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:

•

~~our failure or inability to implement the Recapitalization;~~

•

~~environmental uncertainties and risks related to adverse weather conditions and natural disasters;~~

Table of Contents

•

~~our failure to qualify and maintain our status as a REIT;~~

•

~~government approvals, actions and initiatives, including the need for compliance with environmental requirements;~~

•

~~financial market fluctuations;~~

•

~~changes in real estate and zoning laws and increases in real property tax rates; and~~

•

~~additional factors discussed in our filings with the SEC.~~

The forward-looking statements contained in this report are based on historical performance and management’s current plans, estimates and expectations in light of information currently available to us and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to the factors, risks and uncertainties described above, changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors described in this report and the other documents that we have filed with the SEC, many of which are beyond our control. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove to be incorrect, our actual results may vary in material respects from what we may have expressed or implied by these forward-looking statements. We caution that you should not place undue reliance on any of our forward-looking statements. Any forward-looking statement made by us in this report speaks only as of the date on which we make it. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws.PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Presidio Property Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

	September 30,			December 31,			*June 30,*			*December 31,*
	2017			2016			*2021*			*2020*
	(Unaudited)						(Unaudited)
ASSETS
Real estate assets and lease intangibles:
Land	$	46,105,130		$	47,190,225		$	17,199,715		$	18,827,000
Buildings and improvements		184,584,788			180,590,935			108,927,843			115,409,423
Tenant improvements		21,388,233			20,148,272			12,264,082			11,960,018
Lease intangibles		12,235,417			12,663,629			4,110,139			4,110,139
Real estate assets and lease intangibles held for investment, cost		264,313,568			260,593,061			142,501,779			150,306,580
Accumulated depreciation and amortization		(37,351,636	)		(32,665,688	)		(28,480,085	)		(26,551,789	)
Real estate assets and lease intangibles held for investment, net		226,961,932			227,927,373			114,021,694			123,754,791
Real estate assets held for sale, net		12,342,411			12,594,836			10,370,836			42,499,176
Real estate assets, net		239,304,343			240,522,209			124,392,530			166,253,967
Cash and cash equivalents		3,436,531			3,116,147
Restricted cash		3,854,970			4,271,648
Cash, cash equivalents and restricted cash								29,343,392			11,540,917
Deferred leasing costs, net		1,922,468			1,920,091			1,178,277			1,927,951
Goodwill		2,423,000			2,423,000			2,423,000			2,423,000
Other assets, net		5,612,568			5,745,982			3,509,354			3,422,781
TOTAL ASSETS	$	256,553,880		$	257,999,077		$	160,846,553		$	185,568,616

LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable held for investment, net	$	157,018,825		$	152,998,857
Mortgage notes payable related to real estate assets held for sale, net		5,900,258			5,887,254
Mortgage notes payable, net		162,919,083			158,886,111		$	89,226,919		$	94,664,266
Mortgage notes payable related to properties held for sale, net								753,439			25,365,430
Mortgage notes payable, total net								89,980,358			120,029,696
Note payable, net								0 —			7,500,086
Accounts payable and accrued liabilities		6,743,991			6,066,068			4,391,594			5,126,199
Accrued real estate taxes		2,348,145			2,318,990			940,701			2,548,686
Dividends payable		-			1,171,924
Dividends payable preferred stock								95,836			0
Lease liability, net								89,251			102,323
Below-market leases, net		1,457,204			1,698,086			98,883			139,045
Mandatorily redeemable Series B Preferred Stock, net, $0.01 par value, $1,000 liquidating preference; shares authorized: 35,000; 30,700 and 32,700 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively, net		30,565,687			32,108,268
Total liabilities		204,034,110			202,249,447			95,596,623			135,446,035

Commitments and contingencies

Commitments and contingencies (Note 9)
Equity:
Series A Common Stock, $0.01 par value, shares authorized: 100,000,000; 17,614,160 and 17,502,673 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		176,143			175,028
Series D Preferred Stock, $0.01 par value per share; 1,000,000 shares authorized; 0 and 920,000 shares issued and outstanding (liquidation preference $25.00 per share) as of June 30, 2021 and December 31, 2020, respectively								9,200			0
Series A Common Stock, $0.01 par value, shares authorized: 100,000,000; 9,508,363 shares were both issued and outstanding at June 30, 2021 and December 31, 2020, respectively								95,038			95,038
Additional paid-in capital		150,616,707			149,539,782			176,943,749			156,463,146
Dividends in excess of accumulated losses		(112,939,280	)		(106,623,957	)
Dividends and accumulated losses								(125,590,168	)		(121,674,505	)
Total stockholders' equity before noncontrolling interest		37,853,570			43,090,853			51,457,819			34,883,679
Noncontrolling interest		14,666,200			12,658,777			13,792,111			15,238,902
Total equity		52,519,770			55,749,630			65,249,930			50,122,581
TOTAL LIABILITIES AND EQUITY	$	256,553,880		$	257,999,077		$	160,846,553		$	185,568,616

See Notes to Condensed Consolidated Financial Statements

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Presidio Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						*For the Three Months Ended June 30,*						*For the Six Months Ended June 30,*
	2017			2016			2017			2016			*2021*			*2020*			*2021*			*2020*
Revenues:
Rental income	$	7,661,356		$	7,693,017		$	23,470,574		$	23,602,360		$	4,553,798		$	5,879,526		$	10,031,021		$	12,665,211
Fee and other income		302,118			160,616			1,257,500			489,565
Fees and other income														292,785			241,878			484,316			485,344
Total revenue		7,963,474			7,853,633			24,728,074			24,091,925			4,846,583			6,121,404			10,515,337			13,150,555

Costs and expenses:
Rental operating costs		2,794,071			2,576,781			8,067,236			7,635,145			1,485,815			1,999,834			3,324,738			4,380,926
General and administrative		1,322,631			1,252,299			3,960,202			3,715,029			1,344,770			1,278,971			2,882,036			2,630,316
Depreciation and amortization		2,399,307			2,564,211			7,346,640			7,723,372			1,368,209			1,622,230			2,797,143			3,196,756
Impairment of real estate assets														0			845,674			300,000			845,674
Total costs and expenses		6,516,009			6,393,291			19,374,078			19,073,546			4,198,794			5,746,709			9,303,917			11,053,672
Other income (expense):
Interest expense-mortgage notes														(1,207,036	)		(1,477,628	)		(2,512,057	)		(3,165,404	)
Interest expense - note payable														0			(795,728	)		(279,373	)		(1,661,798	)
Interest and other income (expense), net														(20,657	)		8,400			(53,443	)		1,405
Gain on sales of real estate, net														2,594,341			334,096			1,433,014			324,261
Gain on extinguishment of government debt														0			0			10,000			0
Income tax expense														(238,701	)		(51,369	)		(288,899	)		(135,000	)
Total other income (expense), net														1,127,947			(1,982,229	)		(1,690,758	)		(4,636,536	)
Net income (loss)														1,775,736			(1,607,534	)		(479,338	)		(2,539,653	)
Less: Loss attributable to noncontrolling interests														(925,697	)		(315,282	)		(1,332,305	)		(490,293	)
Net income (loss) attributable to Presidio Property Trust, Inc. stockholders													$	850,039		$	(1,922,816	)	$	(1,811,643	)	$	(3,029,946	)
Less: Preferred Stock Series D dividends														(95,836	)		0			(95,836	)		0
Net income (loss) attributable to Presidio Property Trust, Inc. common stockholders													$	754,203		$	(1,922,816	)	$	(1,907,479	)	$	(3,029,946	)

Other income (expense):
Interest expense-Series B preferred stock		(1,202,099	)		(1,443,960	)		(3,966,902	)		(4,546,687	)
Interest expense-mortgage notes		(1,989,053	)		(1,879,780	)		(5,851,865	)		(5,641,296	)
Interest and other income		10,515			9,892			25,612			78,224
Gain on sales of real estate, net		210,372			732,908			2,237,423			2,121,453
Impairment of real estate asset		-			(700,000	)		-			(700,000	)
Income tax expense		(53,566	)		(87,898	)		(154,189	)		(232,598	)
Total other expense, net		(3,023,831	)		(3,368,838	)		(7,709,921	)		(8,920,904	)
Net income (loss) per share attributable to Presidio Property Trust, Inc. common stockholders:
Basic & Diluted													$	0.08		$	(0.22	)	$	(0.20	)	$	(0.34	)

Weighted average number of common shares outstanding - basic & diluted														9,508,363			8,897,037			9,508,363			8,889,436


Net loss		(1,576,366	)		(1,908,496	)		(2,355,925	)		(3,902,525	)

Less: Income attributable to noncontrolling interests		(200,181	)		(81,534	)		(415,009	)		(102,890	)

Net loss attributable to Presidio Property Trust, Inc. common stockholders	$	(1,776,547	)	$	(1,990,030	)	$	(2,770,934	)	$	(4,005,415	)

Basic and diluted income (loss) per common share
Loss per common share	$	(0.10	)	$	(0.12	)	$	(0.16	)	$	(0.23	)
Weighted average number of common shares outstanding - basic and diluted		17,617,500			17,073,986			17,564,805			17,286,439

See Notes to Condensed Consolidated Financial Statements

Table of Contents

Presidio Property Trust, Inc. and Subsidiaries

Condensed Consolidated ~~Statement~~Statements of Changes in Equity

For the ~~Nine~~Three and Six Months Ended ~~September~~June 30, ~~2017~~2021 and 2020

(Unaudited)

Dividends

Additional

In Excess of

Total

Non-

Common Stock

Paid-in

Accumulated

Stockholders’

controlling

Total

Shares

Amount

Capital

Losses

Equity

Interests

Equity

Balance, December 31, 2016

17,502,673

$
175,028

$
149,539,782

$
(106,623,957
)

$
43,090,853

$
12,658,777

$
55,749,630

Net (loss) income

-

-

-

(2,770,934
)

(2,770,934
)

415,009

(2,355,925
)
Dividends declared/reinvested

114,449

1,144

1,094,290

(3,544,389
)

(2,448,955
)

-

(2,448,955
)
Common stock repurchased

(2,962
)

(29
)

(17,365
)

-

(17,394
)

-

(17,394
)
Contributions from noncontrolling interests, net of distributions paid

-

-

-

-

-

1,592,414

1,592,414

Balance, September 30, 2017

17,614,160

$
176,143

$
150,616,707

$
(112,939,280
)

$
37,853,570

$
14,666,200

$
52,519,770

									Additional		Dividends and			Total			Non-
	Preferred Stock Series D				Common Stock				Paid-in		Accumulated			Stockholders’			controlling			Total
	Shares		Amount		Shares		Amount		Capital		Losses			Equity			Interests			Equity
Balance, December 31, 2020		0	$	0		9,508,363	$	95,038	$	156,463,146	$	(121,674,505	)	$	34,883,679		$	15,238,902		$	50,122,581
Net loss		—		0		—		0		0		(2,661,682	)		(2,661,682	)		406,608			(2,255,074	)
Dividends paid on common stock		—		0		—		0		0		(998,795	)		(998,795	)		0			(998,795	)
Distributions in excess of contributions received		—		0		—		0		0		0			0			(2,034,212	)		(2,034,212	)
Balance, March 31, 2021		0		0		9,508,363		95,038		156,463,146		(125,334,982	)		31,223,202			13,611,298			44,834,500
Net income		—		0		—		0		0		850,039			850,039			925,697			1,775,736
Dividends paid on common stock		—		0		—		0		0		(1,009,389	)		(1,009,389	)		0			(1,009,389	)
Dividends to Series D preferred stockholder		—		0		—		0		0		(95,836	)		(95,836	)		0			(95,836	)
Issuance of preferred stock Series D, net of issuance costs		920,000		9,200		0		0		20,480,603		0			20,489,803			0			20,489,803
Distributions in excess of contributions received		—		0		—		0		0		0			0			(744,884	)		(744,884	)
Balance, June 30, 2021		920,000	$	9,200		9,508,363	$	95,038	$	176,943,749	$	(125,590,168	)	$	51,457,819		$	13,792,111		$	65,249,930

											Additional		Dividends and			Total			Non-
	Preferred Stock Series D				Common Stock						Paid-in		Accumulated			Stockholders’			controlling			Total
	Shares		Amount		Shares			Amount			Capital		Losses			Equity			Interests			Equity
Balance, December 31, 2019		0	$	0		8,881,842		$	88,818		$	152,129,120	$	(113,037,144	)	$	39,180,794		$	17,440,394		$	56,621,188
Net loss		—		0		—			0			0		(1,107,130	)		(1,107,130	)		175,011			(932,119	)
Distributions in excess of contributions received		—		0		—			0			0		0			0			(277,472	)		(277,472	)
Balance, March 31, 2020		0	$	0		8,881,842		$	88,818		$	152,129,120	$	(114,144,274	)	$	38,073,664		$	17,337,933		$	55,411,597
Net loss		—		0		—			0			0		(1,922,816	)		(1,922,816	)		315,282			(1,607,534	)
Contributions received from noncontrolling interests, net of distributions paid		—		0		—			0			0		0			0			66,697			66,697
Share reconciliation adjustment		0		0		(16,080	)		(162	)		162		0			0			0			0
Issuance of stock for Limited Partnership interests		0		0		59,274			594			1,247,396		0			1,247,990			(1,247,990	)		0
Balance, June 30, 2020		0	$	0		8,925,036		$	89,250		$	153,376,678	$	(116,067,090	)	$	37,398,838		$	16,471,922		$	53,870,760

See Notes to Condensed Consolidated Financial Statements

Table of Contents

Presidio Property Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	For the			For the
	Nine Months Ended			Nine Months Ended			*For the Six Months Ended June 30,*
	September 30, 2017			September 30, 2016			*2021*			*2020*
Cash flows from operating activities:
Net loss	$	(2,355,925	)	$	(3,902,525	)	$	(479,338	)	$	(2,539,653	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		7,346,640			7,723,372			2,797,143			3,196,756
Stock compensation		410,760			388,602			582,199			361,243
Bad debt expense		37,205			(54,405	)		0			51,912
Gain on sale of real estate assets, net		(2,237,423	)		(2,121,453	)		(1,433,014	)		(324,261	)
Gain on extinguishment of government debt								(10,000	)		0
Impairment of real estate assets		-			700,000			300,000			845,674
Accretion of original issue discount								0			675,603
Amortization of financing costs		956,956			1,081,520			371,201			733,024
Amortization of above-market leases		79,013			139,417			36,055			25,341
Amortization of below-market leases		(240,882	)		(345,948	)		(34,450	)		(83,586	)
Straight-line rent adjustment		(452,427	)		(660,705	)		(170,554	)		(160,584	)
Changes in operating assets and liabilities:
Other assets		487,961			1,000,323			(426,209	)		997,694
Accounts payable and accrued liabilities		267,164			(1,008,736	)		(938,461	)		(1,860,992	)
Accrued real estate taxes		29,155			(473,886	)		(1,607,985	)		(1,717,453	)
Net cash provided by operating activities		4,328,197			2,465,576
Net cash (used in) provided by operating activities								(1,013,413	)		200,718
Cash flows from investing activities:
Real estate acquisitions		(16,810,985	)		(15,774,855	)		(2,851,800	)		(6,292,383	)
Additions to buildings and tenant improvements		(3,156,986	)		(3,713,626	)		(332,508	)		(2,382,436	)
Additions to deferred leasing costs		(407,653	)		(710,721	)		(73,491	)		(95,151	)
Proceeds from sales of real estate		16,463,558			8,560,357
Restricted cash		416,678			2,992,873
Net cash used in investing activities		(3,495,388	)		(8,645,972	)
Proceeds from sales of real estate, net								44,335,436			29,383,743
Net cash provided by investing activities								41,077,637			20,613,773
Cash flows from financing activities:
Proceeds from mortgage notes payable, net of issuance costs		13,342,994			18,979,585			8,003,807			7,154,117
Repayment of mortgage notes payable		(9,656,060	)		(9,217,047	)		(38,077,499	)		(24,171,066	)
Series B preferred stock costs		(153,500	)		-
Redemption of mandatorily redeemable Series B preferred stock		(2,000,000	)		(2,300,000	)
Contributions from noncontrolling interests net of distributions paid		1,592,414			197,148
Repurchase of common stock		(17,394	)		(55,023	)
Dividends paid to stockholders		(3,620,879	)		(3,347,690	)
Net cash (used in) provided by financing activities		(512,425	)		4,256,973

