company may redeem, at its option, the Series D Preferred Stock, in whole or part, at a cash redemption price of $25.00 per share, plus any accumulated and unpaid dividends to, but not including the redemption date. The Series D Preferred Stock has no stated maturity, will not be subject to any sinking fund or other mandatory redemption, and will not be convertible into or exchangeable for any of our other securities.

In accordance with the terms of the Series D Preferred Stock, the Series D monthly dividend has been approved by the Board of Directors through June 30, 2025 in the amount of $0.19531 per share payable on the 15th of every month to stockholders of record of Series D Preferred Stock as of the last day of the prior month. Total dividends paid to Series D Preferred stockholders during the three and six months ended June 30, 2025 were approximately $0.6 million and $1.2 million, respectively. Total dividends paid to Series D Preferred stockholders during the three and six months ended June 30, 2024 were approximately $0.5 million and $1.1 million, respectively.

Common Stock. The Company is authorized to issue up to 100,000,000 shares of Series A Common Stock, 1,000 shares of Series B Common Stock, and 9,000,000 shares of Series C Common Stock (collectively, the "Common Stock") each with $0.01 par value per share. Each class of Common Stock has identical rights, preferences, terms, and conditions except that the holders of Series B Common Stock are not entitled to receive any portion of Company assets in the event of the Company's liquidation. No shares of Series B or Series C Common Stock have been issued. Each share of Common Stock entitles the holder to one vote. Shares of our Common Stock are not subject to redemption and do not have any preference, conversion, exchange, or preemptive rights. The Company's charter contains restrictions on the ownership and transfer of the Common Stock that prevents one person from owning more than 9.8% of the outstanding shares of common stock. The Board of Directors granted our CEO, Jack Heilbron, and CIO, Gary Katz, an exception to the 9.8% ownership limit and established an excepted holder limit permitting each of Jack Heilbron and Gary Katz to beneficially or constructively own up to 19% of the outstanding shares of our common stock, including warrants, subject to compliance with Article VII of the Company’s charter. As of June 30, 2025, neither Mr. Heilbron nor Mr. Katz owned more than 9.8% of our outstanding shares of common stock.

On July 12, 2021, the Company entered into a securities purchase agreement with a single U.S. institutional investor for the purchase and sale of 100,000 shares of its Series A Common Stock, Common Stock Warrants to purchase up to 200,000 shares of Series A Common Stock and Pre-Funded Warrants to purchase up to 100,000 shares of Series A Common Stock. Each share of Common Stock and accompanying Common Stock Warrants were sold together at a combined offering price of $50.00, and each share of Common Stock and accompanying Pre-Funded Warrants were sold together at a combined offering price of $49.90. The Pre-Funded Warrants were exercised in full during August 2021 at a nominal exercise price of $0.01 per share. The Common Stock Warrants have an exercise price of $55.00 per share, were exercisable upon issuance and will expire five years from the date of issuance.

In connection with this additional offering, we agreed to issue the Placement Agent Warrants to purchase up to 80,000 shares of Series A Common Stock, representing 4.0% of the Series A Common Stock and shares of Series A Common Stock issuable upon exercise of the Pre-Funded Warrant. The Placement Agent Warrants were issued in August 2021, post exercise of the Pre-Funded Warrants with an exercise price of $6.25 and will expire five years from the date of issuance. The Company evaluated the accounting guidance in ASC 480 and ASC 815 regarding the classification of the Pre-Funded Warrant, Common Stock Warrants, and Placement Agent Warrants as equity or a liability and ultimately determined that it should be classified as permanent equity. As of June 30, 2025, none of the Common Stock Warrants and Placement Agent Warrants have been exercised.

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 78,215 shares of SQFT Series A Common Stock in exchange for their 36.4% ownership in NetREIT Genesis II, as per the original exchange agreement at $9.30 per share.

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Effective on May 19, 2025, the Company amended its charter by filing Articles of Amendment with the State Department of Assessments and Taxation of Maryland in order to effect a 1-for-10 reverse stock split of its outstanding shares of common stock (the “Reverse Stock Split”). As a result of the reverse stock split, every 10 shares of the Company’s common stock issued or outstanding were automatically reclassified into one new share of common stock, par value $0.10 per share, subject to the treatment of fractional shares as described below, without any action on the part of the holders. All historical share and per-share amounts reflected throughout the accompanying consolidated financial statements and other financial information in this Quarterly Report on Form 10-Q have been retroactively adjusted to reflect the 2025 Reverse Stock Split as if the split occurred as of the earliest period presented. The Reverse Stock Split did not affect the number of authorized shares of common stock. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who would otherwise have been entitled to receive fractional shares as a result of the Reverse Stock Split were rounded up to the nearest whole share. All equity awards and warrants outstanding immediately prior to the Reverse Stock Split were proportionately adjusted to reflect the Reverse Stock Split. Effective immediately after the Reverse Stock Split, the Company decreased the par value of the shares of Series A Common Stock from $0.10 per share back to $0.01 per share.

Stock Repurchase Program. While we will continue to pursue value creating investments, the Board of Directors believes there is significant embedded value in our assets that is yet to be realized by the market. Therefore, returning capital to stockholders through a repurchase program is an attractive use of capital currently. In November 2023, the Board of Directors authorized a stock repurchase program of up to $6.0 million of outstanding shares of our Series A Common Stock and up to $4.0 million of our Series D Preferred Stock which expired in November 2024. In December 2024, the Board of Directors authorized a stock repurchase program of up to $6.0 million of outstanding shares of our Series A Common Stock and up to $4.0 million of our Series D Preferred Stock, which shall expire in December 2025. During the six months ended June 30, 2025, we repurchased 4,091 shares of our Series A Common Stock, with an average price of $4.53 per share, including a commission of $0.025 per share, for a total cost of $18,552 for the Series A Common Stock. During the six months ended June 30, 2025, the Company repurchased 22,259 shares of our Series D Preferred Stock at an average price of approximately $14.73 per share, including a commission of $0.035 per share, for a total cost of $327,787 for the Series D Preferred Stock. Any repurchased shares are treated as authorized and unissued in accordance with Maryland law and shown as a reduction of stockholders’ equity at cost.

Tender Offer.

On April 8, 2025, we commenced the Offer, a fixed price self-tender offer to purchase for cash all odd lots plus up to 200,000 shares of the Company’s Series A common stock, par value $0.01 per share, properly tendered and not properly withdrawn prior to the expiration date, subject to the Company’s ability to increase the number of shares accepted for payment in the Offer by up to 2% of the Company’s outstanding common stock (resulting in an increase of up to approximately 28,308 shares) without amending or extending the Offer in accordance with rules promulgated by the SEC, at $6.80 per share, net to the seller in cash, less any applicable withholding taxes and without interest. The Offer expired at 11:59 P.M., New York City time, on May 5, 2025. Based on the final count by the depositary for the Offer, 214,412 shares of Class A common stock were validly and successfully tendered and not properly withdrawn, including tenders of shares for which the tender was defective but for which the Company waived such defects. Pursuant to the terms of the Offer, the Company accepted for purchase 214,412 shares of Class A common stock, including 1,209 odd lot shares. Total cash required to complete the tender offer was approximately $1,458,000, excluding fees and expenses related to the Offer. We believe that the tender offer provided an efficient mechanism to provide our stockholders who desired immediate liquidity with the opportunity to tender shares at a favorable price relative to the current market price and without incurring broker’s fees associated with most secondary market sales, while also providing a benefit to those stockholders who did not participate, as such stockholders automatically increased their relative percentage ownership interest in the Company and our future operations, including any liquidity events that we may have in the future. Another purpose of the Offer was to reduce the number of our issued and outstanding shares and to reduce or eliminate all of our odd lots. Overall, we believe that the Offer was a prudent use of our financial resources given our business profile, capital structure, assets and liabilities.

Cash Dividends on Common Stock and Preferred Stock. For the six months ended June 30, 2025 and 2024 the Company did not declare a cash dividend on shares of Series A Common Stock. For the six months ended June 30, 2025 and 2024 the Company declared and paid approximately $1.2 million and $1.1 million, respectively, in cash dividends on shares of Series D Preferred Stock. Cash permitting, the Company intends to continue to pay dividends on a monthly basis to holders of our Series D Preferred Stock going forward, but there can be no guarantee the Board of Directors will approve any future dividends. The Company has not decided when it will resume dividends to our common stockholders on a quarterly basis. The following is a summary of distributions declared per share of our Series A Common Stock and for our Series D Preferred Stock for the six months ended June 30, 2025 and 2024.

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Series A Common Stock

Quarter Ended |  | 2025 |  |  | 2024 |
|  | Distributions Declared |  |  | Distributions Declared |
March 31 |  | $ | — |  |  | $ | — |
June 30 |  |  | — |  |  |  | — |
Total |  | $ | — |  |  | $ | — |

Series D Preferred Stock

Month |  | 2025 |  |  | 2024 |
|  | Distributions Declared |  |  | Distributions Declared |
January |  | $ | 0.19531 |  |  | $ | 0.19531 |
February |  |  | 0.19531 |  |  |  | 0.19531 |
March |  |  | 0.19531 |  |  |  | 0.19531 |
April |  |  | 0.19531 |  |  |  | 0.19531 |
May |  |  | 0.19531 |  |  |  | 0.19531 |
June |  |  | 0.19531 |  |  |  | 0.19531 |
Total |  | $ | 1.17186 |  |  | $ | 1.17186 |

Partnership Interests. Through the Company, its subsidiaries, and its partnerships, we own 10 commercial properties in fee interest, two of which we own partial interests in through our holdings in various affiliates in which we serve as general partner, member and/or manager. Each of the limited partnerships is referred to as a "DownREIT." In each DownREIT, we have the right, through put and call options, to require our co-investors to exchange their interests for shares of our Common Stock at a stated price after a defined period (generally five years from the date they first invested in the entity's real property), the occurrence of a specified event or a combination thereof. The Company is a limited partner in five partnerships and sole stockholder in one corporation, which entities purchase and leaseback model homes from homebuilders.

12. SHARE-BASED INCENTIVE PLAN

The Company maintains a restricted stock incentive plan for the purpose of attracting and retaining officers, employees, and non-employee board members. Share awards generally vest in equal annual installments over a three-to-ten-year period from date of issuance. Non-vested shares have voting rights and are eligible for any dividends paid on shares of common stock. The Company recognized compensation cost for these fixed awards over the service vesting period, which represents the requisite service period, using the straight-line method. Prior to our IPO, the value of non-vested shares was calculated based on the offering price of the shares in the most recent private placement offering of $20.00, adjusted for stock dividends since granted and assumed selling costs, which management believed approximated fair market value as of the date of grant. Upon our IPO, the value of non-vested shares granted is generally calculated based on the closing price of our common stock on the date of the grant.

