By M. Marin
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Presidio Property Trust (NASDAQ:SQFT), an internally-managed REIT that has a diversified portfolio of commercial and industrial properties and model homes, has sponsored a special purpose acquisition company (SPAC), Murphy Canyon Acquisition Corp. (NASDAQ:MURF), which is designed to facilitate a merger or business combination with another company.
MURF closed its IPO earlier this month, raising $132.3 million through the issuance of units consisting of one share and one warrant. The shares trade on the NASDAQ (currently under the ticker MURFU). MURF is designed to facilitate a merger or business combination with another business. SQFT currently is seeking and evaluating target companies that have interest in merging with MURFU. Given management's experience and expertise, the company plans to focus on identifying businesses operating in some capacity in the real estate industry. SQFT, as the sponsor, holds about 3.2 million founder shares, which gives the company exposure to the potential upside of MURF shares.
Core business continues to move forward, as portfolio shifts towards high-growth, higher-margin properties
At the same time, the company continues to expand and upgrade its real estate investment portfolio. SQFT recently closed on a commercial property that is 100% leased to Johns Hopkins' University. This acquisition is consistent with the company's strategy to expand into markets that are supported by university and hospital campuses. The property has an NNN structure and contractual annual rent increases. SQFT also purchased eight model home properties in December of 2021 in the greater Dallas-Fort Worth market and leased them back to the homebuilders on a NNN basis.
MURF presents upside potential for SQFT
Given the company's stake in MURF, if SQFT successfully finds a target real estate company to leverage the MURF SPAC, the company stands to benefit through the upside valuation of its holding in MURF. We would expect SQFT shares to begin to reflect some of this potential as certain upcoming milestones are reached.
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