Net increase (decrease) in cash and cash equivalents		320,384			(1,923,423	)
Cash and cash equivalents - beginning of period		3,116,147			6,626,423
Cash and cash equivalents - end of period	$	3,436,531		$	4,703,000
Repayment of note payable								(7,675,598	)		(5,224,401	)
Payment of deferred offering costs								(214,982	)		(95,652	)
Distributions to noncontrolling interests, net								(2,779,096	)		(210,775	)
Issuance of Preferred Stock Series D, net of offering costs								20,489,803			0
Dividends paid to common stockholders								(2,008,184	)		0
Net cash used in financing activities								(22,261,749	)		(22,547,777	)
Net increase (decrease) in cash equivalents and restricted cash								17,802,475			(1,733,286	)
Cash, cash equivalents and restricted cash - beginning of period								11,540,917			10,391,275
Cash, cash equivalents and restricted cash - end of period							$	29,343,392		$	8,657,989
Supplemental disclosure of cash flow information:
Interest paid Series B preferred stock	$	3,355,983		$	5,080,417
Interest paid-mortgage notes payable	$	5,441,424		$	5,449,481		$	2,400,367		$	3,089,554
Non-cash investing and financing activities:
Reinvestment of cash dividends	$	1,095,434		$	1,795,040
Accrual of dividends payable	$	-		$	1,155,498
Interest paid-notes payable							$	103,861		$	425,267
Unpaid deferred financing costs							$	35,000		$	91,037
Non-cash financing activities:
Issuance of stock for limited partnership interests							$	0		$	1,247,990
Dividends payable - Preferred Stock Series D							$	95,836		$	0

Organization. Presidio Property Trust, Inc. ~~(formerly known as NetREIT, Inc.) (the~~(“we”, “our”, “us” or the “Company”) is ~~incorporated in the State of Maryland and operates as a self-administered~~an internally-managed real estate investment trust (“REIT”) ~~under~~, with holdings in office, industrial, retail and model home properties. We were incorporated in the ~~Internal Revenue Code~~State of ~~1986,~~California on September 28,1999, and in August 2010, we reincorporated as ~~amended (the “Code”). The Company’s portfolio includes the following properties:~~

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

The Company has determined that the ~~entities described above, where~~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 ~~these~~such limited partnerships.

We have elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code (the “Code”), for federal income tax purposes. To ~~qualify~~maintain our qualification as a REIT, ~~the Company must~~we are required to distribute ~~annually~~ at least 90% of ~~adjusted~~our REIT taxable income to our stockholders and meet the various other requirements imposed by the Code relating to such matters as ~~defined~~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 of our taxable income would be subject to ~~its stockholders~~federal income tax at regular corporate rates, including any applicable alternative minimum tax. We are subject to certain state and ~~satisfy certain other organizational and operating requirements. As~~local income taxes.

We, together with one of our entities, have elected to treat our subsidiaries as a taxable REIT ~~no provision is made~~subsidiary (a “TRS”) for federal income ~~taxes on income resulting from those sales of real estate investments which have or will~~tax purposes. Certain activities that we undertake must be ~~distributed to stockholders within the prescribed limits. However, taxes are provided~~conducted by a TRS, such as non-customary services for ~~those gains which are not anticipated to be distributed to stockholders unless such gains are deferred pursuant to Section 1031. In addition, the Company~~our tenants, and holding assets that we cannot hold directly. A TRS is subject to a federal ~~excise tax which equals 4% of the excess, if any, of 85% of the Company’s ordinary~~and state income plus 95% of the Company’s capital gain net income over cash distributions, as defined. The Company believes that it has met all of the REIT distribution and technical requirements for the three and nine months ended September 30, 2017 and 2016.

Earnings and profits that determine the taxability of distributions to stockholders differ from net income reported for financial reporting purposes due to differences in estimated useful lives and tax deprecation methods used to compute the carrying value (basis) on the investments in properties for tax purposes, among other things. During the nine months ended September 30, 2017 and 2016, all distributions paid were considered return of capital to the stockholders as we reported a taxable net loss during the period.

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 ~~major~~ tax jurisdictions.

Initial Public Offering. On October 6, 2020, we completed an initial public offering ("IPO"), selling 500,000 shares of our Series A Common Stock at $5.00 per share. Proceeds from our IPO were $2.0 million after deducting approximately $0.5 million in underwriting discounts, commissions and fees and before giving effect to $0.5 million in other expenses relating to the IPO. Incremental costs of $0.5 million that were directly attributable to issuing new shares were deducted from equity in the Consolidated Statements of Equity, while costs that were not directly related to issuing new shares of $0.5 million were expensed in deferred offering costs in the Consolidated Statements of Operations. We utilized the net proceeds of this offering for general corporate and working capital purposes.

Reverse Stock Split. On July 29,2020, we amended our charter to effect a one-for-2 reverse stock split of every outstanding share of our Series A Common Stock. The financial statements and accompanying footnotes have been retroactively restated to reflect the reverse stock split.

Preferred Stock Series D. On June 15, 2021, the Company completed its secondary offering of 800,000 shares of our 9.375% Series D Cumulative Redeemable Perpetual Preferred Stock ("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 Company intends to use these proceeds for general corporate and working capital purposes and to potentially acquire additional properties.

Repaid Note. On September 17, 2019, the Company issued a Promissory Note (the “Polar Note”) pursuant to which Polar Multi-Strategy Master Fund, provided a loan in the principal amount of $14.0 million to the Company. The Note bore interest at a fixed rate of 8% per annum and required monthly interest-only payments. On September 1, 2020, we extended the maturity of the Polar Note from October 1,2020 to March 31, 2021, at which time the entire outstanding principal balance of $8.8 million and accrued and unpaid interest was to be due and payable. On September 30, 2020, we paid a renewal fee of 4% on the unpaid principal balance of the Polar Note. The Company used the proceeds of the Polar Note to redeem all of the outstanding shares of Series B Preferred Stock. As of December 31, 2020, the outstanding principal balance of the Polar Note was approximately $7.7 million. During the first quarter of 2021, prior to maturity, the Polar Note was paid in full primarily from available cash on hand and proceeds of property sales.

Short-term liquidity needs include paying our current operating costs, satisfying the debt service requirements of existing mortgages, completing tenant improvements, paying leasing commissions, and funding dividends to stockholders. Future principal payments due on mortgage notes payables, during the last six months of 2021, total approximately $2.6 million, of which $2.0 million is related to model home properties. 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. 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 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.

There have been no significant changes to the Company’s accounting policies since it filed its audited financial statements in its Annual Report on Form ~~10-K~~10-K for the year ended December 31, ~~2016.~~2020. 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, ~~2016~~2020 included in the Company’s Annual Report on Form ~~10-K~~10-K filed with the ~~Securities and Exchange Commission (“SEC”)~~SEC on March ~~17, 2017 and amended on April 20, 2017.~~30, 2021.

Basis of Presentation. The accompanying condensed 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"~~(“GAAP”) for interim

financial ~~statement~~statements and the instructions to Form ~~10-Q~~10-Q and Article 8 of Regulation ~~S-X.~~S-X. Certain information and footnote disclosures required for annual consolidated financial statements have been condensed or excluded pursuant to rules and regulations of the SEC. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of our financial position, results of our operations, and cashflows as of and for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~ 2021 and ~~2016,~~2020, 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, ~~2017.~~2021. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form ~~10-K~~10-K for the year ended December 31, ~~2016.~~2020. The condensed consolidated balance sheet ~~at year ended~~ as of December 31, ~~2016~~ 2020has been derived from the audited consolidated financial statements included in the Form ~~10-K~~10-K filed with the SEC on March ~~17, 2017~~30, 2021. The results for the three and ~~amended~~six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the full year ending December 31, 2021 due to real estate market flections, available mortgage lending rates and other factors, such as the effects of the novel coronavirus (“COVID-19”) and its possible influence on ~~April 20, 2017.~~our future results.

Principles of ~~Consolidation.~~Consolidation. The accompanying ~~condensed~~ consolidated financial statements include the accounts of ~~the Company~~Presidio Property Trust and its ~~direct~~subsidiaries, NetREIT Advisors, LLC and ~~indirect wholly-owned~~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, its subsidiaries, and ~~entities~~ the ~~Company controls or of which it is the primary beneficiary.~~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 consolidated net income (loss) in 2021 and 2020 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 statement of operations. Management has evaluated the noncontrolling interests and determined that they do not contain any redemption features.

Use of ~~Estimates.~~Estimates. The preparation of financial statements in ~~conformity~~accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include the allocation of purchase price paid for property acquisitions between 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 may 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, building, 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 and 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 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 and the tenant’s credit quality, among other factors.

The value allocable 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 lease. 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 decrease in rental income of approximately $3,000 and $2,000 for the three and six months ended June 30, 2021, respectively. Amortization of above and below-market rents resulted in a net increase in rental income of approximately $28,000 and $58,000 for the three and six months ended June 30, 2020, respectively.

The value of in-place leases and unamortized lease origination costs are 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 $0.1 million and $0.2 million for the three and six months ended June 30, 2021, respectively. Amortization expense related to these assets was approximately $0.1 million and $0.3 million for the three and six months ended June 30, 2020, respectively.

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 and market conditions change. If management determines the estimated remaining life of the respective lease has changed, the amortization period is adjusted. At June 30, 2021 and December 31, 2020, the Company had net deferred leasing costs of approximately $1.2 million and $1.9 million, respectively. Total amortization expense for the three and six months ended June 30, 2021 was approximately $87,000 and $173,000, respectively Total amortization expense for the three and six months ended June 30, 2020, was approximately $101,000 and $200,000, respectively.

Cash Equivalents and Restricted Cash. At June 30, 2021 and December 31, 2020, we had approximately $29.3 million and $11.5 million in cash equivalents and restricted cash, respectively, of which approximately $4.1 million and $4.2 million represented restricted cash, respectively. Our cash equivalents and restricted cash consist of invested cash and cash in our operating accounts and are held in bank accounts at third party institutions. Restricted cash typically consists of funds held by lenders to be used for property taxes, insurance, capital expenditures and leasing commissions. As of June 30, 2021, restricted cash included approximately $0.9 million in cash held in escrow that relates to a delayed like-kind exchange transaction pursued under Section 1031 of the Internal Revenue Code 1986, as amended (the "Internal Revenue Code").

Real Estate Held for Sale.Real estate held for sale during the current period is classified as “real estate held for sale” for all prior periods presented in the accompanying condensed consolidated financial statements. Mortgage notes payable related to the real estate held for sale during the current period isare classified as ~~“notes~~“mortgage notes payable related to real estate held for ~~sale”~~sale, net” for all prior periods presented in the accompanying condensed consolidated financial statements. As of June 30, 2021, 1 commercial property met the criteria to be classified as held for sale (World Plaza) and 2 model homes were classified as held for sale.

Deferred Offering Costs. Deferred offering costs represent legal, accounting and other direct costs related to our public offerings. Total deferred offering costs, as of June 30, 2021 and December 31, 2020, were approximately $0.1 million, at the end of each period. These costs include direct costs related to the preparation of a registration statement on Form S-3 filed on December 29, 2020, and amended on April 13, 2021. These costs were deferred and were included in Other Assets on the accompanying condensed consolidated balance sheets at June 30, 2021 and December 31, 2020. Offering costs/deferred offering costs/underwriters' discount in connections to the issuance of the Preferred Stock Series D were charged against shareholders' equity within Additional paid-in-capital. Offering costs typically include legal, accounting, and other fees associated with the cost of raising equity capital. As of June 30, 2021 offering costs related to the Series D Preferred Stock, netted against offering proceeds, totaled approximately $2.5 million.

As of June 30, 2021, there were 385,274 shares of restricted unvested common stock grants to employees that were anti-dilutive for the three and six months ended June 30, 2021 and were not included in the ~~carrying value~~computation of ~~these investments exists. During~~diluted earnings per share. As of June 30, 2020, there were 212,783 shares of restricted unvested common stock grants to employees that were anti-dilutive for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017, management did~~ 2020 and were not ~~believe any impairment reserve was required.~~ included in the computation of diluted earnings per share.

~~Reclassifications.~~ Certain reclassifications have been made to the previously presented consolidated financial statements and condensed consolidated financial statements to conform to the current period presentation. These reclassifications had no effect on previously reported results of consolidated operations or equity.

Subsequent Events. We evaluate subsequent events up until the date the condensed consolidated financial statements are issued.

Recently Issued and Adopted Accounting Pronouncements. In ~~February 2016,~~ June 2017, the FASB issued ASU No. ~~2016-02,~~ 2016-13,Financial Instruments – Credit Losses, amendedin February 2020 with ASU No.2020-02, Financial Instruments—Credit Losses (Topic 326) and Leases (Topic ~~842)~~ (“842). ASU ~~No. 2016-02”). The amendments~~2016-13 introduces a new model for estimating credit losses for certain types of financial instruments, including loans receivable, held-to-maturity debt securities, and net investments in direct financing leases, amongst other financial instruments. ASU ~~No.~~ 2016 ~~-02 changes~~-13 also modifies the ~~existing accounting standards~~impairment model for ~~lease accounting, including requiring lessees to recognize most leases on their balance sheets~~available-for-sale debt securities and ~~making targeted changes to lessor accounting.~~expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for losses. While ASU ~~No. 2016-02 is~~2016-13 was effective for ~~annual~~ periods beginning after December 15, ~~2018, including interim periods within those fiscal years. Early adoption~~2019, the issuance of ASU ~~No. 2016-02 as of its issuance~~2020-02 has allowed for the delay in adoption for certain smaller public companies, and is ~~permitted. The new leases standard requires~~now effective for fiscal periods beginning after December 15, 2022. Retrospective adjustments shall be applied through a ~~modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option~~cumulative-effect adjustment to ~~use certain transition relief.~~retained earnings. The Company is ~~currently evaluating~~continuing to evaluate the impact of ~~adopting the new leases standard~~this guidance on its ~~consolidated~~ financial ~~statements.~~

~~In November 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”. This update requires that~~statements, and does not believe it will have a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows. The new standard is effective for annual reporting periods beginning after December 15, 2017 with early adoption permitted. The amendments should be applied using a retrospective transition method to each period presented. The Company is still evaluating the provisions of ASU 2016-18 and itsmaterial impact on the ~~consolidated statement of cash flows.~~financial statements.

~~On February 27, 2017, the Company sold the Rangewood Medical Building for approximately $2.2 million and recognized a loss of approximately $170,000.~~

~~On March 31, 2017, the Company sold the Regatta Square Retail Center for approximately $3.0 million and recognized a gain of approximately $756,000.~~

~~On April 7, 2017, the Company sold the Shoreline Medical Building for approximately $8.2 million and recognized a gain of approximately $1.3 million.~~

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2021, the Company disposed of ~~fourteen Model Homes for approximately $5.3 million and recognized a gain of approximately $350,000 related to~~ the ~~sale of these Model Homes.~~following properties:

During the six months ended June 30, 2021, the Company disposed of 32 model homes for approximately $15.1 million and recognized a gain of approximately $2.3 million.

During the six months ended June 30, 2020, the Company disposed of the following properties:

During the six months ended June 30, 2020, the Company disposed of 21 model homes for approximately $8.0 million and recognized a gain of approximately $0.6 million.