During our Annual Meeting of Stockholders, held on June 1, 2023, the Company's 2017 Incentive Award Plan was amended to increase the available shares for issuance from 250,000 to 350,000 and add an evergreen provision to, on April 1st and October 1st of each year, automatically increase the maximum number of shares of common stock available under the plan to 15% of the Company's outstanding shares of common stock, if on such date 350,000 (as adjusted for any reverse splits) is less than 15% of the Company's then-outstanding shares of common stock. At the Company’s 2025 Annual Meeting of Stockholders, held on June 2, 2025, the Company’s 2017 Incentive Award Plan was amended and restated to (i) increase the number of shares available for issuance thereunder to 450,000 from 350,000 shares of common stock and (ii) revise the plan’s evergreen provision to, on April 1st and October 1st of each year, automatically increase the maximum number of shares of common stock available under the plan to 15% of the Company’s outstanding shares of common stock, if on such date 450,000 shares constitute less than 15% of the Company’s then-outstanding shares of common stock.

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A summary of the activity for the Company's restricted stock was as follows:

Outstanding shares: |  | Common Shares |
Balance at December 31, 2024 |  |  | 117,081 |
Granted |  |  | 97,800 |
Forfeited |  |  | - |
Vested |  |  | (6,326 | )
Balance at June 30, 2025 |  |  | 208,555 |

The non-vested restricted shares outstanding as of June 30, 2025, will vest over the next one to three years. As of June 30, 2025, there were approximately 23,494 shares available to grant under the Company's 2017 Incentive Award Plan. Share-based compensation expense was approximately $0.3 million and $0.5 million for the three and six months ended June 30, 2025, respectively. Share-based compensation expense was approximately $0.3 million and $0.9 million for the three and six months ended June 30, 2024, respectively. As of June 30, 2025, future unrecognized stock compensation related to unvested shares totaled approximately $1.4 million.

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 six months ended June 30, 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, 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.

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The following tables compare the Company's segment activity to its results of operations and financial position as of and for the three and six months ended June 30, 2025, and June 30, 2024:

|  | For the Six Months Ended June 30, 2025 |
|  | Retail |  |  | Office/Industrial |  |  | Model Homes |  |  | Corporate and Other |  |  | Total |
Rental revenue |  | $ | 300,013 |  |  | $ | 4,920,507 |  |  | $ | 1,934,822 |  |  | $ | — |  |  | $ | 7,155,342 |
Recovery revenue |  |  | 56,439 |  |  |  | 1,102,401 |  |  |  | — |  |  |  | — |  |  |  | 1,158,840 |
Other operating revenue |  |  | 400 |  |  |  | 127,255 |  |  |  | (1,326 | ) |  |  | 63,414 |  |  |  | 189,743 |
Total revenues |  |  | 356,852 |  |  |  | 6,150,163 |  |  |  | 1,933,496 |  |  |  | 63,414 |  |  |  | 8,503,925 |
Rental operating costs |  |  | 105,392 |  |  |  | 3,167,862 |  |  |  | 98,097 |  |  |  | (296,103 | ) |  |  | 3,075,248 |
Net Operating Income (NOI) |  |  | 251,460 |  |  |  | 2,982,301 |  |  |  | 1,835,399 |  |  |  | 359,517 |  |  |  | 5,428,677 |
Gain on Sale - Model Homes |  |  | — |  |  |  | — |  |  |  | 564,258 |  |  |  | — |  |  |  | 564,258 |
Impairment of Model Homes |  |  | — |  |  |  | — |  |  |  | (117,712 | ) |  |  | — |  |  |  | (117,712 | )
Adjusted NOI |  | $ | 251,460 |  |  | $ | 2,982,301 |  |  | $ | 2,281,945 |  |  | $ | 359,517 |  |  | $ | 5,875,223 |

|  | For the Six Months Ended June 30, 2024 |
|  | Retail |  |  | Office/Industrial |  |  | Model Homes |  |  | Corporate and Other |  |  | Total |
Rental revenue |  | $ | 773,696 |  |  | $ | 4,773,051 |  |  | $ | 2,351,463 |  |  | $ | — |  |  | $ | 7,898,210 |
Recovery revenue |  |  | 192,372 |  |  |  | 1,023,343 |  |  |  | — |  |  |  | — |  |  |  | 1,215,715 |
Other operating revenue |  |  | 63,174 |  |  |  | 116,143 |  |  |  | 72,904 |  |  |  | 10,457 |  |  |  | 262,678 |
Total revenues |  |  | 1,029,242 |  |  |  | 5,912,537 |  |  |  | 2,424,367 |  |  |  | 10,457 |  |  |  | 9,376,603 |
Rental operating costs |  |  | 296,595 |  |  |  | 3,008,035 |  |  |  | 82,936 |  |  |  | (331,494 | ) |  |  | 3,056,072 |
Net Operating Income (NOI) |  |  | 732,647 |  |  |  | 2,904,502 |  |  |  | 2,341,431 |  |  |  | 341,951 |  |  |  | 6,320,531 |
Gain on Sale - Model Home |  |  | — |  |  |  | — |  |  |  | 2,829,998 |  |  |  | — |  |  |  | 2,829,998 |
Impairment of Model Homes |  |  | — |  |  |  | — |  |  |  | (196,793 | ) |  |  | — |  |  |  | (196,793 | )
Adjusted NOI |  | $ | 732,647 |  |  | $ | 2,904,502 |  |  | $ | 4,974,636 |  |  | $ | 341,951 |  |  | $ | 8,953,736 |

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|  | For the Three Months Ended June 30, 2025 |
|  | Retail |  |  | Office/Industrial |  |  | Model Homes |  |  | Corporate and Other |  |  | Total |
Rental revenue |  | $ | 93,574 |  |  | $ | 2,452,956 |  |  | $ | 1,019,301 |  |  | $ | — |  |  | $ | 3,565,831 |
Recovery revenue |  |  | - |  |  |  | 715,922 |  |  |  | — |  |  |  | — |  |  |  | 715,922 |
Other operating revenue |  |  | - |  |  |  | 64,893 |  |  |  | 428 |  |  |  | 31,666 |  |  |  | 96,987 |
Total revenues |  |  | 93,574 |  |  |  | 3,233,771 |  |  |  | 1,019,729 |  |  |  | 31,666 |  |  |  | 4,378,740 |
Rental operating costs |  |  | 4,824 |  |  |  | 1,549,497 |  |  |  | 49,940 |  |  |  | (141,656 | ) |  |  | 1,462,605 |
Net Operating Income (NOI) |  |  | 88,750 |  |  |  | 1,684,274 |  |  |  | 969,789 |  |  |  | 173,322 |  |  |  | 2,916,135 |
Gain on Sale - Model Homes |  |  | — |  |  |  | — |  |  |  | 323,359 |  |  |  | — |  |  |  | 323,359 |
Impairment of Model Homes |  |  | — |  |  |  | — |  |  |  | (90,769 | ) |  |  | — |  |  |  | (90,769 | )
Adjusted NOI |  | $ | 88,750 |  |  | $ | 1,684,274 |  |  | $ | 1,202,379 |  |  | $ | 173,322 |  |  | $ | 3,148,725 |

|  | For the Three Months Ended June 30, 2024 |
|  | Retail |  |  | Office/Industrial |  |  | Model Homes |  |  | Corporate and Other |  |  | Total |
Rental revenue |  | $ | 390,812 |  |  | $ | 2,408,910 |  |  | $ | 1,107,631 |  |  | $ | — |  |  | $ | 3,907,353 |
Recovery revenue |  |  | 84,441 |  |  |  | 482,404 |  |  |  | — |  |  |  | — |  |  |  | 566,845 |
Other operating revenue |  |  | 600 |  |  |  | 59,703 |  |  |  | 47,784 |  |  |  | 4,256 |  |  |  | 112,343 |
Total revenues |  |  | 475,853 |  |  |  | 2,951,017 |  |  |  | 1,155,415 |  |  |  | 4,256 |  |  |  | 4,586,541 |
Rental operating costs |  |  | 156,640 |  |  |  | 1,462,471 |  |  |  | 41,706 |  |  |  | (168,322 | ) |  |  | 1,492,495 |
Net Operating Income (NOI) |  |  | 319,213 |  |  |  | 1,488,546 |  |  |  | 1,113,709 |  |  |  | 172,578 |  |  |  | 3,094,046 |
Gain on Sale - Model Home |  |  | — |  |  |  | — |  |  |  | 811,903 |  |  |  | — |  |  |  | 811,903 |
Impairment of Model Homes |  |  | — |  |  |  | — |  |  |  | (101,245 | ) |  |  | — |  |  |  | (101,245 | )
Adjusted NOI |  | $ | 319,213 |  |  | $ | 1,488,546 |  |  | $ | 1,824,367 |  |  | $ | 172,578 |  |  | $ | 3,804,704 |

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 six months ended June 30, 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.

