The small-cap REIT recorded over $6 million in impairment charges and saw its Shea Center II property placed into receivership after a loan default.

March 30, 2026

Revenue Declines as Portfolio Shrinks

Presidio Property Trust, the internally managed real estate investment trust trading on Nasdaq under the ticker SQFT, reported a difficult fiscal year 2025, marked by significant property losses, rising impairment charges, and the suspension of its preferred stock dividend as the company works to stabilize its shrinking portfolio.

The company disclosed in its annual report that total revenue fell to approximately $16.8 million for the year ended December 31, 2025, down roughly 11 percent from $18.9 million in the prior year. The decline was driven primarily by the sale of two commercial properties in Colorado Springs early in the year, which removed a meaningful source of rental income from the portfolio.

Shea Center II Enters Receivership

Perhaps the most consequential development involved the company’s Shea Center II office property in Highlands Ranch, Colorado. After struggling with low occupancy that triggered a cash management event under the property’s loan terms, Presidio was unable to repay the roughly $16.4 million loan balance by its January 2026 maturity date. The lender declared a default, and the property has since been placed into receivership. Because the loan was structured as non-recourse, the company’s obligation will be fulfilled by surrendering the property, but the loss removes one of its largest assets from the portfolio.

Similarly, the Dakota Center property in Fargo, North Dakota, saw its non-recourse loan mature in mid-2024 without refinancing. After extended negotiations with the lender, the property was sold in January 2026 for approximately $5.1 million, with the lender receiving about $4.3 million from the proceeds to partially settle the roughly $8.9 million loan balance. Presidio was not responsible for the remaining shortfall due to the non-recourse nature of the debt.

Impairments and Losses Mount

The combined effect of these two properties weighed heavily on the company’s financials. Presidio recorded approximately $6.4 million in non-cash impairment charges during 2025, with roughly $6 million attributable to Shea Center II and Dakota Center and smaller amounts tied to select model homes and goodwill. This compares to approximately $2 million in impairments recorded in 2024.

The net loss attributable to common stockholders widened to approximately $10.6 million, or $8.65 per share, compared to a loss of roughly $27.9 million, or $22.50 per share, in the prior year. The 2024 figure was heavily influenced by an approximately $17.9 million unrealized loss on the company’s investment in Conduit Pharmaceuticals, a position that has now been almost entirely liquidated for minimal proceeds.

Preferred Dividend Suspended to Preserve Cash

In a move to preserve cash, the board of directors suspended the monthly dividend on the company’s 9.375 percent Series D Cumulative Redeemable Perpetual Preferred Stock beginning with the January 2026 payment. The unpaid dividends will continue to accrue at approximately $0.20 per share each month but will not be distributed. The company estimates this action will conserve roughly $2.3 million annually. The board indicated it will reassess the dividend on a quarterly basis. No common stock dividends were paid in either 2025 or 2024.

Model Home Business Grows in Importance

On the operational front, the company continued to actively manage its model home business, acquiring 22 new model homes for approximately $9.4 million and disposing of 20 homes for roughly $9.8 million, generating a gain of about $1 million. The model home segment, which involves purchasing homes from builders and leasing them back under triple-net arrangements, now represents a growing share of the overall portfolio. As of year-end, model homes accounted for nearly 34 percent of total real estate assets, up from about 29 percent a year earlier.

The commercial portfolio shrank considerably. After the sale of Union Town Center and Research Parkway in February 2025, the loss of Shea Center II to receivership, and the sale of Dakota Center, the company expects a revenue decrease of approximately $4 million heading into 2026. The remaining commercial portfolio consists of ten properties spanning roughly 769,000 square feet across Colorado, North Dakota, California, Maryland, and Texas, with an overall occupancy rate of about 82 percent.

Cost Reductions and Capital Moves

General and administrative expenses declined meaningfully to approximately $5.7 million from $7.5 million the prior year, largely reflecting the absence of one-time costs from 2024 related to a proxy contest settlement and elevated legal and consulting fees. Total debt stood at approximately $92.9 million at year-end, down about 10 percent from the prior year, while the weighted average interest rate on borrowings increased to 6.16 percent from 5.63 percent.

The company also executed a one-for-ten reverse stock split in May 2025 to regain compliance with Nasdaq’s minimum bid price requirement and completed a fixed-price tender offer that repurchased approximately 214,000 shares at $6.80 per share. A separate registered direct offering in July 2025 raised approximately $1.7 million in net proceeds.

Outlook Remains Uncertain

Despite these challenges, management expressed cautious optimism about the broader market environment, citing expectations for gradually declining interest rates and potential improvements in REIT valuations as the gap between public and private real estate pricing narrows. However, the company acknowledged significant headwinds including elevated office vacancy rates nationally, ongoing uncertainty around federal monetary policy, and the concentrated geographic exposure of its remaining portfolio.

With just 15 full-time employees and a market capitalization that hovered around $5.2 million as of mid-2025, Presidio Property Trust enters 2026 as a significantly smaller company navigating the aftermath of multiple property losses. The path forward will depend on management’s ability to stabilize cash flows from its remaining assets, selectively grow the model home portfolio, and eventually restore investor distributions.