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 five commercial properties located in Colorado, four in North Dakota and two in Southern California. Our model home properties are located in four states. As of June 30, 2021, the Company owned or had an equity interest in:

A summary of the properties owned by the Company as of ~~September~~June 30, ~~2017~~2021 and December 31, 2020 is as follows:

~~The following tables show a list~~(1) This property was sold during the six months ended June 30, 2021.

(3) Genesis Plaza is owned by ~~Presidio Property Trust, Inc. grouped by state location~~two tenants-in-common, each of which 57% and 43%, respectively, and we beneficially own an aggregate of 76.4%.

(4) A portion of the proceeds from the sale are Highland Court are included in restricted cash, totaling approximately $0.9 million, and are held in escrow for a delayed like-kind exchange transaction pursued under Section 1031 of the Internal Revenue.

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

At each of June 30, 2021 and December 31, 2020, gross lease intangible assets of $0 and $1.1 million, respectively, were included in real estate assets held for sale. At each of June 30, 2021 and December 31, 2020, accumulated amortization related to the lease intangible assets of $0 and $1.1 million, respectively, were included in real estate assets held for sale.

The net value of acquired intangible liabilities was ~~$1,457,204 and $1,698,086~~$0.1 million relating to below-market leases asat each of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016, respectively.~~2020.

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

~~The weighted average remaining amortization period of the intangible assets as of September 30, 2017 is 3.5 years.~~6. OTHER ASSETS

		Principal as of														*Principal as of*
		September 30,			December 31,			Loan	Interest							*June 30,*			*December 31,*			*Loan*	*Interest*
Mortgage note property	Notes	2017			2016			Type	Rate (1)			Maturity	*Notes*			*2021*			*2020*			*Type*	*Rate (1)*			*Maturity*
Rangewood Medical Office Building		$	-		$	958,106		Fixed		4.95	%	1/1/2019
Regatta Square			-			1,150,566		Fixed		4.95	%	1/1/2019
Waterman Plaza														(2	)	$	0		$	3,207,952		Variable		0		-
World Plaza														(3) (4)			0			5,802,568		Variable		2.91	%	7/5/2021
Garden Gateway Plaza			6,491,497			6,626,739		Fixed		5.00	%	2/5/2020		(2)			0			5,861,523		Fixed		5.00	%	8/5/2021
Port of San Diego Complex			9,645,958			9,852,456		Fixed		4.75	%	3/5/2020
West Fargo Industrial			4,383,209			4,434,655		Fixed		4.79	%	8/4/2020
Morena Office Center	(2)		2,173,577			2,224,839		Fixed		4.50	%	1/1/2021
Waterman Plaza			3,872,112			3,939,037		Fixed		4.25	%	4/29/2021
Pacific Oaks Plaza			1,477,981			1,512,640		Fixed		4.50	%	6/1/2021
The Presidio			6,000,000			6,000,000		Fixed		4.54	%	12/1/2021
Shoreline Medical Building			-			3,602,238		Fixed		5.10	%	6/1/2022
300 N.P.																	2,253,299			2,273,478		Fixed		4.95	%	6/11/2022
Highland Court			6,729,472			6,829,348		Fixed		3.82	%	9/1/2022		(2	)		0			6,274,815		Fixed		3.82	%		9/1/2022
Dakota Bank Buildings			10,538,950			10,677,761		Fixed		4.74	%	7/6/2024
Union Terrace Building			6,480,347			6,558,704		Fixed		4.50	%	9/5/2024
Centennial Tech Center			9,950,275			10,077,242		Fixed		4.34	%	11/5/2024
Dakota Center																	9,789,385			9,900,279		Fixed		4.74	%	7/6/2024
Research Parkway			1,920,972			1,956,154		Fixed		3.94	%	1/5/2025					1,733,206			1,760,432		Fixed		3.94	%	1/5/2025
Arapahoe Service Center			8,397,863			8,500,000		Fixed		4.34	%	1/5/2025					7,851,982			7,932,255		Fixed		4.34	%	1/5/2025
Union Town Center			8,440,000			8,440,000		Fixed		4.28	%	1/5/2025					8,244,837			8,315,550		Fixed		4.28	%	1/5/2025
Yucca Valley Retail Center			6,000,000			6,000,000		Fixed		4.30	%	4/11/2025
One Park Centre																	6,331,241			6,385,166		Fixed		4.77	%	9/5/2025
Genesis Plaza																	6,222,672			6,276,273		Fixed		4.71	%	9/6/2025
Shea Center II																	17,620,933			17,727,500		Fixed		4.92	%	1/5/2026
Executive Office Park	(3)		4,171,269			4,231,842		Fixed		5.80	%	7/1/2025		(2	)		0			2,985,998		Fixed		4.83	%	6/1/2027
Genesis Plaza			6,500,000			6,610,000		Fixed		4.65	%	8/25/2025
One Park Centre			6,610,000			6,500,000		Fixed		4.77	%	9/5/2025
Shea Center II			17,727,500			17,727,500		Fixed		4.92	%	1/5/2026
Bismarck Office Building	(5)		4,083,446			4,158,998		Fixed		4.02	%	8/1/2037
300 N.P.			2,388,948			-		Fixed		4.02	%	8/1/2037
Subtotal, Presidio Property Trust, Inc. properties			133,983,376			138,568,825				4.71	%
West Fargo Industrial																	4,206,028			4,262,718		Fixed		3.27	%	8/5/2029
Grand Pacific Center														(5	)		3,679,496			3,738,142		Fixed		4.02	%	8/1/2037
Subtotal, Presidio Property Trust, Inc. Properties																$	67,933,079		$	92,704,649
Model Home mortgage notes			30,717,681			22,259,779		Fixed	(4)			2017-2020		(3	)		22,781,235			28,083,356		Fixed		(6	)		2021 - 2023
Mortgage Notes Payable		$	164,701,057		$	160,828,604										$	90,714,314		$	120,788,005
Unamortized loan costs			(1,781,974	)		(1,942,493	)										(733,956	)		(758,309	)
Mortgage Notes Payable, net		$	162,919,083		$	158,886,111										$	89,980,358		$	120,029,696

~~(4) Each Model Home has a stand-alone mortgage note at interest rates ranging from 3.8% to 5.5% per annum (at~~ ~~September 30, 2017~~).

~~(5) Interest rate is subject to reset on September 1, 2023 and on September 1, 2030.~~

~~The Company is in compliance with all conditions and covenants of its mortgage notes payable.~~

Scheduled principal payments of mortgage notes payable were as follows as of June 30, 2021:

On September 17,2019, the Company executed a Promissory Note pursuant to which Polar Multi-Strategy Master Fund, extended a loan in the principal amount of $14.0 million to the Company (the “Polar Note”). The Polar Note bore interest at a fixed rate of 8% per annum and required monthly interest-only payments. On September 1, 2020, we extended the maturity of the Polar Note from October 1,2020 to March 31, 2021, at which time the entire outstanding principal balance of $8.8 million and accrued and unpaid interest was to be due and payable. On September 30, ~~2017~~:2020, we paid the extension or renewal fee, which was 4% of the unpaid principal balance. The principal balance of the Polar Note as of December 31, 2020 consisted of cash received, less cash repayments from property sales of $6.3 million and Original Issue Discount (“OID”) of $1.4 million. The OID was recorded on the accompanying condensed consolidated balance sheets as a direct deduction from the principal of the Polar Note and was recognized as interest expense over the term of the Polar Note commencing on September 17,2019 through October 1,2020. There was no unrecognized OID as of December 31, 2020 or June 30, 2021.

In August 2014, the Company closed on a private placement offering of its mandatorily redeemable Series B Preferred Stock. The financing, was funded in installments and completed on December 24, 2015. As of December 31, 2015, the Company had issued 35,000 shares of its Series B Preferred Stock. The Company has classified the Series B Preferred Stock as a liability in accordance with ASC Topic No. 480, “~~Distinguishing Liabilities from Equity~~,” which states that mandatorily redeemable financial instruments should be classified as liabilities and therefore the related dividend payments are treated as a component of interest expense in the accompanying consolidated statements of operations.

The Series B preferred stock has a $0.01 par value and a $1,000 liquidation preference. The Series B preferred stock shall be redeemed through a cash payment of the face value of the shares outstanding at redemption. The preferred return on the funds invested is 14% and shall be paid on a monthly basis. The Series B Preferred Stock was scheduled to be redeemed on August 1, 2017; however, the Company had two one year options to extend the redemption date. On June 30, 2017, the Company exercised its option to extend the redemption date to August 1, 2019 and paid an extension fee of $153,500. The Company incurred approximately ~~$3.1~~$1.1 million in legal and underwriting costs related to ~~this~~the transaction. These costs ~~have been~~were recorded as ~~deferred financing~~debt issuance costs on the accompanying consolidated balance sheets as a direct deduction from the ~~carrying amount~~principal of ~~that debt liability~~the Polar Note and ~~are being~~were amortized over the term of the ~~agreement. Amortization expense totaling approximately $507,000~~Polar Note. During the first quarter of 2021, prior to maturity, the Polar Note was paid in full, primarily from available cash on hand and ~~$508,000 was included in interest expense for~~ proceeds of property sales and all unamortized debt issuance costs were expensed.

On April 22, 2020, the ~~nine months ended September 30, 2017~~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 ~~2016~~has been recorded as fees and other income in the ~~accompanying~~condensed consolidated statements of ~~operations.~~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 ~~unamortized deferred stock costs totaled $134,000~~ loan matures on August 17, 2050. We have used the funds for general corporate purposes to alleviate economic injury caused by the COVID-19 pandemic, which economic injury included abating or deferring rent to certain tenants (primarily retail tenants).

On April 30, 2020, the Company received a Paycheck Protection Program ("PPP") loan of $0.5 million from the SBA to provide additional economic relief during the COVID-19 pandemic. The PPP loan, less the $10,000 related to the EIDL received on April 22, 2020, was forgiven by the SBA prior to December 31, 2020 and ~~$592,000~~the remaining $10,000 was fully forgiven in January 2021, upon repeal of the EIDL holdback requirements. On June 5, 2020, the period in which the loan could be utilized was extended to 24 weeks. The unforgiven portion of the PPP loan was recorded in accounts payable and accrued liabilities on the Consolidated Balance Sheets as of ~~September 30, 2017~~ ~~and~~ December 31, ~~2016, respectively.~~

2020. During ~~2016,~~ the ~~Company redeemed 300 shares~~quarter ended March 31, 2021, the forgiven amount totaling $10,000 was recorded as a gain on extinguishment of debt in ~~June, 1,000 shares in July and 1,000 shares in August for a total~~the Consolidated Statement of ~~$2.3 million. During 2017,~~Operations. We have used the ~~Company redeemed 1,000 shares in March and 1,000 shares in May for a total of $2.0 million. As of September 30, 2017,~~funds received from the ~~remaining outstanding number of shares was 30,700.~~ PPP loan to cover payroll related costs.

On April 1, 2021, our wholly-subsidiary, Dubose Model Homes Investors #203 LP ("DMH 203"), issued an unsecured promissory note with LGD Investments Ltd ("LGD") for $330,000 with an interest rate of 4% per annum and a maturity date of April 30, 2022. LGD Investments is owned and controlled by one of our directors, Larry Dubose. During April and May 2021, DMH 203 paid LDG $2,200 in interest related to the promissory note. On June 1, 2021, the Company assumed the promissory note from LDG a face value for $330,000 with no other changes in the terms of the note. Interest expense and interest income related to this promissory note during June 2021 were eliminated through consolidation.

The Company is obligated under certain tenant leases to fund tenant improvements and the expansion of the underlying leased properties.

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.

Preferred Stock. The Company is authorized to issue up to ~~8,990,000~~1,000,000 shares of ~~preferred stock~~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 determine or alter the rights granted to or imposed upon any wholly unissued series of ~~preferred stock~~Preferred Stock including the dividend rights, dividend rate, conversion rights, voting rights, redemption rights (including sinking fund provisions), redemption price, and liquidation preference.

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 Benchmark, 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 and trading on The Nasdaq Capital market under the symbol SQFTP. The Company intends to use these proceeds 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:

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.

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 2 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.

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.

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.

The Company evaluated the accounting guidance in ASC 480 regarding the classification of the Series D Preferred Stock as equity or a liability and ultimately determined that it should be classified as permanent equity. On June 24, 2021, the board of director of the Company declared the first dividend on its Series D Preferred Stock for the initial period from the issue date of June 15 to June 30, 2021. In accordance with the terms of the Series D Preferred Stock, the Series D dividend will be payable in cash in the amount of $0.10417 per share on July 15, 2021, to stockholders of record of Series D Preferred Stock as of the dividend record date of June 30, 2021

Common Stock. The Company is authorized to issue up to 100,000,000 shares of Series A Common Stock, ~~(“Common Stock”) $0.01 par value and~~ 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. ~~The~~Each class of Common Stock ~~and the Series B Common Stock have~~has identical rights, preferences, terms and conditions except that the holders of Series B Common ~~Stockholders~~Stock are not entitled to receive any portion of Company assets in the event of ~~Company~~the Company's liquidation. ~~There have been no~~NaN shares of Series B or Series C Common Stock ~~shares~~have been issued. Each share of Common Stock entitles the holder to ~~one~~1 vote. ~~The~~Shares of our Common Stock is are not subject to redemption and ~~it does~~ do not have any preference, conversion, exchange or ~~pre-emptive~~preemptive rights. The articles of incorporation contain a restriction on ownership of the Common Stock that prevents one person from owning more than 9.8% of the outstanding shares of common stock.

Cash Dividends on Common Stock. During the Company commenced a private placement offering of its common stock. Through December 31, 2011 when the offering was closed, the Company conducted a self-underwritten private placement offering and sale of 20,000,000 shares of its common stock at a price of $10 per share. This offering was made only to accredited investors (and up to thirty-five non-accredited

investors) pursuant to an exemption from registration provided by Section 4(2) and Rule 506 of Regulation D under the Securities Act of 1933, as amended. No public or private market currently exists for the securities sold under this offering.

~~Cash Dividends.~~ In September 2017, we filed a registration statement relating to our proposed initial public offering. In light of the proposed offering, we suspended the payment of dividends corresponding to the threesix months ended ~~September~~June 30, ~~2017. During the nine months ended September 30, 2017 and 2016~~2021 the Company paid twocash dividends ~~net of reinvested~~to the common stock ~~dividends,~~holders of approximately ~~$3,621,000~~$1.0 million or $0.101 per common share and ~~$3,348,000, respectively,~~approximately $1.0 million or ~~at a rate of $0.10~~$0.102 per ~~share on a quarterly basis. As~~common share. During the ~~Company expects to report net taxable losses for the year~~six months ended ~~December 31, 2017, and on a cumulative basis, the~~June 30, 2020 there were 0 cash dividends paid ~~are expected~~by the Company.

Partnership Interests. Through the Company, its subsidiaries and its partnerships, we own 11 commercial properties in fee interest, 1 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 beas a ~~return~~“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 ~~capital to~~our Common Stock at a stated price after a defined period (generally five years from the ~~stockholders rather than~~date they first invested in the entity’s real property), the occurrence of a ~~distribution~~specified event or a combination thereof. The Company is a limited partner in four partnerships and sole stockholder in one corporation, which entities purchase and leaseback model homes from homebuilders.