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|  | For the Six Months Ended June 30, 2025 |
|  | Retail |  |  | Office/Industrial |  |  | Model Homes |  |  | Corporate and Other |  |  | Total |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental income |  | $ | 356,452 |  |  | $ | 6,022,908 |  |  | $ | 1,934,822 |  |  | $ | — |  |  | $ | 8,314,182 |
Fees and other income |  |  | 400 |  |  |  | 127,255 |  |  |  | (1,326 | ) |  |  | 63,414 |  |  |  | 189,743 |
Total revenue |  |  | 356,852 |  |  |  | 6,150,163 |  |  |  | 1,933,496 |  |  |  | 63,414 |  |  |  | 8,503,925 |
Costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental operating costs |  |  | 105,392 |  |  |  | 3,167,862 |  |  |  | 98,097 |  |  |  | (296,103 | ) |  |  | 3,075,248 |
General and administrative |  |  | — |  |  |  | 16,850 |  |  |  | 417,895 |  |  |  | 2,450,889 |  |  |  | 2,885,634 |
Depreciation and amortization |  |  | 54,617 |  |  |  | 1,954,744 |  |  |  | 443,967 |  |  |  | 2,468 |  |  |  | 2,455,796 |
Impairment of goodwill and real estate assets |  |  | — |  |  |  | 4,226,620 |  |  |  | 117,712 |  |  |  | — |  |  |  | 4,344,332 |
Total costs and expenses |  |  | 160,009 |  |  |  | 9,366,076 |  |  |  | 1,077,671 |  |  |  | 2,157,254 |  |  |  | 12,761,010 |
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense - mortgage notes |  |  | (198,039 | ) |  |  | (1,813,284 | ) |  |  | (974,346 | ) |  |  | (2,672 | ) |  |  | (2,988,341 | )
Interest and other income, net |  |  | — |  |  |  | — |  |  |  | 15 |  |  |  | 10,339 |  |  |  | 10,354 |
Net loss in Conduit Pharmaceuticals marketable securities (see footnote 9) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (184,459 | ) |  |  | (184,459 | )
Gain on sales of real estate, net |  |  | 4,213,068 |  |  |  | — |  |  |  | 564,259 |  |  |  | — |  |  |  | 4,777,327 |
Income tax (expense) benefit |  |  | — |  |  |  | — |  |  |  | (52,481 | ) |  |  | 23,980 |  |  |  | (28,501 | )
Total other income (expense), net |  |  | 4,015,029 |  |  |  | (1,813,284 | ) |  |  | (462,553 | ) |  |  | (152,812 | ) |  |  | 1,586,380 |
Net income (loss) |  |  | 4,211,872 |  |  |  | (5,029,197 | ) |  |  | 393,272 |  |  |  | (2,246,652 | ) |  |  | (2,670,705 | )
Less: Income attributable to noncontrolling interests |  |  | — |  |  |  | (29,614 | ) |  |  | (310,854 | ) |  |  | — |  |  |  | (340,468 | )
Net income (loss) attributable to Presidio Property Trust, Inc. stockholders |  | $ | 4,211,872 |  |  | $ | (5,058,811 | ) |  | $ | 82,418 |  |  | $ | (2,246,652 | ) |  | $ | (3,011,173 | )

|  | For the Six Months Ended June 30, 2024 |
|  | Retail |  |  | Office/Industrial |  |  | Model Homes |  |  | Corporate and Other |  |  | Total |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental income |  | $ | 966,068 |  |  | $ | 5,796,394 |  |  | $ | 2,351,463 |  |  | $ | — |  |  | $ | 9,113,925 |
Fees and other income |  |  | 63,174 |  |  |  | 116,143 |  |  |  | 72,904 |  |  |  | 10,457 |  |  |  | 262,678 |
Total revenue |  |  | 1,029,242 |  |  |  | 5,912,537 |  |  |  | 2,424,367 |  |  |  | 10,457 |  |  |  | 9,376,603 |
Costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental operating costs |  |  | 296,595 |  |  |  | 3,008,035 |  |  |  | 82,936 |  |  |  | (331,494 | ) |  |  | 3,056,072 |
General and administrative |  |  | — |  |  |  | — |  |  |  | 444,669 |  |  |  | 3,842,697 |  |  |  | 4,287,366 |
Depreciation and amortization |  |  | 237,878 |  |  |  | 1,938,072 |  |  |  | 517,170 |  |  |  | 9,268 |  |  |  | 2,702,388 |
Impairment of goodwill and real estate assets |  |  | — |  |  |  | — |  |  |  | 196,793 |  |  |  | — |  |  |  | 196,793 |
Total costs and expenses |  |  | 534,473 |  |  |  | 4,946,107 |  |  |  | 1,241,568 |  |  |  | 3,520,471 |  |  |  | 10,242,619 |
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense - mortgage notes |  |  | (289,488 | ) |  |  | (1,692,231 | ) |  |  | (1,056,702 | ) |  |  | (2,630 | ) |  |  | (3,041,051 | )
Interest and other income, net |  |  | — |  |  |  | — |  |  |  | 15 |  |  |  | 9,837 |  |  |  | 9,852 |
Net gain in Conduit Pharmaceuticals marketable securities (see footnote 9) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (13,888,667 | ) |  |  | (13,888,667 | )
Gain on sales of real estate, net |  |  | — |  |  |  | — |  |  |  | 2,829,998 |  |  |  | — |  |  |  | 2,829,998 |
Income tax (expense) benefit |  |  | — |  |  |  | — |  |  |  | (139,107 | ) |  |  | (21,479 | ) |  |  | (160,586 | )
Total other income (expense), net |  |  | (289,488 | ) |  |  | (1,692,231 | ) |  |  | 1,634,204 |  |  |  | (13,902,939 | ) |  |  | (14,250,454 | )
Net income (loss) |  |  | 205,281 |  |  |  | (725,801 | ) |  |  | 2,817,003 |  |  |  | (17,412,953 | ) |  |  | (15,116,470 | )
Less: Income attributable to noncontrolling interests |  |  | — |  |  |  | (61,194 | ) |  |  | (1,912,039 | ) |  |  | — |  |  |  | (1,973,233 | )
Net income (loss) attributable to Presidio Property Trust, Inc. stockholders |  | $ | 205,281 |  |  | $ | (786,995 | ) |  | $ | 904,964 |  |  | $ | (17,412,953 | ) |  | $ | (17,089,703 | )

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|  | For the Three Months Ended June 30, 2025 |
|  | Retail |  |  | Office/Industrial |  |  | Model Homes |  |  | Corporate and Other |  |  | Total |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental income |  | $ | 93,574 |  |  | $ | 3,168,878 |  |  | $ | 1,019,301 |  |  | $ | — |  |  | $ | 4,281,753 |
Fees and other income |  |  | - |  |  |  | 64,893 |  |  |  | 428 |  |  |  | 31,666 |  |  |  | 96,987 |
Total revenue |  |  | 93,574 |  |  |  | 3,233,771 |  |  |  | 1,019,729 |  |  |  | 31,666 |  |  |  | 4,378,740 |
Costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental operating costs |  |  | 4,824 |  |  |  | 1,549,497 |  |  |  | 49,940 |  |  |  | (141,656 | ) |  |  | 1,462,605 |
General and administrative |  |  | — |  |  |  | — |  |  |  | 187,935 |  |  |  | 1,035,723 |  |  |  | 1,223,658 |
Depreciation and amortization |  |  | 22,928 |  |  |  | 955,575 |  |  |  | 231,954 |  |  |  | 1,234 |  |  |  | 1,211,691 |
Impairment of goodwill and real estate assets |  |  | — |  |  |  | 4,226,620 |  |  |  | 90,769 |  |  |  | — |  |  |  | 4,317,389 |
Total costs and expenses |  |  | 27,752 |  |  |  | 6,731,692 |  |  |  | 560,598 |  |  |  | 895,301 |  |  |  | 8,215,343 |
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense - mortgage notes |  |  | (39,942 | ) |  |  | (921,953 | ) |  |  | (514,636 | ) |  |  | (1,339 | ) |  |  | (1,477,870 | )
Interest and other income, net |  |  | — |  |  |  | — |  |  |  | 8 |  |  |  | 5,198 |  |  |  | 5,206 |
Net loss in Conduit Pharmaceuticals marketable securities (see footnote 9) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (7,802 | ) |  |  | (7,802 | )
Gain on sales of real estate, net |  |  | — |  |  |  | — |  |  |  | 323,359 |  |  |  | — |  |  |  | 323,359 |
Income tax (expense) benefit |  |  | — |  |  |  | — |  |  |  | (30,309 | ) |  |  | (23,601 | ) |  |  | (53,910 | )
Total other income (expense), net |  |  | (39,942 | ) |  |  | (921,953 | ) |  |  | (221,578 | ) |  |  | (27,544 | ) |  |  | (1,211,017 | )
Net income (loss) |  |  | 25,880 |  |  |  | (4,419,874 | ) |  |  | 237,553 |  |  |  | (891,179 | ) |  |  | (5,047,620 | )
Less: Income attributable to noncontrolling interests |  |  | — |  |  |  | (11,655 | ) |  |  | (217,250 | ) |  |  | — |  |  |  | (228,905 | )
Net income (loss) attributable to Presidio Property Trust, Inc. stockholders |  | $ | 25,880 |  |  | $ | (4,431,529 | ) |  | $ | 20,303 |  |  | $ | (891,179 | ) |  | $ | (5,276,525 | )

|  | For the Three Months Ended June 30, 2024 |
|  | Retail |  |  | Office/Industrial |  |  | Model Homes |  |  | Corporate and Other |  |  | Total |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental income |  | $ | 475,253 |  |  | $ | 2,891,314 |  |  | $ | 1,107,631 |  |  | $ | — |  |  | $ | 4,474,198 |
Fees and other income |  |  | 600 |  |  |  | 59,703 |  |  |  | 47,784 |  |  |  | 4,256 |  |  |  | 112,343 |
Total revenue |  |  | 475,853 |  |  |  | 2,951,017 |  |  |  | 1,155,415 |  |  |  | 4,256 |  |  |  | 4,586,541 |
Costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental operating costs |  |  | 156,640 |  |  |  | 1,462,471 |  |  |  | 41,706 |  |  |  | (168,322 | ) |  |  | 1,492,495 |
General and administrative |  |  | — |  |  |  | — |  |  |  | 236,747 |  |  |  | 1,966,169 |  |  |  | 2,202,916 |
Depreciation and amortization |  |  | 120,585 |  |  |  | 985,733 |  |  |  | 240,556 |  |  |  | 4,496 |  |  |  | 1,351,370 |
Impairment of goodwill and real estate assets |  |  | — |  |  |  | — |  |  |  | 101,245 |  |  |  | — |  |  |  | 101,245 |
Total costs and expenses |  |  | 277,225 |  |  |  | 2,448,204 |  |  |  | 620,254 |  |  |  | 1,802,343 |  |  |  | 5,148,026 |
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense - mortgage notes |  |  | (144,576 | ) |  |  | (881,309 | ) |  |  | (498,591 | ) |  |  | (1,369 | ) |  |  | (1,525,845 | )
Interest and other income, net |  |  | — |  |  |  | — |  |  |  | 8 |  |  |  | 5,198 |  |  |  | 5,206 |
Net gain in Conduit Pharmaceuticals marketable securities (see footnote 9) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (10,027,433 | ) |  |  | (10,027,433 | )
Gain on sales of real estate, net |  |  | — |  |  |  | — |  |  |  | 811,903 |  |  |  | — |  |  |  | 811,903 |
Income tax (expense) benefit |  |  | — |  |  |  | — |  |  |  | (53,484 | ) |  |  | (27,537 | ) |  |  | (81,021 | )
Total other income (expense), net |  |  | (144,576 | ) |  |  | (881,309 | ) |  |  | 259,836 |  |  |  | (10,051,141 | ) |  |  | (10,817,190 | )
Net income (loss) |  |  | 54,052 |  |  |  | (378,496 | ) |  |  | 794,997 |  |  |  | (11,849,228 | ) |  |  | (11,378,675 | )
Less: Income attributable to noncontrolling interests |  |  | — |  |  |  | (37,040 | ) |  |  | (432,325 | ) |  |  | — |  |  |  | (469,365 | )
Net income (loss) attributable to Presidio Property Trust, Inc. stockholders |  | $ | 54,052 |  |  | $ | (415,536 | ) |  | $ | 362,672 |  |  | $ | (11,849,228 | ) |  | $ | (11,848,040 | )

