Presidio Property Trust's Preferred Dividends: A High-Yield Gamble Amid Institutional Exodus

The Presidio Property Trust's Series D Preferred Stock (SQFTP) offers investors a striking 15.26% yield, driven by its shares trading at a 38.6% discount to their $25 liquidation value. Yet, this compelling income opportunity comes with significant questions: Can Presidio sustain its 9.375% annual dividend in the face of institutional divestment and evolving real estate dynamics? Let's dissect the risks and rewards.

Dividend Consistency Amid Challenges

Presidio has maintained its $0.19531 monthly dividend since the Series D's 2023 launch, with the most recent July 2025 payout confirmed for August 15. This consistency is critical for preferred shareholders, as missed payments would trigger cumulative obligations. The dividend's 9.375% rate is fixed, insulating it from rate hikes—a rare feature in today's market. However, the stock's deep discount suggests investors are skeptical of Presidio's long-term prospects.

The Institutional Exodus: A Vote of No Confidence?

Multiple institutions, including International Assets Investment Management and Atria Wealth Solutions, have slashed holdings by over 50% in recent quarters. The HHI index hitting 0% signals a fragmented shareholder base, with no dominant institutional backer. While some investors like Susquehanna International Group added minor stakes, the overall trend is unmistakable: large players are exiting.

This exodus likely reflects concerns over Presidio's mixed financials. Despite a $27.9M net loss in 2024, the company improved its Funds from Operations (FFO) to a narrower -$3.4M from -$6.2M in 2023. Revenue rose 7.3% to $18.9M, fueled by model home sales and commercial lease renewals. Yet, non-real estate losses—like a $17.9M impairment on Conduit Pharmaceutical—highlight diversification risks.

Real Estate Market Dynamics: A Double-Edged Sword

Presidio's core focus on commercial and residential properties in the Western U.S. offers both opportunity and vulnerability. The region's strong job markets and population growth support demand for its triple-net leased assets. In 2024, the company sold 51 model homes for $24.8M, generating a $3.4M gain, while renewing 83% of expiring leases—a positive sign for recurring cash flow.

However, the real estate sector faces headwinds. Rising interest rates have slowed residential sales, and oversupply in some markets could pressure rental income. Presidio's reliance on a concentrated portfolio—83% of assets in Colorado and Texas—adds geographic risk. A downturn in these states could strain liquidity needed to fund dividends.

The Sustainability Crossroads

Pros:
- Cumulative dividend structure: Missed payments accrue, ensuring preferred shareholders are prioritized over common stockholders.
- Asset sales and cost discipline: Presidio has refinanced debt and sold non-core properties, reducing interest expenses by 8% in 2024.
- Yield protection: The stock's deep discount to liquidation value creates a floor—if shares rebound to $25, dividends would still pay out at current rates.

Cons:
- Earnings volatility: Net losses and non-cash impairments signal operational instability.
- Institutional skepticism: The exodus suggests big players doubt Presidio's ability to stabilize earnings long-term.
- Dependence on real estate cycles: A slowdown in the West could cut cash flows sharply.

Investment Advice: A High-Yield Gamble for the Bold

SQFTP's 15.26% yield makes it an intriguing play for income-focused investors willing to tolerate risk. The dividend's fixed rate and cumulative terms provide a safety net, while the stock's discount offers potential upside. However, this is not a core holding—allocate no more than 5% of a portfolio.

Consider these triggers for action:
- Buy: If Presidio's FFO turns positive in 2025 and institutional selling halts.
- Hold: For now, given the dividend's consistency but monitor quarterly reports for FFO trends.
- Sell: If the company suspends dividends or FFO deteriorates further.

Final Take

Presidio's preferred stock is a high-reward, high-risk proposition. The dividend remains sustainable for now, but investors must weigh the allure of its 15% yield against institutional skepticism and real estate market risks. For the cautious, this is a “watch and wait” story—until Presidio proves it can stabilize earnings and retain investor confidence.

As of July 2025. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.