Dividend Reinvestment Plan.The Company ~~has~~ adopted a distribution reinvestment plan (the “DRIP”) that ~~allows~~allowed stockholders to have dividends and other distributions otherwise distributable to them invested in additional shares of ~~Company common stock.~~the Company’s Common Stock. The Company ~~has~~ registered 3,000,000 shares of ~~common stock~~Common Stock pursuant to the ~~dividend reinvestment plan. The dividend reinvestment plan became effective on January 23, 2012.~~DRIP. The purchase price per share isused in the past was 95% of the price the Company ~~was formerly selling~~sold its shares, or ~~$9.50~~$19.00 per share. NoNaN sales commission or dealer manager ~~fee will be~~fees were paid on shares sold through the ~~dividend reinvestment plan.~~DRIP. The Company may amend, suspend or terminate the ~~Plan~~DRIP at any time. Any such amendment, suspension or termination ~~will be~~is effective upon a designated dividend record date and notice of such amendment, suspension or termination ~~will be~~is sent to all ~~Participants~~participants at least thirty (30) days prior to such record date. The DRIP became effective on January 23, 2012, was suspended on December 7, 2018 and adopted on October 6, 2020 in connection with our IPO, and updated to reflect a change in transfer agent and registrar. As of ~~September~~June 30, ~~2017~~2021, approximately $17.4 million or approximately ~~1,834,147~~917,074 shares of common stock have been issued under the ~~dividend reinvestment plan to date.~~DRIP. NaN shares were issued under the DRIP during the six months ended June 30, 2021.

The Company ~~leases~~maintains a ~~portion~~restricted stock incentive plan for the purpose of ~~its corporate headquarters at Pacific Oaks Plaza~~attracting and retaining officers, key employees and non-employee board members. Share awards vest in ~~Escondido, California~~equal annual installments over a three to ~~entities 100% owned by~~ten year period from date of issuance. Non-vested shares have voting rights and are eligible for any dividends paid to common shares. 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 calculated based on the closing price of our common stock on the date of the grant.

A summary of the activity for the Company’s ~~Chairman~~restricted stock was as follows:

The non-vested restricted shares outstanding as of June 30, 2021 will vest over the next one to seven years.

The value of non-vested restricted stock granted as of June 30, 2021 and ~~Chief Executive Officer. Rental income recorded~~December 31, 2020 was approximately $2.3 million and $0.9 million, respectively.

Share-based compensation expense for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021, was approximately $0.3 million and ~~2016 totaled $7,000~~$0.6 million, respectively. During the three and ~~$7,000, respectively,~~six months ended June 30, 2020, share-based compensation expense was approximately $0.2 million and ~~$21,000 and $21,000,~~$0.4 million, respectively.

The Company’s reportable segments consist of ~~three~~3 types of ~~commercial~~ real estate properties for which the Company’s decision-makers internally evaluate operating performance and financial results: Office/Industrial Properties, ~~Residential~~Model Home Properties and Retail Properties. The Company also has certain ~~corporate level~~corporate-level activities including accounting, finance, legal administration and management information systems which are not considered separate operating segments. ~~The accounting policies of the reportable segments are the same as those described in Note 2.~~ There is no ~~inter segment~~ material inter-segment activity.

The Company evaluates the performance of its segments based upon net operating income (“NOI”), which is a non-GAAP supplemental financial measure. The Company defines NOI for its segments as operating revenues (rental income, tenant reimbursements and other operating income) less property and related expenses (property operating expenses, real estate taxes, insurance, asset management fees, impairments and provision for bad debt). NOI excludes certain items that are not considered to be controllable in connection with the management of an asset such as non-property income and expenses, depreciation and amortization, real estate acquisition fees and expenses and corporate general and administrative expenses. The Company uses NOI to evaluate the operating performance of the Company’s real estate investments and to make decisions ~~about resource allocations.~~regarding allocation of resources.

The following tables ~~reconcile~~compare the Company’s segment activity to its results of operations and financial position as of and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016.~~June 30, 2020:

~~(1) Includes lease intangibles and the land purchase option related to property acquisitions.~~

Our Form S-3 Registration Statement was declared effective by the SEC on April 27, 2021. Under this registration statement, we may offer and sell from time to time, in one or more series, subject to limitation that may apply, such as under Rule 415 of the Securities Act of 1933, various securities of the Company for total gross proceeds of up to $200,000,000. 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 1,000,000 shares of its Class A common stock (“Common Stock”), warrants (“Common Stock Warrants”) to purchase up to 2,000,000 shares of Class A common stock and pre-funded warrants (“Pre-Funded Warrants”) to purchase up to 1,000,000 shares of Class A common stock. Each share of Common Stock and accompanying Common Stock Warrant were sold together at a combined offering price of $5.00, and each share of Common Stock and accompanying Pre-Funded Warrant were sold together at a combined offering price of $4.99. The Pre-Funded Warrants are immediately exercisable at a nominal exercise price of $0.01 and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full. The Common Stock Warrants have an exercise price of $5.50 per share, were exercisable upon issuance and will expire five years from the date of issuance.

On July 15, 2021, the Company paid the first divided to our Preferred Stock Series D stockholders totaling approximately $96,000, from the period of issuance to June 30, 2021. Additional on July 20, 2021 the Company announced the continued monthly dividend on its Preferred Stock Series D in the amount of $0.19531 per share on August 16, 2021, to stockholders of record as of the dividend record date of July 30, 2021. The total payment expected on August 16, 2021 is approximately $180,000.

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

The following discussion ~~relates to our financial statements and~~ should be read in conjunction with our condensed consolidated financial statements and the notes thereto appearing in Item 1 of this report and the more detailed information contained in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission (“SEC”) on March 30, 2021.

We may refer to the three months ended June 30, 2021 and June 30, 2020 as the “2021 Quarter” and the “2020 Quarter,” respectively.

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” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and 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. Currently, one of the most significant factors is the potential adverse effect of the COVID-19 virus and ensuing economic turmoil on the financial condition, results of operations, cash flows and performance of the Company, 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. The extent to which COVID-19 impacts the Company and its tenants will depend on current and future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. Moreover, investors are cautioned to interpret many of the risks identified in the risk factors discussed in this 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 30, 2021, as well as the risks set forth below, as being heightened as a result of the ongoing and numerous adverse impacts of COVID-19. 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 ~~footnotes~~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 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 2020 Annual Report on Form 10-K filed on March 30, 2021, and subsequent Quarterly Reports on Form 10-Q. 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.

On March 11, 2020, the World Health Organization declared COVID-19, a respiratory illness caused by the novel coronavirus, a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The COVID-19 pandemic caused state and local governments within our areas of business operations to institute quarantines, “shelter-in-place” mandates, including rules and restrictions on travel and the types of businesses that may continue to operate. While certain areas have re-opened, others have seen an increase in the number of cases reported, prompting local governments to consider enforce further restrictions. We continue to monitor our operations and government recommendations. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law to provide widespread emergency relief for the economy and to ~~Cautionary Statements appearing~~provide aid to corporations.

The CARES Act includes several significant provisions related to taxes, refundable payroll tax credits and deferment of social security payments. We utilized certain relief options offered under the CARES Act and continue to evaluate the relief options for us and our tenants available under the CARES Act, as well as other emergency relief initiatives and stimulus packages instituted by the federal government. A number of the relief options contain restrictions on future business activities, which require careful evaluation and consideration, such as restrictions on the ability to repurchase shares and pay dividends. We will continue to assess these options, and any subsequent legislation or other relief packages, including the accompanying restrictions on our business, as the effects of the pandemic continue to evolve.

The effects of the COVID-19 pandemic did not significantly impact our operating results during the first and second quarters of 2021. We continue to monitor and communicate with our tenants to assess their needs and ability to pay rent. We have negotiated lease amendments with certain tenants who have demonstrated financial distress caused by the COVID-19 pandemic, which have included or may include rent deferral, temporary rent abatement, or reduced rental rates and/or lease extension periods, however no new negotiations were initiated during the first and second quarters of 2021. While these amendments have affected our short-term cash flows, we do not believe they represent a change in the valuation of our assets for the properties affected and have not significantly affected our results of operations. Given the longevity of this pandemic and the potential for other variants of the coronavirus, such as the delta variant, the COVID-19 outbreak may materially affect our financial condition and results of operations going forward, including, but not limited to, real estate rental revenues, credit losses, leasing activity, and potentially the valuation of our real estate assets. We do not expect additional rent deferrals, abatements, and credit losses from our commercial tenants during the remainder of 2021 which may have a material impact on our real estate rental revenue and cash collections. While we do expect that the effects of the COVID-19 pandemic will impact our ability to lease up available commercial space, our business operations and activities in many regions may be subject to future quarantines, "shelter-in-place" rules, and various other restrictions for the foreseeable future. Due to the uncertainty of the future impacts of the COVID-19 pandemic, the extent of the financial impact cannot be reasonably estimated at this time. We are currently focused on growing our portfolio with the recent capital raised from the sale of our 9.375% Series D Cumulative Redeemable Perpetual Preferred Stock in June 2021 and our Class A common stock in July 2021. For more information, see Part II - Item 1A. Risk Factors” included elsewhere in this ~~report.~~Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 30, 2021.

The Company operates as ~~a self-managed~~an internally managed, diversified REIT, with primary holdings in office, industrial, retail, and ~~self-administered real estate investment trust, or REIT.~~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, ~~office,~~ retail and model home ~~leased~~ residential properties leased to homebuilders located ~~throughout~~in the United States. As of ~~September~~June 30, ~~2017,~~2021, the Company owned or had an equity interest in:

~~The Company’s office, industrial, retail and mixed use~~in Southern California. Our model home properties are located ~~primarily~~ in ~~Southern California and Colorado, with~~ four ~~properties located in North Dakota. Our~~states. While geographical clustering of ~~assets~~real estate enables us to reduce our operating costs through economies of scale by servicing a number of properties with less staff, ~~but~~ it ~~also~~ makes us ~~more~~ susceptible to changing market conditions in these discrete geographic ~~areas.~~areas, including those that have developed as a result of COVID-19. 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 ~~industrial,~~and retail ~~and mixed use~~ properties are leased to a variety of tenants ranging from small businesses to large public companies, many of which doare not ~~have publicly rated debt.~~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 expense ~~(NNN Leases)~~ or pay increases in operating expenses over specific base years. ~~Decreased demand and other negative trends or unforeseeable events that impair~~Most of our ~~ability~~office leases are for terms of three to ~~timely renew or re-lease space could have a negative effect on our future financial condition, results of operations and cash flow.~~

five years with annual rental increases. Our ~~Model Homes~~model homes are typically leased back for 2two to 3three years to the home ~~developer~~builder on a ~~triple net~~triple-net lease. Under a ~~triple net~~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 ~~geographic market~~ and/or tenant. We further ~~supplement this~~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 individual 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 ~~entities.~~tenants. Our Model Home ~~business~~commercial tenants are ~~typically substantial home developers~~well-known homebuilders with established credit histories. These tenants are ~~subject~~subjected to financial review and analysis prior to us entering into a ~~sale-leaseback~~sales-leaseback transaction. ~~Our ownership~~

Initial Public Offering. On October 6, 2020, we completed an initial public offering ("IPO"), selling 500,000 shares of our Series A Common Stock at $5.00 per share. Proceeds from our IPO were $2.0 million after deducting approximately $0.5 million in underwriting discounts, commissions and fees and before giving effect to $0.5 million in other expenses relating to the IPO. Incremental costs of $0.5 million that were directly attributable to issuing new shares were deducted from equity in the Consolidated Statements of Equity, while costs that were not directly related to issuing new shares of $0.5 million were expensed in deferred offering costs in the Consolidated Statements of Operation. We utilized the net proceeds of this offering for general corporate and working capital purposes.

Holders of shares of the Series D Preferred Stock are entitled to receive cumulative cash dividends at a ~~further means~~rate of 9.375% per annum of the $25.00 per share liquidation preference (equivalent to ~~avoiding significant credit losses.~~$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.

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.

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.

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.

Reverse Stock Split. On July 29, 2020, we amended our charter to effect a one-for-two reverse stock split of every outstanding share of our Series A Common Stock. The financial statements and accompanying footnotes have been retroactively restated to reflect the reverse stock split.

~~The Company acquired forty-five Model Home properties and leased them back to~~During the ~~homebuilders during the nine~~six months ended ~~September~~June 30, ~~2017. The purchase price~~2021, the Company disposed of the following properties:

•

Waterman Plaza, which was sold on January 28, 2021 for approximately $3.5 million and the Company recognized a loss of approximately $0.2 million.

•

Garden Gateway, which was sold on February 19, 2021 for approximately $11.2 million and the Company recognized a loss of approximately $1.4 million.

•

Highland Court, which was sold on May 20, 2021 for approximately $10.23 million and the Company recognized a loss of approximately $1.6 million.

•

Executive Office Park, which was sold on May 21, 2021, 2021 for approximately $8.125 million and the Company recognized a gain of approximately $2.5 million.

During the six months ended June 30, 2021, the Company acquire d 6 model homes for ~~the properties was $16.8~~approximately $2.9 million. The purchase price was paid ~~was~~ through cash payments of ~~$5.8~~approximately $0.9 million and mortgage notes of ~~$11.1~~approximately $2.0 million.

~~The Company acquired sixty-five Model Home properties and leased them back to~~During the ~~homebuilders during the twelve~~six months ended ~~December 31, 2016. The purchase price for~~June 30, 2021, the ~~properties was $23.7 million. The purchase price paid was through cash payments of $7.5 million and mortgage notes of $16.2 million.~~

~~Dispositions -~~ We review our portfolio of investment properties for value appreciation potential on an ongoing basis, and dispose of any properties that no longer satisfy our requirements in this regard. The proceeds from any such property sale, after repayment of any associated mortgage, are available for investing in properties that we believe will have a much greater likelihood of future price

~~appreciation. We~~Company disposed of ~~the following properties during the nine months ended September 30, 2017 and the year ended December 31, 2016:~~

~~On February 27, 2017, the Company sold the Rangewood Medical Building~~32 model homes for approximately ~~$2.2 million and recognized a loss of approximately $170,000.~~

~~On March 31, 2017, the Company sold the Regatta Square Retail Center for approximately $3.0~~$15.1 million and recognized a gain of approximately ~~$756,000.~~$2.3 million.

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~~On April 7, 2017,~~

During the six months ended June 30, 2020, the Company ~~sold~~disposed of the ~~Shoreline Medical Building~~following properties:

•

Centennial Tech Center, which was sold on February 5, 2020 for approximately $15.0 million and the Company recognized a loss of approximately $0.9 million.

•

Union Terrace, which was sold on March 13, 2020 for approximately $11.3 million and the Company recognized a gain of approximately $0.69 million

During the six months ended June 30, 2020, the Company acquired 17 model homes for approximately ~~$8.2~~$6.3 million. The purchase price was paid through cash payments of approximately $1.9 million and mortgage notes of approximately $4.4 million.

During the six months ended June 30, 2020, the Company disposed of 21 model homes for approximately $8.0 million and recognized a gain of approximately ~~$1.3~~$0.6 million.

During the nine months ended September 30, 2017, the Company disposed of fourteen Model Homes for approximately $5.3 million and recognized a gain of approximately $350,000 related to the sale of these Model Homes.

~~In July 2016, the Company sold the Havana Parker Complex for approximately $3.3 million and recognized a gain of approximately $668,000.~~

I~~n June 2016, the Company sold a parcel of land and its building at the Yucca Valley Retail Center for approximately $1.3 million and recognized a gain of approximately $831,000.~~

~~During 2016, the Company sold twenty-one Model Homes for approximately $6.4 million, resulting in gain on sales of approximately $687,000.~~

~~ECONOMIC ENVIRONMENT~~

In one of the longest expansions on record, the United States continues to expand its economy. GDP growth in the second quarter of 2017 was 3.0%, which was its quickest pace in two years. The Federal Reserve has remained optimistic about the United States’ economic outlook, and currently anticipates two more rate hikes in 2017.

The U.S. labor market is showing continued improvement since the Great Recession, with an unemployment rate of only 4.4% as of June 30, 2017. Unemployment in the office-using sector of professional & business services was even lower, at 4.1%, and that could lead to a more favorable market for the commercial real estate segment. Vacancy rates for the office sector of commercial real estate rose slightly to 14.8% as of June 30, 2017. During the second quarter of 2017, net absorption in the U.S. office market was 8.8 million square feet.