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|  | June 30, |  |  | December 31, |
Assets by Reportable Segment: |  | 2025 |  |  | 2024 |
Office/Industrial Properties: |  |  |  |  |  |  |  |
Land, buildings and improvements, net (1) |  | $ | 69,162,017 |  |  | $ | 74,425,180 |
Total assets (2) |  | $ | 70,228,381 |  |  | $ | 76,292,662 |
Model Home Properties: |  |  |  |  |  |  |  |
Land, buildings and improvements, net (1) |  | $ | 40,850,511 |  |  | $ | 37,416,000 |
Total assets (2) |  | $ | 41,464,138 |  |  | $ | 38,166,964 |
Retail Properties: |  |  |  |  |  |  |  |
Land, buildings and improvements, net (1) |  | $ | 4,554,707 |  |  | $ | 15,743,789 |
Total assets (2) |  | $ | 4,703,901 |  |  | $ | 16,673,605 |
Reconciliation to Total Assets: |  |  |  |  |  |  |  |
Total assets for reportable segments |  | $ | 116,396,420 |  |  | $ | 131,133,231 |
Corporate and other assets: |  |  |  |  |  |  |  |
Cash, cash equivalents and restricted cash |  |  | 1,243,312 |  |  |  | 564,922 |
Other assets, net |  |  | 10,760,681 |  |  |  | 10,871,497 |
Total Assets |  | $ | 128,400,413 |  |  | $ | 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 Six Months Ended June 30, |
Capital Expenditures by Reportable Segment |  | 2025 |  |  | 2024 |
Office/Industrial Properties: |  |  |  |  |  |  |  |
Capital expenditures and tenant improvements, office |  | $ | 709,531 |  |  | $ | 1,010,815 |
Model Home Properties: |  |  |  |  |  |  |  |
Acquisition of operating properties, model home |  |  | 9,444,465 |  |  |  | 5,740,918 |
Retail Properties: |  |  |  |  |  |  |  |
Capital expenditures and tenant improvements, retail |  |  | — |  |  |  | 203,121 |
Totals: |  |  |  |  |  |  |  |
Acquisition of operating properties, net |  |  | 9,444,465 |  |  |  | 5,740,918 |
Capital expenditures and tenant improvements |  |  | 709,531 |  |  |  | 1,213,936 |
Total real estate investments |  | $ | 10,153,996 |  |  | $ | 6,954,854 |

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14. INCOME TAX PROVISION

We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, commencing with the taxable year ended December 31, 2000. As a REIT, U.S. federal income tax law generally requires us to distribute annually at least 90% of our REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that we pay tax at regular corporate rates to the extent that we annually distribute less than 100% of our net taxable income. We are also subject to U.S. federal, state and local income taxes on our domestic taxable REIT subsidiaries (""TRS"") based on the tax jurisdictions in which they operate.

During the six months ended June 30, 2025 and 2024, we recorded a current income tax provision (benefit) of $28,501 and $160,586, respectively, related to activities of our taxable REIT subsidiaries. There was a $298,644 income tax asset related to the operating activities of our TRS entities as of June 30, 2025 and December 31, 2024, respectively.

We have calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the projected full fiscal year to the TRS pretax income or loss excluding unusual or infrequently occurring discrete items for the reporting period, and have accounted for the REIT's federal refunds and minimum state income taxes as a discrete item in the reporting period.

In December 2023, the FASB issued ASU 2023-09 "Improvements to Income Tax Disclosures" ("ASU 2023-09"). ASU 2023-09 intends to improve the transparency of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and is to be adopted on a prospective basis with the option to apply retrospectively. The Company adopted the disclosures on a prospective basis which did not create a material impact to our consolidated financial statements.

15. RELATED PARTY

During the three and six months ended June 30, 2025 and three and six months ended June 30, 2024, the Company leased portions of its corporate headquarters to Puppy Toes, Inc., a company owned by the Chief Executive Officer and his wife, and to Centurion Counsel, Inc., which is owned by Puppy Toes, Inc. Rent billed to these entities from the Company totaled $3,378 and $6,755 for three and six months ended June 30, 2025, respectively, and $2,688 and $5,376 for three and six months ended June 30, 2024, respectively.

Additionally, we received full payroll reimbursement for employee services provided to Centurion Counsel and Puppy Toes, Inc. during the six months ended June 30, 2025 and 2024, which totaled approximately $65,212 and $75,715, respectively. These reimbursements were at cost and were not marked up or discounted. As of June 30, 2025 and December 31, 2024, we had reimbursement receivable balances of approximately $1,104 and $12,376 which were paid in full during July 2025 and January 2024, respectively.

During the six months ended June 30, 2024, the Company used the services of a former officer and director, Larry Dubose, for consulting on our Model Home Partnerships, and the setup of Dubose Model Home Investors #207. The Company paid Mr. Dubose a total of $153,750 in consulting payments for the six months ended June 30, 2024. Additionally, a trust controlled by Mr. Dubose is an investor in many of our Model Home Partnerships, and as such received pro-rata distributions and return of capital payments during the six months ended June 30, 2024, totaling $86,520. During the six months ended June 30, 2025, the Company paid Mr. Dubose $25,000 in consulting fees and $7,599 in pro-rata distributions and return of capital payments. Mr. Dubose is the father-in-law of Steve Hightower, the President of our Model Home Division and a director.

For the fiscal year ended December 31, 2024, the Company paid to Mr. Dubose, inclusive of the payments made in the quarter ended March 31, 2024 described above, $191,250. Through his ownership of a trust that is an investor in many of our Model Home Partnerships, Mr. Dubose received pro-rata distributions and return of capital payments of $101,889 during the year ended December 31, 2024, inclusive of pro-rata distributions and return of capital payments received in the six months ended June 30, 2024 described above.

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16. SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date the financial statements were issued. Based upon this review, except as disclosed below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements other than those disclosed below.

On July 8, 2025, the Company declared a dividend on its 9.375% Series D Cumulative Redeemable Perpetual Preferred Stock (the “Series D Preferred Stock”) for the months of July 2025, August 2025 and September 2025. In accordance with the terms of the Series D Preferred Stock, the July 2025 Series D dividend will be payable in cash in the amount of $0.19531 per share on August 15, 2025, to stockholders of record of Series D Preferred Stock as of the dividend record date of July 31, 2025. The August 2025 Series D dividend will be payable in cash in the amount of $0.19531 per share on September 15, 2025, to stockholders of record of Series D Preferred Stock as of the dividend record date of August 31, 2025. The September 2025 Series D dividend will be payable in cash in the amount of $0.19531 per share on October 15, 2025, to stockholders of record of Series D Preferred Stock as of the dividend record date of September 30, 2025.

On July 14, 2025, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional investor (the “Purchaser”) for the purpose of raising approximately $2.05 million in gross proceeds for the Company. Pursuant to the terms of the Purchase Agreement, the Company agreed to sell in a registered direct offering (the “Offering”), (i) 140,000 shares (the “Public Shares”) of its Series A Common Stock and (ii) pre-funded warrants to purchase up to 30,830 shares (the “Pre-Funded Warrant Shares”) of Series A Common Stock (the “Pre-Funded Warrants”). Each Public Share and accompanying Pre-Funded Warrant were sold together at a combined offering price of $12.00. The Pre-Funded Warrants were immediately exercisable at a nominal exercise price of $0.0001 and were exercised on July 14, 2025 in full.

The closing of the sales of the Securities pursuant to the Purchase Agreement occurred on July 15, 2025, subject to customary closing conditions. The net proceeds to the Company after deducting the Placement Agent’s fees and the Company’s estimated offering expenses are expected to be approximately $1.7 million. The Company intends to use the net proceeds from the Offering for working capital and for other general corporate purposes including to potentially acquire additional properties.

In addition, in connection with the Purchase Agreement, the Company and the Purchaser entered into an Amendment to Series A Common Stock Purchase Warrants (the “Amendment”). The Amendment amends certain warrants to purchase 200,000 shares of Series A Common Stock purchased by the Purchaser on July 14, 2021 to (i) reduce the exercise price to $12.00 per share from $55 per share and (ii) extend the termination date to July 16, 2030 from July 16, 2026. Pursuant to the Stock Purchase Agreement, the Company agreed to file a resale registration statement to register the shares of Series A Common Stock underlying such warrants within 30 days of the closing of the offering and to cause the registration statement to go effective within 60 days of the closing.

Pursuant to the terms of the Purchase Agreement and subject to certain exceptions as set forth in the Purchase Agreement, for a period of 15 days after the closing of the offering, the Company may not, without the prior written consent of the Placement Agent and the Purchaser and subject to certain exceptions, (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any Series A Common Stock or common stock equivalent or (ii) file any registration statement or any amendment or supplement thereto. In addition, pursuant to the terms of the Purchase Agreement, for a period of 60 days after the closing of the offering, the Company shall be prohibited from effecting or entering into an agreement to effect any variable rate transaction, with the exceptions that (i) the Company may enter into an at-the-market sales facility with the Placement Agent; (ii) file a registration statement with respect to an at-the-market sales facility with the Placement Agent; and (iii) beginning 30 days after closing, may make sales pursuant to an at-the-market sales facility with the Placement Agent.

On August 6, 2024, the Company refinanced the mortgage loan on our Genesis Plaza property, and entered into a loan agreement for $6.25 million, a term of four years, with an interest rate of 7.07%.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto appearing in Item 1 of this report and the more detailed information contained in our 2024 year end Annual Report.

We may refer to the three months ended June 30, 2025 and June 30, 2024, as the "2025 Quarter" and the "2024 Quarter," respectively.

