Presidio Property Trust: Dividend Announcement Makes This REIT A Must-Have In Your Yield Portfolio

Real estate investment trusts (REITs) have historically proven to be excellent investment tools for individuals as well as institutions looking to have exposure to the real estate market and earn dividends without investing very large amounts in physical properties. REITs are known to invest in residential or commercial real estate with different investment strategies and provide returns not just through regular dividend pay-outs but also through stock price appreciation. There is no question that a high appreciation of the price results in lower yields for late entrants in the REIT which is why the investment timing is quite critical to maximize the returns through yield as well as capital growth. Presidio Property Trust (NASDAQ:SQFT) (“Presidio”) is a good example of a REIT that appears to be highly undervalued and has the potential to generate an excellent yield for investors post its recent dividend announcement. It is our pick of the week for all our Small Caps Daily readers particularly those looking for a dividend play.

Presidio’s Investment Theme

Presidio Property Trust is a San Diego-based REIT that was founded in 1999 and was known as NetREIT in the past. It was recently listed on the NASDAQ post a successful fundraise of $2.5 million. Its management follows the commercial real estate investments theme and looks to invest in offices, industrial properties, strip malls, retail, and other kinds of high-quality commercial properties. Its average investment ticket size ranges between $10 million to $30 million which is below the average investment size for most of the larger REITs. Thus, it faces minimal competition within its domain and is able to negotiate better prices.

In terms of geographical spread, Presidio’s investments have been made across American cities which are known to have a low cost of living, strong healthcare systems, growing population, and the presence of companies seeking cost efficient leases and access to a good talent pool.  All of this sets the stage for a boost to average income levels as well as the demand for commercial properties. These include cities like Minneapolis, Kansas City, Salt Lake City, Columbus, Denver, Colorado Springs, San Diego, and more. The company’s current property base of around 1.13 million square feet has about 86% occupancy as per its recent SEC filings and its 15 commercial properties have a book value of close to $138 million.

Model Homes Business

Presidio does have some exposure to the residential real estate market in these fast-growing cities, but it is mainly through model homes – single-family residential homes built to serve the purpose of marketing the construction project to customers. Presidio is known to purchase these model homes from construction companies at a discount of up to 15% over the market value and lease it back to them on a triple-net basis. Under this structure, the builder is responsible for all the operating expenses such as maintenance, taxes, and insurance. Presidio earns cash flow through rent on the model homes from the construction company as well as a solid profit on selling these homes in the market once the rest of the construction project is completed and sold out. Builders benefit from upfront cash flow through this sale which is why they are readily selling model homes to Presidio. The REIT owns 138 such model homes as per its most recent filings and these are mostly concentrated in Florida and Texas. The company has a history of earning excellent profits on the sale of these model homes.  Presidio sold 21 model homes in the first 6 months of 2020 for around $8 million and made an impressive profit of $557,000. The story in 2019 was similar when the management sold close to 41 model homes and made a profit of approximately $1.2 million. This is a strong distinguishing point in favor of Presidio as against other REITs.  Most other REITs do not invest in model homes, allowing Presidio to pursue a contrarian investment approach in a less competitive real estate market sector.

Key Takeaways Presidio is undervalued by Wall Street and is trading below its recent initial public offering price. However, the company has a proven ability to generate strong cash flows. It generated over $1 million funds from operations for the first half of 2020 and management has already announced a $0.10 per share dividend on November 4, 2020. If the management can maintain the same pay-out for each quarter, it would result in an effective yield of more than 10% assuming the current price levels, making Presidio a no-brainer investment in our opinion. The company’s diversified commercial real estate investments, model home exposure, and its newly announced dividend payment are strong reassuring points in its favor. We believe that investors should grab this REIT before it gets too pricey and before Wall Street starts valuing it fairly.