The economy’s moderate growth has continued so far in 2017, with some second quarter growth in household spending and positive consumer sentiment, having improved 62.0% since mid-2011. Fixed investment has also increased this year after a slow 2016, and growth in export markets helped to keep U.S. manufacturing buoyant. The housing market remained strong, with continued, historically low mortgage rates.

~~It is impossible to project U.S. economic growth, but economic conditions could have a material effect on our business, financial condition and results of operations.~~

CRITICAL ACCOUNTING POLICIES

There have been no material changes to our critical accounting policies as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2020 filed with the SEC on March ~~17, 2017 and amended on April 20, 2017.~~30, 2021.

MANAGEMENT EVALUATION OF RESULTS OF OPERATIONS

Management’s evaluation of operating results includes an assessment of our ability to generate 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~~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~~management evaluates the results of the operations of our portfolio and individual properties ~~results of operations~~ 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 ~~that have reached goals in occupancy and rental rates~~ are regularly evaluated for potential added value appreciation and cashflow and, if lacking such potential, are sold

with the equity reinvested in ~~properties that have better potential without foregoing cash flow.~~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.

In September 2017, we filed a registration statement relating to our proposed initial public offering. In light of the proposed offering, we suspended the payment of dividends corresponding to the three months ended September 30, 2017.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED ~~SEPTEMBER~~June 30, ~~2017 AND 2016.~~2021 and 2020

Our results of operations for the three months ended September 30, 2017 and 2016 are not indicative of those expected in future periods as we expect that rental income, interest expense, rental operating expense and depreciation and amortization will increase in future periods as a result of anticipated growth through future acquisitions of real estate related investments.

Revenues.Total ~~revenue was $8.0~~revenues were $4.8 million for the three months ended ~~September~~June 30, ~~2017~~2021 compared to ~~$7.9~~$6.1 million for the same period in ~~2016, an increase~~2020, a decrease of approximately ~~$100,000~~$1.3 million or ~~1.3%. While total revenue remained consistent,~~21%, which is primarily due to a net decrease in rental ~~revenue from retail and medical~~income related tothe sale of two properties ~~decreased $320,000~~ during the ~~period due to the sales that occurred~~six months ended June 30, 2020 and four properties during the ~~first and second quarter of 2017. This~~six months ended June 30, 2021 The decrease ~~was offset by a $360,000 increase~~ in rental ~~revenues from model homes. The Company owned 139 model homes as of September 30, 2017 compared~~income is also attributed to ~~93 model homes as of September 30, 2016.~~COVID-19 related tenant workouts, which included rent abatements and deferrals that are being recognized over the remaining lease term.

Rental Operating Costs.~~Rental~~ Rental operating costs ~~remained relatively consistent at approximately $2.8~~decreasedby $0.5 millionto $1.5 millionfor thethree months ended ~~September~~June 30, ~~2017 when~~ 2021,compared to ~~$2.6~~$2.0 million for the ~~three months ended September 30, 2016.~~same period in 2020. Rental operating costs as a percentage of total revenue ~~was 35.0%~~also decreased to 30.7% as compared to 32.7% for thethree months ended June 30, 2021 and ~~32.9%~~2020, respectively. The overalldecrease in rental operating costsfor the three months endedJune 30, 2021 as compared to 2020 is duetothe sale of two properties during the six months ended June 30, 2020 and four properties during the six months ended June 30, 2021, as well as the mix of properties held to include a higher percentage of model homes period over period, which have significantly lower operating costs.

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General and Administrative Expenses. General & Administrative (“G&A”) expenses for the three months ended June 30, 2021 and 2020 totaled approximately $1.3 million and $1.3 million, respectively. These expenses increased by approximately $66,000 for the three months ended ~~September~~June 30, ~~2017 and 2016, respectively.~~

~~General and Administrative Expenses.~~ ~~General and administrative (“G&A”) expenses remained consistent at $1.3 million for~~2021 compared to the ~~three months ended September 30, 2017 and 2016.~~same period in 2020 G&A expenses as a percentage of total revenue was ~~16.3%~~27.7% and ~~16.5%~~20.9% for three months ended ~~September~~June 30, ~~2017~~2021 and ~~2016,~~2020, respectively. The increase in percentage is primarily due to a net decrease in rental income related tothe sale of two properties during the six months ended June 30, 2020 and four properties during the six months ended June 30, 2021, while G&A remained relatively flat.

Depreciation and Amortization.Depreciation and amortization expense ~~totaled approximately $2.4~~was $1.4 million for the three months ended ~~September~~June 30, ~~2017,~~2021, compared to ~~approximately $2.6~~$1.6 million for the same period in ~~2016,~~2020, representing a decrease of ~~approximately $200,000~~$0.3 million or ~~7.6%~~18%. ~~Depreciation~~The decrease in depreciation and amortization expense ~~associated with~~in 2021 compared to the same period in 2020 is duetothe sale of two properties ~~sold~~ during the ~~first~~six months ended June 30, 2020 and ~~second quarter account for all of the decrease~~four properties during the ~~quarter.~~six months ended June 30, 2021.

Asset Impairments.We review the carrying value of each of our real estate properties quarterly to determine if circumstances indicate an impairment in the carrying value of these investments exists. ~~During three months ended September 30, 2017, management~~The Company did not ~~believe any~~recognize an impairment ~~reserve was required. During~~during the three months ended ~~September~~June 30, ~~2016, management estimated that~~2021. Management considered the ~~fair market value~~impact of ~~World Plaza property was below the carrying value and an impairment of approximately $700,000 was recorded.~~

~~Interest Expense-Series B preferred stock.~~ The Series B Preferred Stock issued in August 2014 includes a mandatory redemption provision and therefore is treated as a liability for financial reporting purposes. The interest paid and accrued and the amortization of the deferred offering costs are considered interest expense. Interest expense, including amortization of the deferred offering costs, totaled $1.2 million for the three months ended September 30, 2017 compared to $1.4 million for the same period in 2016. Interest paid and accrued totaled $1.1 million and $1.2 million, respectively, and the amortization of the deferred offering costs associated with that transaction totaled $104,000 and $254,000, respectively for the three months ended September 30, 2017 and 2016 and were included in interest expense-Series B preferred stock in the accompanying financial statements. There were 30,700 and 32,700 shares outstandingCOVID-19 on all other remaining assets as of ~~September~~June 30, ~~2017~~2021 and ~~2016, respectively, resulting in the decrease in interest expense. We plan to redeem the entire outstanding amount~~determined that there were no other indicators of ~~the Series B Preferred Stock using a portion~~impairment had occurred as of ~~the proceeds from the completion of our proposed initial public offering.~~that date.

Interest ~~Expense-mortgage~~Expense - mortgage notes.Interest expense, including amortization of deferred finance charges ~~remained consistent~~was $1.2 million for the three months ended ~~September~~June 30, ~~2017 when~~2021 compared to $1.5 million for the same period in ~~2016 totaling $2.0~~2020, a decrease of $0.3 million or 20%. The decrease in mortgage interest expense relates to the decreased number of commercial properties owned in 2021 compared to 2020 and ~~$1.9 million, respectively.~~the related mortgage debt. The weighted average interest rate on our outstanding debt was ~~4.7 % as of September 30, 2017 compared to~~4.2% and 4.6% as of June 30, 2021 and 2020, respectively.

Interest expense - note payable. On September 17, 2019, the Company executed a Promissory Note pursuant to which Polar Multi-Strategy Master Fund (“Polar”), extended a loan in the principal amount of $14.0 million to the Company (the "Polar Note"). The Polar Note bore interest at a fixed rate of 8% per annum and required monthly interest-only payments. Interest expense, including amortization of the deferred offering costs and Original Issue Discount of $1.4 million, totaled $0 and $0.9 million for the three months ended June 30, ~~2016.~~2021 and 2020, respectively. The Polar Note was paid in full during March 2021.

~~Gain~~

Loss on Sale of Real Estate Assets, net.~~For the three months ended September 30, 2017, the Company recognized a net~~ The change in gain ~~of $210,000 from~~or loss on the sale of ~~five Model Homes. The Company recognized a gain from~~real estate assets is dependent on the ~~sale~~mix of ~~two Model Homes of approximately $65,000~~properties sold and ~~an approximately $668,000 gain from~~ the ~~sale~~market conditions at the time of the ~~Havana Parker Complex during the three months ended September 30, 2016.~~sale. See "Significant Transactions in 2021 and 2020" above for further detail.

Income allocated to non-controlling interests.Income allocated to non-controlling interests for the three months ended ~~September~~June 30, ~~2017~~2021 and 2020 totaled approximately ~~$200,000 when compared to the income allocated during the three months ended September 30, 2016 of $82,000.~~$0.9 million and $0.3 million.

RESULTS OF OPERATIONS FOR THE ~~NINE~~Six MONTHS ENDED ~~SEPTEMBER~~June 30, ~~2017 AND 2016.~~2021 and 2020

Revenues.Total ~~revenue was $24.7~~revenues were $10.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 compared to ~~$24.1~~$13.2 million for the same period in ~~2016, an increase~~2020, a decrease of ~~$600,000~~approximately $2.6 million or ~~2.5%. The increase in revenue as reported for the nine months month period in 2017 as compared to 2016~~20%, which is primarily due to a ~~favorable insurance claim~~net decrease in rental income related tothe sale of ~~approximately $525,000~~two properties during the six months ended June 30, 2020 and four properties during the six months ended June 30, 2021 The decrease in ~~excess of the cost~~rental income is also attributed to ~~repair roof damage at one of the properties. As same store occupancy remained largely consistent at 89.1%~~COVID-19 related tenant workouts, which included rent abatements and ~~91.2 % as of September 30, 2017 and 2016, respectively,~~deferrals that are being recognized over the remaining ~~$75,000 increase was due to an increase in rental rates.~~lease term.

Rental Operating Costs.Rental operating costs ~~were $8.1~~decreasedby $1.1 million to $3.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~ 2021,compared ~~to $7.6~~to$4.4 million for the same period in ~~2016, an increase of approximately $500,000 or 6.6%.~~2020. Rental operating costs as a percentage of total revenue ~~was 32.8% and 31.5%~~also decreased to 31.6% as compared to 33.3% for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016,~~2020, respectively.The overalldecrease in rental operating costsfor the three months endedJune 30, 2021 as compared to 2020 is duetothe sale of two properties during the six months ended June 30, 2020 and four properties during the six months ended June 30, 2021, as well as the mix of properties held to include a higher percentage of model homes period over period, which have significantly lower operating costs.

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General and Administrative Expenses. General & Administrative (“G&A&A”) expenses ~~was $4.0~~for thesix months ended June 30, 2021 and 2020 totaled approximately $2.9 million and $2.6 million, respectively. These expenses decreased by approximately $0.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 compared to ~~$3.7 million for~~ the same period in ~~2016, an increase of approximately $300,000 or 8.1%. The increase in G&A expense is~~2020, primarily due to ~~annual salary increases and an increase in group insurance rates.~~decreased payroll related costs, temporally reduced by the Employee Retention Credit ("ERC") received during the six months ended June 30, 2021. G&A expenses as a percentage of total revenue was ~~16.2%~~27.4% and ~~15.4%~~20.0% for ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016,~~2020, respectively.

Depreciation and Amortization.Depreciation and amortization expense ~~totaled approximately $7.3~~was $2.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2021, compared to ~~approximately $7.7~~$3.2 million for the same period in ~~2016,~~2020, representing a decrease of ~~approximately $400,000~~$0.4 million or ~~5.2 %. Depreciation~~13%. The decrease in depreciation and amortization expense ~~associated with properties sold during the first and second quarters of 2017 account for all of the decrease during the nine months ended September 30, 2017 when~~in 2021 compared to the same period in ~~2016.~~2020 is duetothe sale of two properties during the six months ended June 30, 2020 and four properties during the six months ended June 30, 2021.

Asset Impairments.We review the carrying value of each of our real estate properties quarterly to determine if circumstances indicate an impairment in the carrying value of these investments exists. ~~During nine~~The Company recognize impairment of $0.3 million, related to the potential sale or our Highland Court property, in the Condensed Consolidated Statements of Operations during the six months ended ~~September~~June 30, ~~2017, management did not believe any impairment reserve was required. During~~2021. Management considered the ~~nine months ended September 30, 2016, management estimated that the fair market value~~impact of ~~World Plaza property was below the carrying value and an impairment of approximately $700,000 was recorded.~~

~~Interest Expense-Series B preferred stock.~~ The Series B Preferred Stock issued in August 2014 includes a mandatory redemption provision and therefore is treated as a liability for financial reporting purposes. The interest paid and accrued and the amortization of the deferred offering costs are considered interest expense. Interest expense, including amortization of the deferred offering costs, totaled $4.0 million for the nine months ended September 30, 2017 compared to $4.5 million for the same period in 2016, a decrease of $500,000 or 11.1%. The decrease is due to the 2,000 shares redeemed during the second and third quarters of 2016. Interest paid and accrued totaled $3.3 million and $3.8 million, respectively, and the amortization of the deferred offering costs associated with that transaction totaled $611,000 and $761,000, respectively for the nine months ended September 30, 2017 and 2016 and were included in interest expense-Series B preferred stock in the accompanying financial statements. There were 30,700 and 32,700 shares outstandingCOVID-19 on all other remaining assets as of ~~September~~June 30, ~~2017~~2021 and ~~2016, respectively, resulting in the decrease in interest expense. We plan to redeem the entire outstanding amount~~determined that there were no other indicators of ~~the Series B Preferred Stock using a portion~~impairment had occurred as of ~~the proceeds from the completion of our proposed initial public offering.~~that date.

Interest ~~Expense-mortgage~~Expense - mortgage notes.Interest expense, including amortization of deferred finance charges was ~~$5.9~~$2.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017 when~~2021 compared to ~~$5.6~~$3.2 million for the same period in ~~2016, an increase~~2020, a decrease of ~~$300,000~~$0.7 million or ~~5.4%~~22%. The ~~increase~~decrease in mortgage interest expense relates to the ~~new debt on the Waterman property drawn~~decreased number of commercial properties owned in ~~the second quarter of 2016~~2021 compared to 2020 and the ~~increased number of model homes and the~~ related mortgage debt. The weighted average interest rate on our outstanding debt was ~~4.7 % as of September 30, 2017 compared to~~4.2% and 4.6% as of June 30, 2021 and 2020, respectively.

Interest expense - note payable. On September 17, 2019, the Company executed a Promissory Note pursuant to which Polar Multi-Strategy Master Fund (“Polar”), extended a loan in the principal amount of $14.0 million to the Company (the "Polar Note"). The Polar Note bore interest at a fixed rate of 8% per annum and required monthly interest-only payments. Interest expense, including amortization of the deferred offering costs and Original Issue Discount of $1.4 million, totaled $- and $0.9 million for the six months ended June 30, ~~2016.~~2021 and 2020, respectively. The Polar Note was paid in full during March 2021.

~~Gain~~

Loss on Sale of Real Estate Assets, net.~~For the nine months ended September 30, 2017, the Company recognized a net~~ The change in gain of approximately $2.3 million due to the sales of Rangewood Medical Office Building, Regatta Square Retail Center, Shoreline Medical Building and fourteen Model Homes. The sale of Rangewood Medical Office Building resulted in aor loss of approximately $170,000. The sale of Regatta Square resulted in a gain of approximately $756,000. The sale of the Shoreline Medical Office Building resulted in a gain of approximately $1.3 million. The sale of the fourteen Model Homes resulted in a gain of approximately $350,000. For the nine months ended September 30, 2016, the Company recognized a gain fromon the sale of ~~seventeen Model Homes~~real estate assets is dependent on the mix of ~~approximately $622,000, a gain of approximately $831,000 from~~properties sold and the ~~sale of a parcel of land and its building~~market conditions at the ~~Yucca Valley Retail and a $668,000 gain from the sale~~time of the ~~Havana Parker Complex.~~sale. See "Significant Transactions in 2021 and 2020" above for further detail.