Forward-Looking Statements

This Form 10-Q contains forward-looking statements which involve risks and uncertainties. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," or "potential" and/or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and also of which do not relate solely to historical matters. Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Moreover, investors are cautioned to interpret many of the risks identified in the risk factors discussed in this 10-Q and our 2024 year end Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 31, 2025, respectively. Additional factors which may cause the actual results, performance, or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements include, but are not limited to, the risks associated with the ownership of real estate in general and our real estate assets in particular; the economic health of the metro regions where we conduct business; the risk of failure to enter into/and or complete contemplated acquisitions and dispositions, within the price ranges anticipated and on the terms and timing anticipated; changes in the composition of our portfolio; fluctuations in interest rates; reductions in or actual or threatened changes to the timing of federal government spending; the risks related to the use of third-party providers and joint venture partners; the ability to control our operating expenses; the economic health of our tenants; the supply of competing properties; shifts away from brick and mortar stores to e-commerce; the availability and terms of financing and capital and the general volatility of securities markets; compliance with applicable laws, including those concerning the environment and access by persons with disabilities; terrorist attacks or actions and/or risks relating to information technology and cybersecurity attacks, loss of confidential information and other related business disruptions; weather conditions, natural disasters and pandemics; ability to maintain key personnel; failure to qualify and maintain our qualification as a REIT and the risks of changes in laws affecting REITs; and other risks and uncertainties detailed from time to time in our filings with the SEC, including our 2024 year end Annual Report. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We undertake no obligation to update our forward-looking statements or risk factors to reflect new information, future events, or otherwise.

OVERVIEW

The Company operates as an internally managed, diversified REIT, with primary holdings in office, industrial, retail, and triple-net leased model home properties. In October 2017, we changed our name from "NetREIT, Inc." to "Presidio Property Trust, Inc." The Company acquires, owns, and manages a geographically diversified portfolio of real estate assets, including office, industrial, retail and model home residential properties leased to homebuilders located in the United States. As of June 30, 2025, the Company owned or had an equity interest in:

| • | Eight office buildings and one industrial property ("Office/Industrial Properties"), which total approximately 758,175 rentable square feet;

| • | One retail building (“Retail Property”) with approximately 10,500 rentable square feet; and

| • | 87 model home residential properties ("Model Homes" or "Model Home Properties"), totaling approximately 260,227 square feet, leased back on a triple-net basis to homebuilders that are owned by four affiliated limited partnerships and one wholly-owned corporation, all of which we control.

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We own three commercial properties located in Colorado, four in North Dakota, one in Southern California, one in Texas and one in Maryland. Our model home properties are located in four states. While geographical clustering of real estate enables us to reduce our operating costs through economies of scale by servicing several properties with less staff, it makes us susceptible to changing market conditions in these discrete geographic areas. We do not develop properties but acquire properties that are stabilized or that we anticipate will be stabilized within two or three years of acquisition. We consider a property to be stabilized once it has achieved an 80% occupancy rate for a full year as of January 1 of such year or has been operating for three years.

Most of our office and retail properties are leased to a variety of tenants ranging from small businesses to large public companies, many of which are not investment grade. We have, in the past, entered into, and intend in the future to enter into, purchase agreements for real estate having net leases that require the tenant to pay all of the operating expenses or pay increases in operating expenses over specific base years. Most of our office leases are for terms of three to five years with annual rental increases. Our model homes are typically leased back for two to three years to the home builder on a triple-net lease. Under a triple-net lease, the tenant is required to pay all operating, maintenance and insurance costs and real estate taxes with respect to the leased property.

We seek to diversify our portfolio by commercial real estate segments, including office, industrial, retail and model home properties to reduce the adverse effect of a single under-performing segment and/or tenant. We further mitigate risk at the tenant level through our credit review process, which varies by tenant class. For example, our commercial and industrial tenants tend to be corporations or individually owned businesses. In these cases, we typically obtain financial records, including financial statements and tax returns (depending on the circumstance), and run credit reports for any prospective tenant to support our decision to enter into a rental arrangement. We also typically obtain security deposits from these commercial tenants. Our Model Home commercial tenants are well-known homebuilders with established credit histories. These tenants are subjected to financial review and analysis prior to us entering into a sales-leaseback transaction.

In June 2024, the Board of Directors established the Strategic Planning and Cyber Committee (the "Strategic Committee"). The purpose of the Strategic Committee is to: assist the Board in carrying out its responsibilities of oversight over the Company's business strategy, make recommendations to the Board on the Company's strategic direction and objectives and serve as a liaison between the Board and management, and assist the Board in fulfilling its responsibilities of oversight with regard to the Company's identification, assessment, and management of the Company's cybersecurity risks. There can be no assurance that the work of the Strategic Committee will result in any transaction being pursued or consummated. In addition, there is no formal timetable for the Strategic Committee's exploration of potential strategic alternatives, and the Company does not intend to disclose any developments with respect to the Strategic Committee's activities unless and until the Company determines that further disclosure is appropriate or required by law or regulation.

For additional information regarding our Common Stock activity, see Footnote 11. Stockholders' Equity in the Notes to the Consolidated Financial Statements in "Part I, Item 1. Financial Statements" of this Quarterly Report.

For details regarding our sponsorship of a special purpose acquisition company, Murphy Canyon Acquisition Corp. ("Murphy Canyon" or the "SPAC"), see Note 9, Investment in Conduit Pharmaceuticals, in the Notes to the Consolidated Financial Statements in "Part I, Item 1. Financial Statements" of this Quarterly Report.

SIGNIFICANT TRANSACTIONS IN 2025 AND 2024

Acquisitions during the six months ended June 30, 2025

| • | The Company acquired 22 model homes for approximately $9.4 million. The purchase price was paid through cash payments of approximately $2.8 million and mortgage notes of approximately $6.6 million.

Acquisitions during the six months ended June 30, 2024

| • | The Company acquired 12 model homes for approximately $5.7 million. The purchase price was paid through cash payments of approximately $1.7 million and mortgage notes of approximately $4.0 million.

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Dispositions during the six months ended June 30, 2025

| • | On February 7, 2025, the Company sold two commercial properties, Union Town Center and Research Parkway, to a single buyer for approximately $17.0 million and recognized a net gain of approximately $4.2 million, net of closing costs.
| • | The Company sold 13 model homes for approximately $5.9 million, net of sales costs, and recognized a gain of approximately $0.6 million.

Dispositions during the six months ended June 30, 2024

| • | The Company sold 42 model homes for approximately $20.1 million, net of sales costs, and recognized a gain of approximately $2.8 million.

CRITICAL ACCOUNTING POLICIES

There have been no material changes to our critical accounting policies as previously disclosed in our 2024 year end Annual Report.

MANAGEMENT EVALUATION OF RESULTS OF OPERATIONS

Management’s evaluation of operating results includes an assessment of our ability to generate the cash flow necessary to pay operating expenses, general and administrative expenses, debt service and to fund distributions to our stockholders. As a result, management’s assessment of operating results gives less emphasis to the effects of unrealized gains and losses and other non-cash charges, such as depreciation and amortization and impairment charges, which may cause fluctuations in net income for comparable periods but have no impact on cash flows. Management’s evaluation of our potential for generating cash flow includes assessments of our recently acquired properties, our non-stabilized properties, long-term sustainability of our real estate portfolio, our future operating cash flow from anticipated acquisitions, and the proceeds from the sales of our real estate assets.

In addition, management evaluates the results of the operations of our portfolio and individual properties with a primary focus on increasing and enhancing the value, quality and quantity of properties in our real estate holdings. Management focuses its efforts on improving underperforming assets through re-leasing efforts, including negotiation of lease renewals and rental rates. Properties are regularly evaluated for potential added value appreciation and cashflow and, if lacking such potential, are sold with the equity reinvested in new acquisitions or otherwise allocated in a manner we believe is accretive to our stockholders. Our ability to increase assets under management is affected by our ability to raise borrowings and/or capital, coupled with our ability to identify appropriate investments.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED June 30, 2025 and 2024

Revenues. Total revenues were approximately $4.4 million for the three months ended June 30, 2025, compared to approximately $4.6 million for the same period in 2024. As of June 30, 2025, we had approximately $114.6 million in net real estate assets including 87 model homes, compared to approximately $130.9 million in net real estate assets including 80 model homes at June 30, 2024. The average number of model homes held during the three months ended June 30, 2025 and 2024 was 85 and 84, respectively. The change in revenue is directly related to the decrease in commercial real estate rental income during the current period, from the sale of our two commercial properties on February 7, 2025.

Rental Operating Costs. Rental operating costs totaled approximately$1.5 million for the three months ended June 30, 2025, compared to approximately $1.5 million for the same period in 2024. Rental operating costs as a percentage of total revenue was approximately 33% for both the three months ended June 30, 2025 and 2024, respectively. We expect rental operating costs to go down in future quarters due to the sale of our retail properties UTC and Research Parkway during February 2025; however, if we purchase additional properties, our rental operating costs will increase.

General and Administrative Expenses. G&A expenses for the three months ended June 30, 2025 and 2024 totaled approximately $1.2 million and $2.2 million, respectively. G&A expenses as a percentage of total revenue was 27.9% and 48.0% for the three months ended June 30, 2025 and 2024, respectively. G&A expenses for the three months ended June 30, 2025 decreased by approximately $1.0 million partially related to consulting fees in 2024 and additional legal fees related to Zuma Capital Management, LLC (Zuma Capital"), which was not repeated in 2025. During the three months ended June 30, 2025, we also reduced our accrual for board fees by $130,000, as cash payments were replaced with stock compensation, and we reduced our accrual for income tax preparation fees.

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Depreciation and Amortization. Depreciation and amortization expense was approximately$1.2 million and $1.4 million for the three months ended June 30, 2025 and 2024, respectively, directly related to the decrease in commercial real estate rental income during the current period, from the sale of our two commercial properties on February 7, 2025.

Asset Impairments. We review the carrying value of each of our real estate properties regularly to determine if circumstances indicate an impairment in the carrying value of these investments exists. During the three months ended June 30, 2025 and 2024, we recognized non-cash impairment charges of approximately $0.1 million related to one model home property and approximately $0.1 million related to four model homes, respectively, based on estimated selling prices. Additionally, during the three months ended June 30, 2025, in connection with the pending sale of Dakota Center, we have impaired the property’s book value and recorded an impairment charge of approximately $3.3 million, with the short sale expected to take place during the third quarter of 2025, which will include a discounted payoff for the non-recourse loan. We also recorded an impairment charge of approximately $0.9 million, on our Shea Center II property, based on current market conditions, occupancy rates, and the estimated hold period of the property.