Legal Disclaimer

Except for the historic data introduced herein, issues mentioned in this text comprise forward-looking statements which might be topic to sure dangers and uncertainties that would trigger precise outcomes to differ materially from any future outcomes, efficiency or achievements expressed or implied by such statements. Salesparq, LLC which owns SmallcapsDaily.com will not be registered with any monetary or securities regulatory authority and does not present nor claim to present funding recommendation or suggestions to readers of this launch. Salesparq, LLC, which owns SmallcapsDaily.com, could also be compensated for its companies in the type of cash-based compensation for the businesses it writes about. For making particular investment choices, readers ought to do their own research. Pursuant to an agreement between TraDigital IR and Salesparq, LLC, which owns SmallcapsDaily.com, has been retained for a interval from 11/1/2020 – 11/15/2020 to publicly disseminate details about Presidio Property Trust, Inc., together with on the Website, electronic mail and different media together with online and social media. We have been compensated four thousand dollars for our services during this period. We own zero shares of Presidio Property Trust, Inc. We don’t intend to purchase shares of Presidio Property Trust Inc. in the open market at any time. Please read our full disclaimer here: https://smallcapsdaily.com/disclaimer/


This website is a wholly owned subsidiary of Salesparq, LLC, herein referred to as Salesparq, LLC. Our publications are a commercial advertisement and are for general information purposes ONLY. We are engaged in the business of marketing and advertising companies for monetary compensation. We may receive compensation for this article on a PPC basis as an affiliate. Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. The disclaimer is to be read and fully understood before using our services, joining our site or our email/blog list as well as any social networking platforms we may use.PLEASE NOTE WELL: Salesparq, LLC and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever.Release of Liability: Through use of this website viewing or using you agree to hold Salesparq, LLC, its operators owners and employees harmless and to completely release them from any and all liability due to any and all loss (monetary or otherwise), damage (monetary or otherwise), or injury (monetary or otherwise) that you may incur. The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. Salesparq, LLC encourages readers and investors to supplement the information in these reports with independent research and other professional advice. All information on featured companies is provided by the companies profiled, or is available from public sources and Salesparq, LLC makes no representations, warranties or guarantees as to the accuracy or completeness of the disclosure by the profiled companies. None of the materials or advertisements herein constitute offers or solicitations to purchase or sell securities of the companies profiled herein and any decision to invest in any such company or other financial decisions should not be made based upon the information provided herein. Instead Salesparq, LLC strongly urges you conduct a complete and independent investigation of the respective companies and consideration of all pertinent risks. Readers are advised to review SEC periodic reports: Forms 10-Q, 10K, Form 8-K, insider reports, Forms 3, 4, 5 Schedule 13D. Salesparq, LLC is compliant with the Can Spam Act of 2003. Salesparq, LLC does not offer such advice or analysis, and Salesparq, LLC further urges you to consult your own independent tax, business, financial and investment advisors. Investing in micro-cap and growth securities is highly speculative and carries and extremely high degree of risk. It is possible that an investors investment may be lost or impaired due to the speculative nature of the companies profiled. The Private Securities Litigation Reform Act of 1995 provides investors a safe harbor in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be forward looking statements. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as projects, foresee, expects, will, anticipates, estimates, believes, understands, or that by statements indicating certain actions & quote; may, could, or might occur. Understand there is no guarantee past performance will be indicative of future results.In preparing this publication, Salesparq, LLC has relied upon information supplied by its customers, publicly available information and press releases which it believes to be reliable; however, such reliability cannot be guaranteed. Investors should not rely on the information contained in this website. Rather, investors should use the information contained in this website as a starting point for doing additional independent research on the featured companies. Salesparq, LLC has not been compensated for this article. The advertisements in this website are believed to be reliable, however, Salesparq, LLC and its owners, affiliates, subsidiaries, officers, directors, representatives and agents disclaim any liability as to the completeness or accuracy of the information contained in any advertisement and for any omissions of materials facts from such advertisement. Salesparq, LLC is not responsible for any claims made by the companies advertised herein, nor is Salesparq, LLC responsible for any other promotional firm, its program or its structure. Salesparq, LLC is not affiliated with any exchange, electronic quotation system, the Securities Exchange Commission or FINRA.
Show More

Related Articles

Back to top button