Income allocated to non-controlling interests.Income allocated to non-controlling interests for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and 2020 totaled approximately ~~$415,000 when compared to~~$0.9 million and $0.2 million.

Geographic Diversification Tables

The following tables show a list of commercial properties owned by the ~~income allocated during the nine months ended September~~Company grouped by state and geographic region as of June 30, ~~2016~~2021:

		Aggregate					Current		Approximate %
	No. of	Square		Approximate %			Base Annual		of Aggregate
State	Properties	Feet		of Square Feet			Rent		Annual Rent
California	2		113,617		11.6	%	$	1,908,225		17.2	%
Colorado	5		467,640		47.8	%		5,869,031		53.0	%
North Dakota	4		397,039		40.6	%		3,304,503		29.8	%
Total	11		978,296		100.0	%	$	11,081,759		100.0	%

Table of ~~$103,000.~~Contents

The following tables show a list of our Model Home properties by geographic region as of June 30, 2021:

							Current		Approximate
	No. of	Aggregate		Approximate %			Base Annual		of Aggregate
Geographic Region	Properties	Square Feet		of Square Feet			Rent		% Annual Rent
Southwest	85		254,901		92.4	%	$	2,409,576		90.0	%
Southeast	3		8,201		3.0	%	$	86,904		3.3	%
Midwest	2		6,153		2.2	%	$	80,844		3.0	%
Northeast	2		6,602		2.4	%	$	99,276		3.7	%
Total	92		275,857		100	%	$	2,676,600		100	%

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our anticipated future sources of liquidity may include existing cash and cash equivalents, cash flows from operations, ~~new mortgages on our unencumbered properties,~~ refinancing of existing mortgages, future real estate sales, new borrowings, financial aid from government programs instituted as a result of COVID-19, and the ~~possible~~ sale of ~~additional equity/~~equity or debt securities. Management believes that the number of recent real estate sales and resulting cash generated may not be indicative of our future strategic plans. We intend to grow our portfolio with the recent capital raised from the sale of our Series D Preferred Stock in June 2021 and our Class A common stock in July 2021. Our ~~available liquidity at September 30, 2017 included~~ cash and restricted cash equivalents of $3.4 million, as well as, funds from mortgages and refinancing of mortgages with low debt to value. We currently do not have a revolving line of credit but have been exploring the possibilities of obtaining such a line of credit. Onat June 30, ~~2017, the Company exercised its option to extend the redemption date on its Series B preferred stock to August 1, 2019 and paid an extension fee of $153,500.~~

2021 was approximately $29.3 million. Our future capital needs include paying down existing borrowings, maintaining our existing properties, funding tenant improvements, paying lease commissions ~~(not~~(to the extent they are not covered by ~~lender held~~lender-held reserve deposits), ~~monthly payments on the Series B preferred stock~~ and the payment of ~~a competitive distribution~~dividends to our stockholders. We also are actively seeking investments that are likely to produce income and achieve ~~long term~~long-term gains in order to pay ~~distributions~~dividends to our ~~stockholders.~~stockholders, and may seek a revolving line of credit to provide short-term liquidity. To ensure that we ~~are able to~~can effectively execute these objectives, we routinely review our liquidity requirements and continually evaluate all potential sources of liquidity.

Our ~~short term~~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 ~~for our distributions~~dividends to stockholders. ~~During~~Future principal payments due on our mortgage notes payables, during the ~~nine~~last six months ~~ended September 30, 2017, our principal debt service was~~of 2021, total approximately ~~$2.1~~$2.6 million, ~~(debt~~of which $2.0 million is related to model home properties. Management expects certain model home and commercial properties will be sold, and that the underlying mortgage notes will be paid off ~~in connection~~ with sales ~~of real estate was $7.6 million) and~~proceeds, while other mortgage notes will be refinanced as the Company has done in the past. Additional principal payments will be made with cash ~~portion of~~flows from ongoing operations.

There can be no assurance that any such re-financing or additional financing or capital will be available to the ~~distributions~~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 ~~our common stockholders was approximately $2.4 million and~~reduce its plans or certain discretionary spending, which could have a material adverse effect on the ~~net cash provided by our operating activities totaled approximately $4.3 million.~~Company’s ability to achieve its intended business objectives. We believe that ~~the~~cash on hand, cash flow from our existing portfolio, ~~and our acquisitions and~~ distributions from joint ventures in Model Home ~~partnerships~~Partnerships and property sales during 2021 will be sufficient to fund our ~~near term~~ operating costs, planned capital expenditures ~~debt service costs~~ and required dividends for at least the ~~cash portion of distributions to stockholders at the current rate. However, if~~next twelve months. If our cash flow from operating activities is not sufficient to fund our ~~short term~~short-term liquidity needs, we ~~will~~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 ~~will~~may reduce the rate of ~~distribution~~dividends to the stockholders.

Table of Contents

During the six months ended June 30, 2021 the Company paid two cash dividends to the common stock holders of approximately $1.0 million or $0.101 per commo share and approximately $1.0 million or $0.102 per common share. The Company intends to continue to pay dividends to our common stockholders on a quarterly basis, and on a monthly basis for the Series D Preferred stockholders going forward, but there can be no guarantee the Board of Directors will approve any future dividends.

Our long-term liquidity needs include proceeds 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~~short- and ~~long term~~long-term goals and reinvesting 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 ~~unencumbered~~ properties, issue debt instruments, privately place securities or sell securities to the public we may not be able to acquire additional properties to meet our long-term objectives. In addition, the ongoing COVID-19 pandemic may adversely impact our future operating cash flows due to the inability of some of our tenants to pay their rent on time or at all and the overall weakening of economic conditions that the pandemic may cause. The COVID-19 pandemic may also make financing more difficult to obtain for us and for prospective buyers of our properties, resulting in difficulty in selling assets within our expected timeframe, or a decline in our expected sales price.

~~Cash and~~

Cash Equivalents and Restricted Cash

At ~~September~~June 30, ~~2017,~~2021 and December 31, 2020, we had approximately ~~$3.4~~$29.3 million and $11.5 million in cash equivalents, respectively, including $4.1 million and $4.2 million of restricted cash, ~~equivalents.~~respectively. Our cash equivalents and restricted cash consist of invested cash, cash in our operating accounts and cash ~~equivalents are~~ held in bank accounts at third party ~~institutions~~institutions. During 2021 and ~~consist of invested cash and cash in our operating accounts. During 2017 and 2016,~~2020, we did not experience any loss or lack of access to our cash or cash equivalents. Approximately ~~$2.0~~$1.9 million of our cash balance is intended for capital expenditures on existing properties (net of deposits held in reserve accounts by our lenders). over the last half of 2021. We intend to use the remainder of our existing cash and cash equivalents for ~~acquisitions,~~reduction of principal debt, general corporate purposes ~~and distributions~~or dividends to our stockholders.

~~Secured Debt~~

As of ~~September~~June 30, ~~2017,~~2021, restricted cash also included approximately $0.9 million in cash held in escrow that relates to a delayed like-kind exchange transaction pursued under Section 1031 of the ~~Company~~Internal Revenue Code 1986, as amended (the "Internal Revenue Code").

Secured Debt

As of June 30, 2021, all our commercial properties had fixed-rate mortgage notes payable in the aggregate principal amount of ~~$134.0~~$67.9 million, collateralized by a total of 2110 commercial properties with loan terms at issuance ranging from 53 to 2022 years. The weighted-average interest rate on ~~the~~these mortgage notes payable as of ~~September~~June 30, ~~2017~~2021 was approximately ~~4.7 %,~~4.54%, and our debt to estimated market value ~~on these~~for our commercial properties was approximately ~~57.3%~~57.5%.

As of ~~September~~June 30, ~~2017,~~2021, the Company had ~~136~~88 fixed-rate mortgage notes payable related to model homes in the aggregate principal amount of ~~$27.4~~$22.8 million, collateralized by a total of ~~139~~88 Model ~~Home properties.~~Homes. These loans generally have a term at issuance of three to five years. ~~The~~As of June 30, 2021, the average loan balance per home outstanding and the weighted-average interest rate on these mortgage loans are approximately ~~$226,000~~$259,000 and ~~4.5%~~3.3%, ~~respectively as of September 30, 2017.~~respectively. Our debt to estimated market value on these properties is approximately ~~66.5%~~58.7%. The Company has guaranteed between 25% - 100% of these ~~promissory notes.~~ mortgage loans.

We have been able to refinance maturing ~~debts before scheduled~~mortgages to extend maturity dates and we have ~~also~~ not experienced any ~~unusual~~notable difficulties ~~financing~~financing our acquisitions.

Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~September~~June 30, ~~2016.~~2020

Operating Activities: Net cash used by operating activities for the six months ended June 30, 2021 increased by approximately $1.2 million to approximately $1.0 million, as compared to cash provided by operating activities ~~for the nine months ended September 30, 2017 increased by approximately $1.8 million to approximately $4.3 million from net cash provided~~ of ~~$2.5~~$0.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2020. The ~~primary reason cash provided from operating was low during the nine months ended September 30, 2016 was due to paying off approximately $1.3 million~~increase in ~~Series B accrued preferred dividends which were included in account payable and accrued liabilities as of December 31, 2015.~~

~~Investing Activities:~~ ~~Net~~net cash used in operating activities is mainly due to changes in net income, which fluctuates based on timing of receipt and payment, as well as an increase in non-cash addbacks such as straight-line rent.

Investing Activities: Net cash provided by investing activities ~~during~~for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 was approximately ~~$3.5~~$41.1 million compared to approximately ~~$8.6~~$20.6 million ~~of cash used in~~during the same period in ~~2016. During~~2020. The change from each period was primarily related to the nine months ended September 30, 2017 the Company purchased forty-five model homes for approximately $16.8 million. During the nine months ended September 30, 2016, the Company purchased forty-six Model Homes for approximately $15.8 million. During the nine months ended September 30, 2017, the Company receivedmix of gross proceeds from the ~~sales~~sale of ~~two medical~~office buildings and one retail building totaling approximately $13.3 million and the sale of fourteen Model homes for approximately $3.2 million. During the nine months ended September 30, 2016, the Company received proceeds from the sales of seventeen Model Homes ~~totaling $5.1 million,~~ sold ~~a parcel~~in each period.

Table of ~~land and its building for approximately $1.3 million and the Havana Parker Complex for approximately $3.3 million.~~ Contents

We currently project that we could spend up to ~~$2.0~~$1.9 million (net of ~~deposits~~deposits held in reserve accounts by lenders) on capital improvements, tenant improvements and leasing costs for properties within our portfolio ~~on an annual basis.~~over the last half of 2021. 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 and the anticipated increase in property acquisitions.~~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 ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 was ~~approximately~~ ~~$500,000~~$22.3 million compared to ~~cash provided of~~ ~~approximately~~ ~~$4.3~~$22.5 million for the same period in ~~2016~~2020 and was primarily due to ~~refinancing two properties in~~ the ~~prior year~~following activities for ~~approximately $8.2 million. During~~ the ~~nine month~~six months ended ~~September~~June 30, ~~2017, we redeemed 2,000 shares of Series B preferred stock for $2,000,000. There were 2,300 shares redeemed in the same period in 2016 totaling $2.3 million.~~2021:

•

Net increase in dividends paid to stockholders of $2.0 million; and

•

Net increase in repayment of the Polar Note, the fully payment of mortgage note on the World Plaza property and full payment of the four mortgage notes related to the properties sold during 2021; offset by

•

Net increase in proceeds from mortgage notes of $0.8 million; and

•

The issuance of our Series D Preferred Stock with net proceeds of approximately $20.5 million.

Off-Balance Sheet Arrangements

As of ~~September~~June 30, ~~2017,~~2021, we do not have any off-balance sheet arrangements or obligations, including contingent obligations.

~~Non-GAAP Supplemental Financial Measures:~~

~~Funds From Operations (“FFO”)~~

Management believes that FFO is a useful supplemental measure of our operating performance. We compute FFO using the definition outlined by the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as net income (loss) in accordance with GAAP, plus depreciation and amortization of real estate assets (excluding amortization of deferred financing costs and depreciation of non-real estate assets) reduced by gains and losses from sales of depreciable operating property and extraordinary items, as defined by GAAP. Other REITs may use different methodologies for calculating FFO and, accordingly, our FFO may not be comparable to other REITs. Because FFO excludes depreciation and amortization, gains and losses from property dispositions that are available for distribution to stockholders and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities, general and administrative expenses and interest costs, providing a perspective not immediately apparent from net income. In addition, Management believes that FFO provides useful information to the investment community about our financial performance when compared to other REITs since FFO is generally recognized as the industry standard for reporting the operations of REITs. However, FFO should not be viewed as an alternative measure of our operating performance since it does not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties which are significant economic costs and could materially impact our results from operations.

~~Modified Funds From Operations (“MFFO”)~~

~~We define MFFO, a non-GAAP measure, consistent with the Investment Program Association’s (“IPA”) Guideline 2010-01,~~ ~~Supplemental Performance Measure for Publicly Registered, Non-Listed REIT~~ ~~Modified Funds From Operations,~~ or the Practice Guideline, issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for the following items, as applicable, included in the determination of GAAP net income: acquisition fees and expenses; amounts relating to deferred

rent receivables and amortization of above-market and below-market leases and liabilities (which are adjusted in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments); accretion of discounts and amortization of premiums on debt investments; nonrecurring impairments of real estate-related investments (i.e., infrequent or unusual, not reasonably likely to recur in the ordinary course of business); mark-to-market adjustments included in net income; nonrecurring gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. The accretion of discounts and amortization of premiums on debt investments, nonrecurring unrealized gains and losses on hedges, foreign exchange, derivatives or securities holdings, unrealized gains and losses resulting from consolidations, as well as other listed cash flow adjustments are adjustments made to net income in calculating the cash flows provided by operating activities and, in some cases, reflect gains or losses which are unrealized and may not ultimately be realized.