Interest Expense - mortgage notes. Interest expense, including amortization of deferred finance charges was approximately $1.5 million for the three months ended June 30, 2025, compared to approximately $1.5 million for the same period in 2024. T he weighted average interest rate on our outstanding debt was 5.90% and 5.38% as of June 30, 2025 and 2024, respectively. Mortgage notes payable totaled approximately $95.4 million and $102.0 million as of June 30, 2025 and 2024, respectively. The decrease in mortgage notes payable is a direct result of the sale of our two commercial properties during February 2025 and the change in the number of model homes.

Gain on Sale of Real Estate Assets, net. The change in gain or loss on the sale of real estate assets is dependent on the mix of properties sold and the market conditions at the time of the sale. S ee "Significant Transactions in 2025 and 2024" above for further detail.

Income allocated to non-controlling interests. Income allocated to non-controlling interests for the three months ended June 30, 2025 and 2024 totaled approximately $0.2 million and $0.5 million, respectively. This was directly related to the gain on sales of model homes held by our affiliated limited partnerships.

Loss on Conduit remeasurement. As of June 30, 2025, we had sold our remaining 29,431 shares of CDT for $13,990, and held 709,000 public common stock warrants of CDTTW, and 540,000 private common stock warrants, with a combined value of approximately $7,728. Conduit's public common stock warrants (CDTTW) and Private CDT Warrants presented on the consolidated balance sheets were measured at fair value using Level 1 and Level 3 market prices, taking into account the adoption of ASU 2022-03 Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. During the three months ended June 30, 2025, we recorded a loss on Conduit's marketable securities of $7,802, compared to a loss of approximately $10.0 million during the three months ended June 30, 2024.

RESULTS OF OPERATIONS FOR THE six MONTHS ENDED June 30, 2025 and 2024

Revenues. Total revenues were approximately $8.5 million for the six months ended June 30, 2025, compared to approximately $9.4 million for the same period in 2024. As of June 30, 2025, we had approximately $114.6 million in net real estate assets including 87 model homes, compared to approximately $130.9 million in net real estate assets including 80 model homes at June 30, 2024. The average number of model homes held during the six months ended June 30, 2025 and 2024 was 83 and 93, respectively. The change in revenue is directly related to the decrease in model home rental income and transaction fees during the current period, and the sale of our two commercial properties on February 7, 2025.

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Rental Operating Costs. Rental operating costs totaled approximately $3.1 million for the six months ended June 30, 2025, compared to approximately $3.1 million for the same period in 2024. Rental operating costs as a percentage of total revenue was 36.2% and 32.6% for the six months ended June 30, 2025 and 2024, respectively. We expect rental operating costs to go down in future quarters due to the sale of our retail properties UTC and Research Parkway during February 2025; however, if we purchase additional properties, our rental operating costs will increase.

General and Administrative Expenses. G&A expenses for the six months ended June 30, 2025 and 2024 totaled approximately $2.9 million and $4.3 million, respectively. G&A expenses as a percentage of total revenue was 33.9% and 45.7% for the six months ended June 30, 2025 and 2024, respectively. G&A expenses for the six months ended June 30, 2025 decreased by approximately $1.4 million partially related to consulting fees in 2024 including a one-time payment for the setup of DMH 207, and additional legal fees related to Zuma Capital Management, LLC (Zuma Capital"), which was not repeated in 2025. Additionally, during the six months ended June 30, 2025, we also reduced our accrual for board fees by $130,000, as cash payments were replaced with stock compensation, our accrual for income tax preparation fees, and companywide bonus accruals were down approximately $127,000.

Depreciation and Amortization. Depreciation and amortization expense was approximately $2.5 million and $2.7 million for the six months ended June 30, 2025 and 2024, respectively.

Asset Impairments. We review the carrying value of each of our real estate properties regularly to determine if circumstances indicate an impairment in the carrying value of these investments exists. During the six months ended June 30, 2025 and 2024, we recognized non-cash impairment charges of approximately $0.1 million and $0.2 million, respectively, related to model homes properties, based on estimated selling prices. Additionally, during the six months ended June 30, 2025, in connection with the pending sale of Dakota Center, we have impaired the property’s book value and recorded an impairment charge of approximately $3.3 million, with the short sale expected to take place during the third quarter of 2025, which will include a discount payoff for the non-recourse loan. We also recorded an impairment charge of approximately $0.9 million, on our Shea Center II property, based on current market conditions, occupancy rates, and the estimated hold period of the property.

Interest Expense - mortgage notes. Interest expense, including amortization of deferred finance charges was approximately $3.0 million for the six months ended June 30, 2025, compared to approximately $3.0 million for the same period in 2024. T he weighted average interest rate on our outstanding debt was 5.90% and 5.38% as of June 30, 2025 and 2024, respectively. Mortgage notes payable totaled approximately $95.4 million and $102.3 million as of June 30, 2025 and 2024, respectively. The decrease in mortgage notes payable is a direct result of the sale of our two commercial properties during February 2025 and the change in the number of model homes.

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Gain on Sale of Real Estate Assets, net. The change in gain or loss on the sale of real estate assets is dependent on the mix of properties sold and the market conditions at the time of the sale. S ee "Significant Transactions in 2025 and 2024 " above for further detail.

Income allocated to non-controlling interests. Income allocated to non-controlling interests for the six months ended June 30, 2025 and 2024 totaled approximately $0.3 million and $2.0 million, respectively. This was directly related to the gain on sales of model homes held by our affiliated limited partnerships.

Loss on Conduit remeasurement. As of June 30, 2025, we had sold our remaining 29,431 shares of CDT for $13,990, and held 709,000 public common stock warrants of CDTTW, and 540,000 private common stock warrants, with a combined value of approximately $7,728. Conduit's public common stock warrants (CDTTW) and Private CDT Warrants presented on the consolidated balance sheets were measured at fair value using Level 1 and Level 3 market prices, taking into account the adoption of ASU 2022-03 Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. During the six months ended June 30, 2025, we recorded a loss on Conduit's marketable securities of $184,459, compared to a loss of approximately $13.9 million during the six months ended June 30, 2024.

Geographic Diversification Tables

The following tables show a list of commercial properties owned by the Company grouped by state and geographic region as of June 30, 2025:

State |  | No. of Properties |  |  | Aggregate Square Feet |  |  | Approximate % of Square Feet |  |  | Current Base Annual Rent |  |  | Approximate % of Aggregate Annual Rent |
California |  |  | 1 |  |  |  | 57,807 |  |  |  | 7.5 | % |  | $ | 1,548,723 |  |  |  | 14.8 | %
Colorado |  |  | 3 |  |  |  | 269,503 |  |  |  | 35.1 | % |  |  | 4,238,114 |  |  |  | 40.4 | %
Maryland |  |  | 1 |  |  |  | 31,752 |  |  |  | 4.1 | % |  |  | 739,050 |  |  |  | 7.1 | %
North Dakota |  |  | 4 |  |  |  | 399,113 |  |  |  | 51.9 | % |  |  | 3,605,054 |  |  |  | 34.4 | %
Texas |  |  | 1 |  |  |  | 10,500 |  |  |  | 1.4 | % |  |  | 349,546 |  |  |  | 3.3 | %
Total |  |  | 10 |  |  |  | 768,675 |  |  |  | 100.0 | % |  | $ | 10,480,487 |  |  |  | 100.0 | %

The following tables show a list of our Model Home properties by geographic region as of June 30, 2025:

State |  | No. of Properties |  |  | Aggregate Square Feet |  |  | Approximate % of Square Feet |  |  | Current Base Annual Rent |  |  | Approximate of Aggregate % Annual Rent |
Alabama |  |  | 10 |  |  |  | 23,835 |  |  |  | 9.2 | % |  | $ | 347,064 |  |  |  | 9.2 | %
Arizona |  |  | 2 |  |  |  | 6,822 |  |  |  | 2.6 | % |  | $ | 149,196 |  |  |  | 3.9 | %
Tennessee |  |  | 2 |  |  |  | 5,534 |  |  |  | 2.1 | % |  | $ | 89,304 |  |  |  | 2.4 | %
Texas |  |  | 73 |  |  |  | 224,036 |  |  |  | 86.1 | % |  | $ | 3,207,360 |  |  |  | 84.5 | %
Total |  |  | 87 |  |  |  | 260,227 |  |  |  | 100.0 | % |  | $ | 3,792,924 |  |  |  | 100.0 | %

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LIQUIDITY AND CAPITAL RESOURCES

Overview

Our anticipated future sources of liquidity may include existing cash and cash equivalents, cash flows from operations, refinancing of existing mortgages, future real estate sales, new borrowings from our model home lines of credit, and the sale of our equity or issuance of debt securities or bonds. Our cash and restricted cash at June 30, 2025 was approximately $7.3 million. Our future capital needs include paying down existing borrowings, maintaining our existing properties, funding tenant improvements, paying lease commissions (to the extent they are not covered by lender-held reserve deposits), and the payment of dividends to our stockholders. We also are actively seeking model home investments that are likely to produce income and achieve long-term gains in order to pay dividends to our stockholders. To ensure that we can effectively execute these objectives, we routinely review our liquidity requirements and continually evaluate all potential sources of liquidity.

Our short-term liquidity needs include paying our current operating costs, satisfying the debt service requirements of our existing mortgages, completing tenant improvements, paying leasing commissions, and funding dividends to stockholders. Future principal payments due on mortgage notes payable, during the last three quarters of 2025 and in the year ending December 31, 2026 total approximately $24.4 million and $19.7 million, respectively, of which $3.7 million in 2025 and $3.0 million in 2026 are related to model home properties. See Note 7. Mortgage Notes Payable, in Part I - Financial Information for additional information on the Dakota Center loan that matured on July 6, 2024. Management expects certain model home properties can be sold, and that the underlying mortgage notes will be paid off with sales proceeds while other mortgage notes can be refinanced, as the Company has historically been able to do in the past with all model home properties. Additional principal payments will be made with cash flows from ongoing operations.

As the Company continues its operations, it may re-finance or seek additional financing. However, there can be no assurance that any such re-financing or additional financing will be available to the Company on acceptable terms, if at all. If events or circumstances occur such that the Company does not obtain additional funding, it will most likely be required to reduce its plans and/or certain discretionary spending, which could have a material adverse effect on the Company's ability to achieve its intended business objectives. Management believes that the combination of working capital on hand and the ability to refinance commercial and model home mortgages will fund operations through at least the next twelve months from the date of the issuance of these unaudited interim financial statements.

