Company: SQFTP
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001437749-25-010185
Chunk: 396

Company: Presidio Property Trust, Inc.
Filing Date: 2025-03-31
Form: 10-K
Item: Item 10
Chunk 396
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Additionally, we record the operating results related to real estate that has been disposed of as discontinued operations for all periods presented if the operations have been eliminated and represent a strategic shift and we will not have any significant continuing involvement in the operations of the property following the sale. Properties considered held for sale are recorded at the lesser of the carrying value or fair value less costs to sell.  As of  December 31, 2024, three commercial properties, Union Town Center, Research Parkway, and Dakota Center met the criteria to be classified as "held for sale", and  9 model homes were classified as "held for sale", but are not considered discontinued operations or a strategic shift in our operations.
    
   Impairments of Real Estate Assets. We regularly review for impairment on a property-by-property basis. Impairment is recognized on a property held for use when the expected undiscounted cash flows for a property are less than the carrying amount at which time the property is written-down to fair value. Impairment is recognized on a property held for sale when the fair value less costs to sell is less than the carrying amount. The calculation of both discounted and undiscounted cash flows requires management to make estimates of future cash flows that are determined based on a number of inputs and assumptions such as the intended hold period, market rental rates, leasing assumptions, capitalization rates and discount rates. Actual results could be significantly different from the estimates. Although our strategy is to hold our properties over the long-term, if our strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss  may be recognized to reduce the property to fair value and such loss could be material.

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   We review the carrying value of each of our real estate properties regularly to determine if circumstances indicate an impairment in the carrying value of these investments exists. During the year ended  December 31, 2024, we recognized non-cash impairment charges of approximately $1.8 million, with approximately $0.4 million related to model homes and approximately $1.4 million related to our commercial properties Dakota Center and 300 NP.  
    
   The impairment on our commercial property, Dakota Center, was the result of the loan maturing in  July and the Company not being able to reach an agreement with the lenders regarding a loan modification or extension. In  October, the lender has agreed to a sale of the property to settle