Our MFFO calculation complies with the IPA’s Practice Guideline described above. In calculating MFFO, we exclude acquisition related expenses, amortization of above-market and below-market leases, deferred rent receivables and the adjustments of such items related to noncontrolling interests. Under GAAP, acquisition fees and expenses are characterized as operating expenses in determining operating net income. These expenses are paid in cash by us. All paid and accrued acquisition fees and expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of other properties are generated to cover the purchase price of the property, these fees and expenses and other costs related to such property. The acquisition of properties, and the corresponding acquisition fees and expenses, is the key operational feature of our business plan to generate operational income and cash flow to fund distributions to our stockholders. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income in determining cash flow from operating activities. In addition, we view fair value adjustments of impairment charges and gains and losses from dispositions of assets as non-recurring items or items which are unrealized and may not ultimately be realized, and which are not reflective of on-going operations and are therefore typically adjusted for when assessing operating performance. In particular, we believe it is appropriate to disregard impairment charges, as this is a fair value adjustment that is largely based on market fluctuations and assessments regarding general market conditions which can change over time. An asset will only be evaluated for impairment if certain impairment indications exist and if the carrying, or book value, exceeds the total estimated undiscounted future cash flows (including net rental and lease revenues, net proceeds on the sale of the property, and any other ancillary cash flows at a property or group level under GAAP) from such asset. Investors should note, however, that determinations of whether impairment charges have been incurred are based partly on anticipated operating performance, because estimated undiscounted future cash flows from a property, including estimated future net rental and lease revenues, net proceeds on the sale of the property, and certain other ancillary cash flows, are taken into account in determining whether an impairment charge has been incurred. While impairment charges are excluded from the calculation of MFFO as described above, investors are cautioned that due to the fact that impairments are based on estimated future undiscounted cash flows and the relatively limited term of our operations, it could be difficult to recover any impairment charges.Inflation

~~The following table presents our FFO and MFFO~~Leases generally provide for ~~the three and nine months ended September 30, 2017 and 2016:~~

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2017

2016

2017

2016

Net loss

$
(1,776,547
)

$
(1,990,030
)

$
(2,770,934
)

$
(4,005,415
)
Adjustments:

Loss attributable to noncontrolling interests

200,181

81,534

415,009

102,890

Depreciation and amortization

2,399,307

2,564,211

7,346,640

7,723,372

Impairment of real estate

-

700,000

-

700,000

Gain on sale of real estate assets

(210,372
)

(732,908
)

(2,237,423
)

(2,121,453
)
FFO

$
612,569

$
622,807

$
2,753,292

$
2,399,394

Straight-line rent adjustment

(135,037
)

(258,254
)

(452,427
)

(660,705
)
Amortization of above and below market leases, net

(49,769
)

(65,525
)

(161,869
)

(206,531
)
Restricted stock compensation

136,920

129,534

410,760

388,602

Amortization of financing costs

213,667

346,213

956,957

1,081,520

Real estate acquisition costs

28,028

28,935

66,355

56,016

MFFO

$
806,378

$
803,710

$
3,573,068

$
3,058,296

~~No conclusion or comparisons should be made from the presentation of these figures.~~

~~Same-Store Property Operating Results for the nine months ended September 30, 2017 and 2016.~~

The table below presents the operating results for the Company’s commercial rental properties owned as of January 1, 2016 for each of the three and nine months ended September 30, 2017 and 2016, thereby excluding the impact on our results of operations from the real estate properties acquired subsequently. The table below excludes model home operations as the rental rates do not fluctuate during the term of the lease and there are no operating expenses. Income from discontinued operations from the self-storage portfolio are not included. The Company believes that this type of non-GAAP financial measure, when considered with our financial statements prepared in accordance with GAAP, allows investors to better understand the Company’s operating results. Properties are included in this analysis if they were owned and operated for the entirety of both periods being compared. Further, same-property operating results is a measure for which there is no standard definition and, as such, it is not consistently defined or reported on among the Company’s peers, and thus may not provide an adequate basis for comparison between REITs.

The Company evaluates the performance of its same-store property operating results based upon net operating income from continuing operations (“NOI”), which is a non-GAAP supplemental financial measure. The Company defines NOI as operating revenues (rental income, tenant reimbursements and other operating income) less property and related expenses (property operating expenses, real estate taxes, insurance and provision for bad debt) less 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 and expenses, depreciation and amortization, asset management fees and corporate general and administrative expenses. The Company believes that net income is the GAAP measure that is most directly comparable to NOI; however, NOI should not be considered as an alternative to net income as the primary indicator of operating performance as it excludes the items described above. Additionally, NOI as defined above may not be comparable to other REITs or companies as their definitions of NOI may differ from the Company’s definition.

For the Three Months Ended September 30,

Variance

For the Nine Months Ended September 30,

Variance

2017

2016

$

%

2017

2016

$

%

Rental revenues

$
7,053,463

$
7,016,649

$
36,814

0.5%

$
21,351,285

$
20,416,346

$
934,939

4.6%

Rental operating costs

2,570,987

2,177,697

393,290

18.1%

7,219,169

6,355,950

863,219

13.6%

Net operating income

$
4,482,476

$
4,838,952

$
(356,476
)

-7.4%

$
14,132,116

$
14,060,396

$
71,720

0.5%

Operating Ratios:

Number of same properties

22

22

22

22

Same-property occupancy, end of period

89.1
%

91.2
%

-0.2%

89.1
%

91.2
%

-0.2%

Same-properties operating costs as
a percentage of total revenues

36.4
%

31.0
%

5.4%

33.8
%

31.1
%

2.7%

~~Overview~~

Same-store property NOI decreased 7.4% for the three months ended September 30, 2017, as compared to the corresponding period in 2016. The decrease in NOI was due to an 18.1% increase in rental operating costs relatedlimited increases in real estate taxes in Colorado due to property value reassessments of approximately $317,000. Without these increases, same store NOI would have decreased .08%. While rental revenues remained consistent for the three months ended September 30, 2017 when compared to the same quarter in 2016, rental rates increased as evidenced by the leasing spreads discussed below. The net impact on rental revenue was an increase of 0.5% as the increases in rental rates were offset by the loss of major tenant at the Shea property.

Same-store property NOI increased 0.5% for the nine months ended September 30, 2017 as compared to the corresponding period in 2016 as evidenced by the increase in rental revenues of 4.6 % offset by increases in rental operating costs of 13.6%. The increases in rental revenues was due to an increase in rental rates. The increase in rental operating costs during the nine months ended September 30, 2017 when compared to 2016 due to an increase in real estate taxes in Colorado of approximately $514,000 due to property value reassessments, an increase in bad debt expense during the period of approximately $78,000, an increase in utilities of $72,000 and $182,000 in maintenance costs.

~~Leasing~~

Our same-store results is primarily driven by increases in rental rates on new leases and lease renewals and changes in portfolio occupancy. Over the long-term, we believe that the infill nature and strong demographics of our properties provide us with a strategic advantage, allowing us to maintain relatively high occupancy and increase rental rates. We have continued to see signs of

improvement for many of our tenants as well as increased interest from prospective tenants for our spaces. While there can be no assurance that these positive signs will continue, we remain cautiously optimistic regarding the improved trends we have seen over the past few years. We believe the locations of our properties and diverse tenant base mitigate the potentially negative impact of a poor economic environment. However, any reduction in our tenants' abilities to pay base rent ~~percentage rent or other charges, may adversely affect our financial condition and results of operations.~~

~~During the quarter ended~~ ~~September 30, 2017~~, we signed 9 comparable leases (1 new leases and 8 renewals) for a total of 32,366 square feet of comparable space leases, at an average rental rate increase of 1.7 % on a cash basis and an average rental increase of 10.0 % on a straight-line basis. Renewals for comparable office spaces were signed for 31,244 square feet at an average rental rate increase of 2.6% on a cash basis and increase of 11.2% on a straight-line basis.

~~Impact of Downtime and Rental Rate Changes~~

The downtime between a lease expiration and a new lease commencement, typically ranging from 6-24 months, can negatively impact total NOI and same property NOI. In addition, office leases, both new and lease renewals typically contain upfront rental and /or operating expense abatement periods which delay the cash flow benefits of the lease even after the new lease or renewal has commenced. If we are unable to replace expiring leases with new or renewal leases at rental rates equal to or greater than the expiring rates, rental rate roll downs can also negatively impact total NOI and same property NOI comparisons. This was the case for all leases entered into prior to 2008 the start of the recession. Most of our leases were less than seven years and therefore the rental rate roll downs should not have a significant effect on future years. Our geographically diverse portfolio model results in rent roll ups that can fluctuate widely on a market by market basis; however, given the large volume of leasing activity over the last several years, we estimate that our portfolio, taken as a whole, is currently at market. Total NOI and same property NOI comparisons for any given period may still fluctuate 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 ~~roll ups and roll downs, however, depending on~~increases over time. During times when inflation is greater than increases in rent, as provided for in the ~~leasing activity in individual geographic markets during~~leases, rent increases may not keep up with the ~~respective period.~~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 ~~QUALITATI~~VEQUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~Not required~~

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~~report 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 ~~Principal~~Chief Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of ~~"disclosure~~“disclosure controls and ~~procedures"~~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, Chief Financial Officer and our ~~Principal~~Chief Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer, Chief Financial Officer and ~~Principal~~Chief Accounting Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Table of Contents

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 ~~September~~June 30, ~~2017~~2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Furthermore, we do not believe that these controls have been impacted by COVID-19 related circumstances, including remote work arrangements with our employees.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors

~~Not Required~~

The following supplements and updates the risk factors in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020. If any of the risks discussed below or in our Annual Report on Form 10-K occur, our business, prospects, liquidity, financial condition and results of operations (individually and collectively referred to in the following risk factor as “Financial Performance”) could be materially and adversely affected. Some statements in this Quarterly Report on Form 10-Q, including statements in the following risk factors, constitute forward-looking statements. Please refer to the introductory section of this Quarterly Report on Form 10-Q, preceding Part I, "Financial Information," entitled “Cautionary Note Regarding Forward-Looking Statements.”

Risks Related to COVID-19

The current outbreak of the novel coronavirus (COVID-19), and the resulting volatility it has created, has disrupted our business and we expect that the COVID-19 pandemic, may significantly and adversely impact our business, financial condition and results of operations going forward, and that other potential pandemics or outbreaks, could materially adversely affect our business, financial condition, results of operations and cash flows in the future. Further, the spread of the COVID-19 outbreak has caused severe disruptions in the U.S. and global economy and financial markets, and could potentially create widespread business continuity issues of an unknown magnitude and duration. To date our business has not been significantly impacted by the COVID-19 pandemic. While several of our tenants have reported financial challenges, suffered because of the COVID-19 pandemic, only 13 of our tenants have requested rent abatements or reductions from us. The impact of the COVID-19 pandemic on our business is still uncertain and will be largely dependent on future developments.

The COVID-19 pandemic has had in the future will likely continue to have, repercussions across regional and global economies and financial markets. The global impact of the outbreak has been rapidly evolving and many countries, including the United States (including the states and cities that comprise the San Diego, California; Denver and Colorado Springs, Colorado; Fargo and Bismarck, North Dakota; and other metro regions, where we own and operate properties) have instituted quarantines, "shelter in place" mandates, and rules and restrictions on travel and the types of businesses that may continue to operate. While some of these restrictions have been lifted, new variants of the coronavirus and/or the continued spread of the virus could cause government authorities to extend, reinstitute and/or adopt new restrictions. As a result, the COVID-19 pandemic is negatively impacting almost every industry, both inside and outside these metro regions, directly or indirectly and has created business continuity issues. For instance, a number of our commercial tenants temporarily closed their offices or stores and requested temporary rent deferral or rent abatement during the pandemic. In addition, jurisdictions where we own and operate properties have implemented, or may implement, rent freezes, eviction freezes, or other similar restrictions. The full extent of the impacts on our business over the long term are largely uncertain and dependent on a number of factors beyond our control.

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As a result of the effects of the COVID-19 pandemic, we have been impacted by and may further be impacted by one or more of the following:

•

a decrease in real estate rental revenue (our primary source of operating cash flow), as a result of temporary rent deferrals, rent abatement and/or rent reductions, rent freezes or declines impacting new and renewal rental rates on properties, longer lease-up periods for both anticipated and unanticipated vacancies (in part, due to “shelter-in-place” mandates), lower revenue recognized as a result of waiving late fees, as well as our tenants’ ability and willingness to pay rent, and our ability to continue to collect rents, on a timely basis or at all;

•

a complete or partial closure of one or more of our properties resulting from government or tenant action (as of March 31, 2021, many of our commercial properties were reopened, however certain tenants were still operating on a limited basis pursuant to local government orders);

•

reductions in demand for commercial space and the inability to provide physical tours of our commercial spaces may result in our inability to renew leases, re-lease space as leases expire, or lease vacant space, particularly without concessions, or a decline in rental rates on new leases;

•

the inability of one or more major tenants to pay rent, or the bankruptcy or insolvency of one or more major tenants, may be increased due to a downturn in its business or a weakening of its financial condition as a result of shelter-in-place orders, phased re-opening of its business, or other pandemic related causes;

•

the inability to decrease certain fixed expenses at our properties despite decreased operations at such properties;

•

the inability of our third-party service providers to adequately perform their property management and/or leasing activities at our properties due to decreased on-site staff;

•

the effect of existing and future orders by governmental authorities in any of our markets, which might require homebuilders to cease operations for an uncertain or indefinite period of time, which could significantly affect new home orders and deliveries, and negatively impact their home sales revenue and ability to perform on their lease obligations to the Company in such markets;

•

difficulty accessing capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deterioration in credit and financing conditions, which may affect our access to capital and our commercial tenants' ability to fund their business operations and meet their obligations to us;

•

the financial impact of the COVID-19 pandemic could negatively impact our future compliance with financial covenants of debt agreements;

•

a decline in the market value of real estate may result in the carrying value of certain real estate assets exceeding their fair value, which may require us to recognize an impairment to those assets;

•

future delays in the supply of products or services may negatively impact our ability to complete the renovations and lease-up of our buildings on schedule or for their original estimated cost;

•

a general decline in business activity and demand for real estate transactions could adversely affect our ability or desire to grow or change the complexion of our portfolio of properties;

•

our insurance may not cover loss of revenue or other expenses resulting from the pandemic and related shelter-in-place rules;

•

unanticipated costs and operating expenses and decreased anticipated revenue related to compliance with regulations, such as additional expenses related to staff working remotely, requirements to provide employees with additional mandatory paid time off and increased expenses related to sanitation measures performed at each of our properties, as well as additional expenses incurred to protect the welfare of our employees, such as expanded access to health services;

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•

the potential for one or more members of our senior management team to become sick with COVID-19 and the loss of such services could adversely affect our business;

•

the increased vulnerability to cyber-attacks or cyber intrusions while employees are working remotely has the potential to disrupt our operations or cause material harm to our financial condition;

•

the effects of fiscal stimulus programs in response to COVID-19 are unpredictable and may cause inflation in excess of the rent increase under our leases and volatility in the markets for equity and debt securities; and

•

complying with REIT requirements during a period of reduced cash flow could cause us to liquidate otherwise attractive investments or borrow funds on unfavorable conditions.

The financial aspects of the COVID-19 pandemic are difficult to predict and may not directly correlate to the severity of outbreaks at a particular place or time. For example, there has been significant inflation in the price of lumber, largely as a result of supply shortages specific to the lumber industry resulting from the pandemic, that may affect construction and renovation costs in our industry. Similarly, despite general economic concerns resulting from the COVID-19 pandemic, there has been home price inflation in many markets, which may affect our ability to purchase Model Homes at prices we consider to be reasonable.

The significance, extent and duration of the impact of COVID-19 remains largely uncertain and dependent on future developments that cannot be accurately predicted at this time, such as the continued severity, duration, transmission rate and geographic spread of COVID-19, the extent and effectiveness of the containment measures taken, and the response of the overall economy, the financial markets and the population.

The rapid development and volatility of this situation precludes us from making any prediction as to the ultimate adverse impact of COVID-19. As a result, we cannot provide an estimate of the overall impact of the COVID-19 pandemic on our business or when, or if, we (or our tenants) will be able to resume fully normal operations. Nevertheless, COVID-19 presents material uncertainty and risk with respect to our business, financial performance and condition, operating results and cash flows.

The impact of COVID-19 may also exacerbate other risks discussed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K, any of which could have a material effect on us.

Risks related to cyber-attacks, cyber intrusions and other security breaches.

We face risks associated with security breaches, whether through cyber-attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our IT networks and related systems. The risk of a security breach or disruption, particularly through cyber-attack or cyber intrusion has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. In addition, the risk of cyber-attack or cyber intrusion has increased and become more costly to monitor and manage with more of our employees and the employees of our vendors, customers or other business partners working remotely as a result of the ongoing pandemic. Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations (including managing our building systems). We make efforts to maintain the security and integrity of our IT networks and systems and have implemented various measures to manage the risk of a security breach or disruption. However, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging. A security breach or other significant disruption involving our IT networks and related systems could result in unauthorized access to proprietary, confidential, sensitive or otherwise valuable information, significantly disrupt our business operations, cause damage to our reputation and subject us to additional unforeseen costs and require significant time and resources to remedy. Any or all of the foregoing could have a material adverse effect on our results of operations, financial condition and cash flows.

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Current legislative uncertainty and discourse could cause significant economic impact on markets, including the availability and access to capital markets and other funding sources, adverse changes in real estate values and increased interest rates.