Management has begun discussions with various lenders to either restructure, extend or refinance the other three loans. Additionally, management may consider selling these properties if we are unsuccessful in extending the maturity dates or are unable to raise additional funds to pay these non-recourse loans in full. Management expects certain model homes will be sold, and that the underlying mortgage notes will be paid off with sales proceeds, while other mortgage notes will be refinanced as the Company has done in the past. Additional principal payments will be made with cash flows from ongoing operations.

While we will continue to pursue value creating investments, the Board of Directors believes there is significant embedded value in our assets that is yet to be realized by the market. Therefore, returning capital to stockholders through a repurchase program is an attractive use of capital currently. In November 2023, the Board of Directors authorized a stock repurchase program of up to $6.0 million of outstanding shares of our Series A Common Stock and up to $4.0 million of our Series D Preferred Stock which expired in November 2024. In December 2024, the Board of Directors authorized a stock repurchase program of up to $6.0 million of outstanding shares of our Series A Common Stock and up to $4.0 million of our Series D Preferred Stock, which shall expire in December 2025. During the six months ended June 30, 2025, we repurchased 4,091 shares of our Series A Common Stock, with an average price of $4.53 per share, including a commission of $0.025 per share, for a total cost of $18,552 for the Series A Common Stock. During the six months ended June 30, 2025, the Company repurchased 22,259 shares of our Series D Preferred Stock at an average price of approximately $14.73 per share, including a commission of $0.035 per share, for a total cost of $327,787 for the Series D Preferred Stock. Any repurchased shares are treated as authorized and unissued in accordance with Maryland law and shown as a reduction of stockholders’ equity at cost.

There can be no assurance that the Company will refinance loans, take out additional financing or that capital will be available to the Company on acceptable terms, if at all. If events or circumstances occur such that the Company does not obtain additional funding, it will most likely be required to reduce its plans, reduce certain discretionary spending or even sell properties, which could have a material adverse effect on the Company’s ability to achieve its intended business objectives. We believe that cash on hand, cash flow from our existing portfolio, distributions from joint ventures in Model Home Partnerships and property sales during 2024 and 2025 will be sufficient to fund our operating costs, planned capital expenditures and required dividends for at least the next twelve months. If our cash flow from operating activities is not sufficient to fund our short-term liquidity needs, we plan to fund a portion of these needs from additional borrowings of secured or unsecured indebtedness, from real estate sales, issuance of debt instruments, additional investors, or we may reduce or suspend the rate of dividends to our stockholders.

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Our long-term liquidity needs include the capital necessary to grow and maintain our portfolio of investments. We believe that the potential financing capital available to us in the future is sufficient to fund our long-term liquidity needs. We are continually reviewing our existing portfolio to determine which properties have met our short- and long-term goals and while seeking to reinvest the proceeds in properties with better potential to increase performance. We expect to obtain additional cash in connection with refinancing of maturing mortgages and assumption of existing debt collateralized by some or all of our real property in the future to meet our long-term liquidity needs. If we are unable to arrange a line of credit, borrow on properties, privately place securities or sell securities to the public, we may not be able to acquire additional properties to meet our long-term objectives.

For the six months ended June 30, 2025 and 2024, the Company did not declare a cash dividend on shares of Series A Common Stock. For the six months ended June 30, 2025 and 2024, the Company declared and paid approximately $1.2 million and $1.1 million, respectively, in cash dividends on shares of Series D Preferred Stock. Cash permitting, the Company intends to continue to pay dividends on a monthly basis to holders of our Series D Preferred Stock going forward, but there can be no guarantee the Board of Directors will approve any future dividends. The Company has not decided when it will resume dividends to our common stockholders on a quarterly basis. The following is a summary of distributions declared per share of our Series A Common Stock and for our Series D Preferred Stock for the six months ended June 30, 2025 and 2024.

Series A Common Stock:

Quarter Ended |  | 2025 |  |  | 2024 |
|  | Distributions Declared |  |  | Distributions Declared |
March 31 |  | $ | — |  |  | $ | — |
June 30 |  |  | — |  |  |  | — |
Total |  | $ | — |  |  | $ | — |

Series D Preferred Stock:

Month |  | 2025 |  |  | 2024 |
|  | Distributions Declared |  |  | Distributions Declared |
January |  | $ | 0.19531 |  |  | $ | 0.19531 |
February |  |  | 0.19531 |  |  |  | 0.19531 |
March |  |  | 0.19531 |  |  |  | 0.19531 |
April |  |  | 0.19531 |  |  |  | 0.19531 |
May |  |  | 0.19531 |  |  |  | 0.19531 |
June |  |  | 0.19531 |  |  |  | 0.19531 |
Total |  | $ | 1.17186 |  |  | $ | 1.17186 |

Cash Equivalents and Restricted Cash

At June 30, 2025 and December 31, 2024, we had approximately $7.3 million and $8.0 million in cash equivalents, respectively, including $3.6 million and $5.0 million of restricted cash, respectively. O ur cash equivalents and restricted cash consist of invested cash, cash in our operating accounts, short-term bonds and cash held in bank accounts at third-party institutions. During 2025 and 2024, we did not experience any loss or lack of access to our cash or cash equivalents. Approximately $1.5 million to 2.0 million of our cash balance is intended for capital expenditures on existing properties, net of any construction financing (some of which is held in deposits reserve accounts by our lenders) during the rest of the year. We intend to use the remainder of our existing cash and cash equivalents for asset/property acquis itions, reduction of principal debt, general corporate purposes, common stock repurchases (if market conditions are met), or dividends to our stockholders.

On July 14, 2025, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional investor (the “Purchaser”) for the purpose of raising approximately $2.05 million in gross proceeds for the Company. Pursuant to the terms of the Purchase Agreement, the Company agreed to sell in a registered direct offering (the “Offering”), (i) 140,000 shares (the “Public Shares”) of its Series A Common Stock and (ii) pre-funded warrants to purchase up to 30,830 shares (the “Pre-Funded Warrant Shares”) of Series A Common Stock (the “Pre-Funded Warrants”). Each Public Share and accompanying Pre-Funded Warrant were sold together at a combined offering price of $12.00. The Pre-Funded Warrants were immediately exercisable at a nominal exercise price of $0.0001 and were exercised on July 14, 2025 in full.

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The closing of the sales of the Securities pursuant to the Purchase Agreement occurred on July 15, 2025, subject to customary closing conditions. The net proceeds to the Company after deducting the Placement Agent’s fees and the Company’s estimated offering expenses are expected to be approximately $1.7 million. The Company intends to use the net proceeds from the offering for working capital and for other general corporate purposes including to potentially acquire additional properties.

In addition, in connection with the Purchase Agreement, the Company and the Purchaser entered into an Amendment to Series A Common Stock Purchase Warrants (the “Amendment”). The Amendment amends certain warrants to purchase 200,000 shares of Series A Common Stock purchased by the Purchaser on July 14, 2021 to (i) reduce the exercise price to $12.00 per share from $55 per share and (ii) extend the termination date to July 16, 2030 from July 16, 2026. Pursuant to the Stock Purchase Agreement, the Company agreed to file a resale registration statement to register the shares of Series A Common Stock underlying such warrants within 30 days of the closing of the offering and to cause the registration statement to go effective within 60 days of the closing.

Secured Debt

As of June 30, 2025, all our commercial properties, except 300 N.P. which has no debt, had fixed-rate mortgage notes payable in the aggregate principal amount of $67.0 million, collateralized by a total of nine commercial properties with loan terms at issuance ranging from 5 to 10 years. The weighted-average interest rate on these mortgage notes payable as of June 30, 2025, was approximately 5.38%, and our debt to estimated market value for our commercial properties was approximately 67.2%. During the next 12 months, three of our commercial property loans, totaling approximately $28.1 million, will mature, with an estimated combined loan to value of approximately 68.9% as of June 30, 2025. The non-recourse loan on the Dakota Center property matured on July 6, 2024. During December 2024, the lender agreed to the broker the Company would use to sell the property to settle the non-recourse debt. As of June 30, 2025, the property was included in the real estate assets held for sale, net on the consolidated balance sheet. During July 2025, the lender approved a purchase offer from a third party for $5,125,000. In connection with the pending sale, we have impaired the property’s book value and recorded an impairment charge of approximately $3.3 million as of June 30, 2025. The sale is expected to take place during the third quarter 2025. The loan is considered non-recourse and we will not be required to make up the difference if the property sells for less than the loan balance. See Note 4. Real Estate Assets above for further discussion on impairment of the property. As of June 30, 2025, the property was included in the real estate assets held for sale, net on the consolidated balance sheet.

As of June 30, 2025, the Company had fixed-rate mortgage notes payable related to model homes in the aggregate principal amount of $28.4 million, collateralized by a total of 87 Model Homes. These loans generally have a term at issuance of three to five years. As of June 30, 2025, the average loan balance per home outstanding and the weighted-average interest rate on these mortgage loans are approximately $326,961 and 7.13%, respectively. Our debt to estimated market value on all our model home properties is approximately 61.7%. We have been able to refinance maturing mortgages to extend maturity dates and we have not experienced any notable difficulties financing our acquisitions. The Company anticipates that any new mortgages used to acquire commercial properties or model homes in the near future will be at rates higher than our currently weighted average interest rate.

Cash Flow for the six months ended June 30, 2025, and June 30, 2024

Operating Activities: Net cash used in operating activities for the six months ended June 30, 2025, totaled approximately $1.0 million, as compared to cash used in operating activities of $1.3 million for the six months ended June 30, 2024. The change in net cash used in operating activities is mainly due to changes in net income, which fluctuates due to new leases, leasing renewals, tenant move outs and model home sales and acquisitions, as well as changes in non-cash addbacks or subtractions such as straight-line rent.

Investing Activities: Net cash provided by investing activities for the six months ended June 30, 2025, was approximately $11.4 million compared to approximately $13.0 million used in investing activities during the same period in 2024. The change from each period was primarily related to the sale of our commercial properties in February 2025 for approximately $16.95 million. There were no similar commercial property sales during the six months ended June 30, 2024. Proceeds from the sale of real estate assets total approximately $21.5 million, net of selling costs, while cash used in real estate acquisition and capital improvement totaled approximately $10.2 million, for the six months ended June 30, 2025.

