Presidio Property Trust, Inc. (SQFT) stock intrinsic value fair value estimate & owner earnings analysis

Presidio Property Trust owns a small, diversified portfolio of ten commercial office and industrial properties across Colorado, North Dakota, California, Maryland and Texas, plus a separate Model Home segment that buys single-family homes and leases them back, triple-net, to homebuilders (about 69% of those homes to one builder). The commercial side has roughly 131 tenants with an average remaining lease term of about three years, so a meaningful slice of rent rolls over within any five-year window. The business has been shrinking by design: management has been selling properties opportunistically (gains on real estate sales of $5.4 million in 2025 and $3.4 million in 2024), and revenue has declined from about $19.2 million in 2021 to $16.8 million in 2025 as the portfolio has been pared down. We measured the cash the business actually generates for common shareholders — operating cash flow, less the swings in working capital, less stock compensation, less the capital needed just to maintain the existing properties (as opposed to buying new ones) — over 2021 through 2025. We started the clock in 2021 rather than earlier because that is when the company issued its 9.375% Series D Preferred Stock, a permanent, senior claim on cash that did not exist before and materially changes what is left over for common shareholders. Over that window, the typical (median) year has produced about negative $4.39 per common share of owner earnings, after paying roughly $2.2-2.3 million a year of preferred dividends. In other words, even before counting the preferred dividend, the real estate and model-home operations have not reliably covered the cash needed to maintain the portfolio in most recent years, and the preferred dividend is a further, fixed drag on top of that. We built three cases around how that gap evolves: The bear case (roughly a one-in-ten downside outcome) assumes continued lease rollover pressure on the office and industrial properties, a repeat of the kind of heavy model-home turnover and capital spending seen in 2023, and no relief on the preferred dividend, which we treat as a permanent obligation since it has no maturity date. Under this path the shortfall to common shareholders widens toward $6 per share a year and does not recover, which on a present-value basis (using a 6% discount rate) implies common shares are worth about negative $98 - meaning the fixed claims ahead of common stock are worth considerably more than the operating business generates for common holders. The base case (our median expectation) assumes the smaller, ten-property portfolio and model-home book stabilize roughly where they are, with modest continued cost discipline (cash flow has already been improving through the first half of 2026 even as revenue continues to soften slightly). The shortfall narrows gradually from about $4.30 to $3.00 per share over ten years but does not close, because we found no specific, dated plan to reduce or redeem the preferred stock. On that basis, the value of the common shares comes out at roughly negative $55 per share - again reflecting that the preferred dividend, left in place indefinitely, is larger than what the underlying real estate business currently earns for common holders. The bull case (roughly a one-in-ten upside outcome) assumes the company uses proceeds from further property sales - something it has demonstrated an ability to do - to retire a meaningful portion of the Series D Preferred at a discount, that the model-home relationship with its main homebuilder customer continues without another heavy turnover year, and that overhead is right-sized to the smaller portfolio. Under this path the shortfall closes over the next several years and the business becomes modestly cash-generative for common holders by around year six, producing an estimated value of roughly positive $16 per share. Because the bear and base cases are already negative, a lower share price alone does not create a margin of safety here: our downside-case math says the fixed claims on the business (chiefly the preferred stock) are worth more than what the properties currently earn for common shareholders. No positive margin-of-safety price is set on that basis. What would change this estimate is concrete evidence - in a filing, not a press release - that the company has meaningfully reduced its preferred stock obligation (through redemption, exchange, or conversion) and that operating cash flow has stabilized for a couple of consecutive quarters; at that point the calculus would need to be redone from scratch. A few notes on how we treated some unusual items: Presidio also holds a small legacy investment in Conduit Pharmaceuticals stock (from having sponsored its SPAC merger), which produced large non-cash mark-to-market swings in 2023-2024 (a $40 million gain and a subsequent $23 million and $18 million of losses in different years); the position has since been sold down to a token amount, and we excluded these swings from owner earnings since they are non-cash and now immaterial going forward. We also note the company completed a 1-for-10 reverse stock split in 2025 after receiving a Nasdaq minimum-bid-price notice; it has since regained compliance, and per-share figures throughout this analysis are already stated on a post-split basis.