Such impacts could have a material adverse effect on our business, financial condition, results from operation and growth prospects.

Following the election cycle in November 2020, the Democratic party gained control of the executive branch of government and the legislative branch of government. Changes in federal policy and at regulatory agencies occur over time through policy and personnel changes following elections. These changes could result in sweeping reform in many laws and regulations, including without limitation, those relating to taxes, small business aid and recovery from the COVID-19 pandemic. In addition, political discourse continues to be abrasive and an inability of the legislative and executive branches to engage in bipartisan politics may lead to instability on legislative, economic and social matters. These factors could have significant economic impacts on the markets, including without limitation, the stability, availability and access to capital markets and other funding sources, reduced real estate values and increases to interest rates. Such impacts could have a material adverse effect on our business, financial condition, results from operation and growth prospects.

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

Unregistered Sales of Equity Securities.None.

1.	~~The Company does not have a formal policy with respect to a stock repurchase program and typically restricts repurchases to hardship cases only.~~

2.	~~See note 10 to the condensed consolidated financial statements for a description of the related party transaction.~~

Stock Repurchases. The Company does not have a formal policy with respect to a stock repurchase program and typically restricts repurchases to hardship cases only.

Item 3. Defaults Upon Senior Securities.

None.

I~~tem~~Item 4. Mine Safety Disclosures

None.

Item 5. Other Information.

None.

Item 6. E~~XHIBITS.~~Exhibits.

Exhibit Number		Description
1.1		Underwriting Agreement, dated June 10, 2021, by and between the Company and Benchmark, as representative of the several underwriters (incorporated by reference to Exhibit 1.1 of the Company's Current Report on Form 8-K filed with the Commission on June 15, 2021).

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 ~~quarter~~three and six months ended ~~September~~June 30, ~~2017.~~2021.


31.2		Certification of the Company's ~~Principal Accounting~~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 ~~quarter~~three and six months ended ~~September~~June 30, ~~2017.~~2021.

32.1		Certification of ~~Principal~~Chief Executive Officer and ~~Principal Accounting~~Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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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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~~Instance Document~~

~~XBRL Taxonomy Extension Schema Document~~

~~XBRL Taxonomy Extension Calculation Linkbase Document~~

~~XBRL Taxonomy Extension Definition Linkbase Document~~

~~XBRL Taxonomy Extension Label Linkbase Document~~

~~XBRL Taxonomy Extension Presentation Linkbase Document~~SIGNATURES

~~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: ~~November 8, 2017~~

August 10, 2021

Presidio Property Trust, Inc.

By:

/s/ Jack K. Heilbron

Name:

Jack K. Heilbron

Title:

Chief Executive Officer

By:

/s/ ~~Heather L. Pittard~~Adam Sragovicz

Name:

Adam Sragovicz

~~Heather L. Pittard~~

Title:

Chief Financial Officer

By:

~~Principal~~/s/ Ed Bentzen

Name:

Ed Bentzen

Title:

Chief Accounting Officer


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

		Index	Page

Part I. FINANCIAL INFORMATION:					5

Item 1. FINANCIAL STATEMENTS:				5

	Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2017~~2021 (unaudited) and December 31, ~~2016~~2020					5
	Condensed Consolidated Statements of Operations for the Three ~~Months~~ and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020 (unaudited)					6
	Condensed Consolidated ~~Statement~~Statements of Changes in Equity for the ~~Nine~~Three and Six Months Ended ~~September~~June 30, ~~2017~~2021 and 2020 (unaudited)					7
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020 (unaudited)					8
	Notes to Condensed Consolidated Financial Statements (unaudited)					9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations					1824
Item 3. Quantitative and Qualitative Disclosures about Market Risk					2733
Item 4. Controls and Procedures					27
		33
Part II. OTHER INFORMATION					2734

	Item 1. Legal Proceedings					2734
	Item 1A. Risk Factors					2734
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds					2737
	Item 3. Defaults Upon Senior Securities					2737
	Item 4. Mine Safety Disclosures					2737
	Item 5. Other Information					2737
	Item 6. Exhibits					2837

	Signatures		39			29

			Real estate
	Date		assets, net
Property Name	Acquired	Location	(in thousands)
Garden Gateway Plaza	March 2007	Colorado Springs, Colorado	$	11,450
World Plaza	September 2007	San Bernardino, California		5,738
Executive Office Park	July 2008	Colorado Springs, Colorado		8,120
Waterman Plaza	August 2008	San Bernardino, California		5,656
Pacific Oaks Plaza	September 2008	Escondido, California		4,019
Morena Office Center	January 2009	San Diego, California		4,922
Genesis Plaza	August 2010	San Diego, California		8,707
Dakota Bank Buildings	May 2011	Fargo, North Dakota		9,772
Yucca Valley Retail Center	September 2011	Yucca Valley, California		6,605
Port of San Diego Complex	December 2011	San Diego, California		13,957
The Presidio	November 2012	Aurora, Colorado		6,432
Bismarck	March 2014	Fargo, ND		5,788
Union Terrace Building	August 2014	Lakewood, Colorado		8,395
Centennial Tech Center	December 2014	Colorado Springs, Colorado		13,585
Arapahoe Service Center	December 2014	Centennial, Colorado		10,783
Union Town Center	December 2014	Colorado Springs, Colorado		10,293
West Fargo Industrial	August 2015	Fargo, North Dakota		7,500
300 N.P.	August 2015	Fargo, North Dakota		3,672
Research Parkway	August 2015	Colorado Springs, Colorado		2,710
One Park Center	August 2015	Westminster, Colorado		8,505
Highland Court	August 2015	Centennial, Colorado		12,449
Shea Center II	December 2015	Highlands Ranch, Colorado		23,742
Presidio Property Trust, Inc properties				192,800
Model Home properties	2010-2017	AZ, CA, FL, IL, NC, NJ, PA, SC, TX, UT, WI		46,504
	Total real estate assets and lease intangibles, net		$	239,304

	*Date*		*Real estate assets, net (in thousands)*
Property Name	*Acquired*	*Location*	*2021*		*2020*
Garden Gateway Plaza (1)	March 2007	Colorado Springs, Colorado		0	$	11,465
World Plaza (2)	September 2007	San Bernardino, California		9,272		9,272
Executive Office Park (1)	July 2008	Colorado Springs, Colorado		0		5,106
Waterman Plaza (1)	August 2008	San Bernardino, California		0		3,500
Genesis Plaza (3)	August 2010	San Diego, California		8,322		8,651
Dakota Center	May 2011	Fargo, North Dakota		8,426		8,597
Grand Pacific Center	March 2014	Bismarck, North Dakota		5,594		5,684
Arapahoe Center	December 2014	Centennial, Colorado		8,920		9,233
Union Town Center	December 2014	Colorado Springs, Colorado		9,250		9,345
West Fargo Industrial	August 2015	Fargo, North Dakota		7,034		7,061
300 N.P.	August 2015	Fargo, North Dakota		3,248		3,280
Research Parkway	August 2015	Colorado Springs, Colorado		2,407		2,438
One Park Center	August 2015	Westminster, Colorado		8,302		8,586
Highland Court (1) (4)	August 2015	Centennial, Colorado		0		10,500
Shea Center II	December 2015	Highlands Ranch, Colorado		20,496		21,026
Presidio Property Trust, Inc. properties				91,271		123,744
Model Home properties (5)	2014 - 2020	TX, FL, IL, WI		33,122		42,510
Total real estate assets and lease intangibles, net			$	124,393	$	166,254

State	No. of Properties		Aggregate Square Feet		Approximate % of Square Feet			Current Base Annual Rent		Approximate % of Aggregate Annual Rent

California		7		420,927		24.9	%	$	5,947,230		27.5	%
Colorado		11		873,684		51.6	%		12,229,995		56.5	%
North Dakota		4		397,039		23.5	%		3,457,516		16.0	%
Total		22		1,691,650		100.0	%	$	21,634,741		100.0	%

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

										Dividends
							Additional			In Excess of			Total			Non-
	Common Stock						Paid-in			Accumulated			Stockholders’			controlling		Total
	Shares			Amount			Capital			Losses			Equity			Interests		Equity
Balance, December 31, 2016		17,502,673		$	175,028		$	149,539,782		$	(106,623,957	)	$	43,090,853		$	12,658,777	$	55,749,630
Net (loss) income		-			-			-			(2,770,934	)		(2,770,934	)		415,009		(2,355,925	)
Dividends declared/reinvested		114,449			1,144			1,094,290			(3,544,389	)		(2,448,955	)		-		(2,448,955	)
Common stock repurchased		(2,962	)		(29	)		(17,365	)		-			(17,394	)		-		(17,394	)
Contributions from noncontrolling interests, net of distributions paid		-			-			-			-			-			1,592,414		1,592,414
Balance, September 30, 2017		17,614,160		$	176,143		$	150,616,707		$	(112,939,280	)	$	37,853,570		$	14,666,200	$	52,519,770

	•	The Company is the sole general partner and a limited partner in two limited partnerships (NetREIT Palm Self-Storage LP and NetREIT Casa Grande LP), one of which, at June 20, 2021, 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 (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 NetREIT Dubose Model Home REIT, LP). The Company refers to these entities collectively as the “Model Home Partnerships”.

	•	Seven office buildings and One industrial property (“Office/Industrial Properties”) which total approximately 724,000 rentable square feet;

	•	Three retail shopping centers (“Retail Properties”) which total approximately 111,000 rentable square feet; and

	•	92 model home residential properties (“Model Homes” or “Model Home Properties”), totaling approximately 276,000 square feet, leased back on a triple-net basis to homebuilders that are owned by six affiliated limited partnerships and one wholly-owned corporation, all of which we control.

	September 30, 2017							December 31, 2016							*June 30, 2021*							*December 31, 2020*
	Lease Intangibles		Accumulated Amortization			Lease Intangibles, net		Lease Intangibles		Accumulated Amortization			Lease Intangibles, net		*Lease Intangibles*		*Accumulated Amortization*			*Lease Intangibles, net*		*Lease Intangibles*		*Accumulated Amortization*			*Lease Intangibles, net*
In-place leases	$	6,635,928	$	(4,369,040	)	$	2,266,888	$	6,872,980	$	(3,840,670	)	$	3,032,310	$	2,515,264	$	(2,276,081	)	$	239,183	$	3,136,587	$	(2,757,530	)	$	379,057
Leasing costs		4,622,792	$	(2,849,914	)		1,772,878		4,813,951		(2,517,759	)		2,296,192		1,261,390		(1,122,131	)		139,259		1,730,656		(1,510,559	)		220,097
Above-market leases		2,124,360	$	(1,665,341	)		459,019		2,124,360		(1,586,328	)		538,032		333,485		(327,476	)		6,009		333,485		(291,421	)		42,064
	$	13,383,080	$	(8,884,295	)	$	4,498,785	$	13,811,291	$	(7,944,757	)	$	5,866,534	$	4,110,139	$	(3,725,688	)	$	384,451	$	5,200,728	$	(4,559,510	)	$	641,218

Three months remaining in 2017	$	365,385
Years ending December 31:
2018		1,320,270
2019		1,066,827
2020		850,757
2021		554,344
Thereafter		341,202
Total	$	4,498,785

2021	$	127,281
2022		202,342
2023		17,526
2024		17,526
2025		15,670
Thereafter		4,106
Total	$	384,451

	*Presidio Property*		*Model*
	*Trust, Inc.*		*Homes*		*Total Principal*
Years ending December 31:	*Notes Payable*		*Notes Payable*		*Payments*
2021	$	665,787	$	1,945,178	$	2,610,965
2022		3,581,868		10,242,969		13,824,837
2023		1,410,835		5,605,481		7,016,316
2024		10,365,313		4,987,607		15,352,920
2025		28,783,605		0		28,783,605
Thereafter		23,125,671		0		23,125,671
Total	$	67,933,079	$	22,781,235	$	90,714,314

	Presidio Property Trust, Inc.		Model Homes		Principal
	Notes Payable		Notes Payable		Payments
Three months remaining in 2017	$	474,791	$	299,579	$	774,370
Years ending December 31:
2018		1,931,368		1,720,327	$	3,651,695
2019		2,286,504		16,696,091	$	18,982,595
2020		21,156,934		12,001,684	$	33,158,618
2021		14,496,465		-	$	14,496,465
Thereafter		93,637,314		-	$	93,637,314
Total	$	133,983,376	$	30,717,681	$	164,701,057

	Common Shares
Outstanding shares:
Balance at December 31, 2020		126,190
Granted		282,694
Forfeited		(23,610	)
Vested		0
Balance at June 30, 2021		385,274

	*Three Months Ended June 30,*						*For the Six Months Ended June 30,*
	*2021*			*2020*			*2021*			*2020*
Office/Industrial Properties:
Rental, fees and other income	$	3,317,847		$	4,198,849		$	7,260,652		$	9,183,790
Property and related expenses		(1,262,483	)		(1,657,836	)		(3,116,754	)		(3,673,459	)
Net operating income, as defined		2,055,364			2,541,013			4,143,898			5,510,331
Model Home Properties:
Rental, fees and other income		845,412			1,093,015			1,789,190			2,209,745
Property and related expenses		(30,215	)		(55,531	)		(80,501	)		(101,791	)
Net operating income, as defined		815,197			1,037,484			1,708,689			2,107,954
Retail Properties:
Rental, fees and other income		683,324			829,540			1,465,495			1,757,020
Property and related expenses		(193,117	)		(1,132,142	)		(427,483	)		(1,451,350	)
Net operating (loss) income, as defined		490,207			(302,602	)		1,038,012			305,670
Reconciliation to net loss:
Total net operating income, as defined, for reportable segments		3,360,768			3,275,895			6,890,599			7,923,955
General and administrative expenses		(1,344,770	)		(1,278,971	)		(2,882,036	)		(2,630,316	)
Depreciation and amortization		(1,368,209	)		(1,622,230	)		(2,797,143	)		(3,196,756	)
Interest expense		(1,207,036	)		(2,273,355	)		(2,791,430	)		(4,827,202	)
Gain on extinguishment of government debt		0						10,000			0
Other income (expense), net		(20,657	)		8,400			(53,443	)		1,405
Income tax expense		(238,701	)		(51,369	)		(288,899	)		(135,000	)
Gain (loss) on sale of real estate		2,594,341			334,096			1,433,014			324,261
Net income (loss)	$	1,775,736		$	(1,607,534	)	$	(479,338	)	$	(2,539,653	)

	*For the Six Months Ended June 30,*
Capital Expenditures by Reportable Segment	*2021*		*2020*
Office/Industrial Properties:
Capital expenditures and tenant improvements	$	289,685	$	2,374,260
Model Home Properties:
Acquisition of operating properties		2,851,800		6,292,383
Retail Properties:
Capital expenditures and tenant improvements		42,823		8,176
Totals:
Acquisition of operating properties, net		2,851,800		6,292,383
Capital expenditures and tenant improvements		332,508		2,382,436
Total real estate investments	$	3,184,308	$	8,674,819

	For the Three Months Ended September 30,						Variance					For the Nine Months Ended September 30,						Variance
	2017			2016			$			%		2017			2016			$		%
Rental revenues	$	7,053,463		$	7,016,649		$	36,814			0.5%	$	21,351,285		$	20,416,346		$	934,939		4.6%
Rental operating costs		2,570,987			2,177,697			393,290			18.1%		7,219,169			6,355,950			863,219		13.6%

Net operating income	$	4,482,476		$	4,838,952		$	(356,476	)		-7.4%	$	14,132,116		$	14,060,396		$	71,720		0.5%

Operating Ratios:
Number of same properties		22			22								22			22
Same-property occupancy, end of period		89.1	%		91.2	%					-0.2%		89.1	%		91.2	%				-0.2%
Same-properties operating costs as a percentage of total revenues		36.4	%		31.0	%					5.4%		33.8	%		31.1	%				2.7%