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We currently project that we could spend up to $1.6 million (some of which is held in deposits reserve accounts by our lenders) on capital improvements, tenant improvements and leasing costs for properties within our portfolio during the next 12 months. Capital expenditures may fluctuate in any given period subject to the nature, extent, and timing of improvements required to the properties. We may spend more on capital expenditures in the future due to rising construction costs. Tenant improvements and leasing costs may also fluctuate in any given year depending upon factors such as the property, the term of the lease, the type of lease, the involvement of external leasing agents and overall market conditions.

Financing Activities: Net cash used in financing activities during the six months ended June 30, 2025, was $11.1 million compared to $9.6 million provided by financing activities for the same period in 2024 and was primarily due to the following activities for the six months ended June 30, 2025:

| • | Proceeds from mortgage notes payable, net of issuance costs totaled approximately $6.6 million, and payment of debt issuance costs totaled approximately $0.2 million.
| • | Proceeds used for the repurchase of Series A Common Stock, totaled approximately $1.5 million, including stock repurchased in the Offer.
| • | Proceeds used for the repurchase of Series D Preferred Stock, totaled approximately $0.3 million.
| • | Repayment of mortgage notes payable totaled approximately $14.0 million for the six months ended June 30, 2025.
| • | Distributions to noncontrolling interest of approximately $0.4 million for the six months ended June 30, 2025.
| • | Dividends paid to Series D Preferred Stockholders of approximately $1.2 million for the six months ended June 30, 2025.

Off-Balance Sheet Arrangements

On July 12, 2021, the Company entered into a securities purchase agreement with a single U.S. institutional investor for the purchase and sale of 100,000 shares of its Series A Common Stock, Common Stock Warrants to purchase up to 200,000 shares of Series A Common Stock and Pre-Funded Warrants to purchase up to 200,000 shares of Series A Common Stock. Each share of Common Stock and accompanying Common Stock Warrants were sold together at a combined offering price of $50.00, and each share of Common Stock and accompanying Pre-Funded Warrant were sold together at a combined offering price of $49.90. The Pre-Funded Warrants were exercised in full during August 2021 at a nominal exercise price of $0.10 per share. The Common Stock Warrants had an exercise price of $55.00 per share, exercisable upon issuance and will expire five years from the date of issuance. In July 2025 the exercise price was adjusted to $12.00 per share and the term of the warrants extended to July 16, 2030.

In connection with Series A Common Stock offering in July 2021, we agreed to issue the Placement Agent Warrants to purchase up to 8,000 shares of Series A Common Stock, representing 4.0% of the Series A Common Stock and shares of Series A Common Stock issuable upon exercise of the Pre-Funded Warrants. The Placement Agent Warrants were issued in August 2021, post exercise of the Pre-Funded Warrants with an exercise price of $62.50 and will expire five years from the date of issuance.

Common Stock Warrants:

If all the potential Common Stock Warrants outstanding at June 30, 2025, were exercised at the price of $12 per share, gross proceeds to us would be approximately $2.4 million and we would as a result issue an additional 200,000 shares of common stock.

Placement Agent Warrants:

If all the potential Placement Agent Warrants outstanding at June 30, 2025, were exercised at the price of $62.50 per share, gross proceeds to us would be approximately $0.5 million and we would as a result issue an additional 8,000 shares of common stock.

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January 14, 2022, was the record date with respect to the distribution of five-year listed warrants (the “Series A Warrants”). The Series A Warrants and the shares of common stock issuable upon the exercise of the Series A Warrants were registered on a registration statement that was filed with the SEC and was declared effective January 21, 2022. The Series A Warrants commenced trading on the Nasdaq Capital Market under the symbol “SQFTW” on January 24, 2022 and were distributed on that date to persons who held shares of common stock and existing outstanding warrants as of the January 14, 2022 record date, or who acquired shares of common stock in the market following the record date, and who continued to hold such shares at the close of trading on January 21, 2022. The Series A Warrants give the holder the right to purchase one share of common stock at $70.00 per share, for a period of five years. Should warrant holders not exercise the Series A Warrants during that holding period, the Series A Warrants will automatically convert to 1/100 of a common share at expiration, rounded down to the nearest number of whole shares.

Series A Warrants:

If all the potential Series A Warrants outstanding at June 30, 2025, were exercised at the price of $70.00 per share, gross proceeds to us would be approximately $101.2 million and we would as a result issue an additional 1,445,007 shares of common stock.

Inflation

Leases generally provide for limited increases in rent as a result of fixed increases, increases in the consumer price index (typically subject to ceilings), or increases in the clients’ sales volumes. We expect that inflation will cause these lease provisions to result in rent increases over time. During times when inflation is greater than increases in rent, as provided for in the leases, rent increases may not keep up with the rate of inflation.

However, our use of net lease agreements tends to reduce our exposure to rising property expenses due to inflation because the client is responsible for property expenses. Inflation and increased costs may have an adverse impact on our clients if increases in their operating expenses exceed increases in revenue.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide disclosure pursuant to this item.

ITEM 4. CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-14(c). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

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Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Stock Repurchase Program. While we will continue to pursue value creating investments, the Board of Directors believes there is significant embedded value in our assets that is yet to be realized by the market. Therefore, returning capital to stockholders through a repurchase program is an attractive use of capital currently. In November 2023, the Board of Directors authorized a stock repurchase program of up to $6.0 million of outstanding shares of our Series A Common Stock and up to $4.0 million of our Series D Preferred Stock which expired in November 2024. In December 2024, the Board of Directors authorized a stock repurchase program of up to $6.0 million of outstanding shares of our Series A Common Stock and up to $4.0 million of our Series D Preferred Stock, which shall expire in December 2025. During the six months ended June 30, 2025, we repurchased 4,091 shares of our Series A Common Stock, with an average price of $4.53 per share, including a commission of $0.025 per share, for a total cost of $18,552 for the Series A Common Stock. During the six months ended June 30, 2025, the Company repurchased 22,259 shares of our Series D Preferred Stock at an average price of approximately $14.73 per share, including a commission of $0.035 per share, for a total cost of $327,787 for the Series D Preferred Stock. Any repurchased shares are treated as authorized and unissued in accordance with Maryland law and shown as a reduction of stockholders’ equity at cost.

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Stock repurchases for Series A Common Stock.

Month |  | Total Number of Shares Purchased |  |  | Average Price Paid Per Share |  |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  |  | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs |
April 2025 |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | 5,956,977 |
May 2025 (1) |  |  | 214,412 |  |  |  | 6.80 |  |  |  | — |  |  |  | 5,956,977 |
June 2025 |  |  | 4,091 |  |  |  | 4.53 |  |  |  | 4,091 |  |  |  | 5,938,424 |
Total |  |  | 218,503 |  |  | $ | 6.76 |  |  |  | 4,091 |  |  | $ | 5,938,424 |

| 1. | On April 8, 2025, we commenced a fixed price self-tender offer (the “Offer”) to purchase for cash all odd lots plus up to 200,000 shares of the Company’s Series A common stock, par value $0.01 per share, properly tendered and not properly withdrawn prior to the expiration date, subject to the Company’s ability to increase the number of shares accepted for payment in the Offer by up to 2% of the Company’s outstanding common stock (resulting in an increase of up to approximately 28,308 shares) without amending or extending the Offer in accordance with rules promulgated by the SEC, at $6.80 per share, net to the seller in cash, less any applicable withholding taxes and without interest. The Offer expired at 11:59 P.M., New York City time, on May 5, 2025. Based on the final count by the depositary for the Offer, 214,412 shares of Class A common stock were validly and successfully tendered and not properly withdrawn, including tenders of shares for which the tender was defective but for which the Company waived such defects. Pursuant to the terms of the Offer, the Company accepted for purchase 214,412 shares of Class A common stock, including 1,209 odd lot shares. Total cash required to complete the tender offer was approximately $1,458,000, excluding fees and expenses related to the Offer. We believe that the tender offer provided an efficient mechanism to provide our stockholders who desired immediate liquidity with the opportunity to tender shares at a favorable price relative to the current market price and without incurring broker’s fees associated with most secondary market sales, while also providing a benefit to those stockholders who did not participate, as such stockholders automatically increased their relative percentage ownership interest in the Company and our future operations, including any liquidity events that we may have in the future. Another purpose of the Offer was to reduce the number of our issued and outstanding shares and to reduce or eliminate all of our odd lots. Overall, we believe that the Offer was a prudent use of our financial resources given our business profile, capital structure, assets and liabilities.

Stock repurchases for Series D Preferred Stock.

Month |  | Total Number of Shares Purchased |  |  | Average Price Paid Per Share |  |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  |  | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs |
April 2025 |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | 3,764,119 |
May 2025 |  |  | 4,620 |  |  |  | 14.16 |  |  |  | 4,620 |  |  |  | 3,698,678 |
June 2025 |  |  | 4,795 |  |  |  | 14.05 |  |  |  | 4,795 |  |  |  | 3,631,303 |
Total |  |  | 9,415 |  |  | $ | 14.06 |  |  |  | 9,415 |  |  | $ | 3,631,303 |

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Item 3. Defaults Upon Senior Securities.

On March 13, 2025, we received notice of a maturity date default of a loan in the original principal amount of $11.1 million evidenced by a promissory note issued on June 9, 2014. The loan is secured by the Dakota Center in Fargo, North Dakota.

As a result of the default, the Company is required to pay the default interest rate that is 5% above the original interest rate and the lender’s expenses related to the loan, including third party report fees, attorneys’ fees and loan servicing expenses. As of the date of this report, the amount of the default is approximately $9.1 million and the total arrearage is approximately $0.4 million. Additionally, the lender is holding approximately $1.6 million in restricted cash sweep accounts as of June 30, 2025.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information.

During the three months ended March 31, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits.

Exhibit Number |  | Description
3.1 |  | Articles of Amendment, dated May 16, 2025 (Incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on May 16, 2025).
31.1 |  | Certificate of the Company's Chief Executive Officer (Principal Executive Officer) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant's Quarterly Report on Form 10-Q for the three and six months ended June 30, 2025.
31.2 |  | Certification of the Company's Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant's Quarterly Report on Form 10-Q for the three and six months ended June 30, 2025.
32.1 |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS | Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH | Inline XBRL Taxonomy Extension Schema Document
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 14, 2025 | Presidio Property Trust, Inc.
| By: | /s/ Jack K. Heilbron
| Name: | Jack K. Heilbron
| Title: | Chief Executive Officer
| By: | /s/ Ed Bentzen
| Name: | Ed Bentzen
| Title: | Chief Financial Officer

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