Strategic Realty Trust Reports Significant Asset Decline, Net Assets in Liquidation Decrease

As of September 30, 2024, Strategic Realty Trust, Inc. reported total assets of $15.3 million, a significant decrease from $28.3 million as of December 31, 2023. This decline was primarily driven by a reduction in real estate assets, which fell from $26.3 million to $13.0 million during the same period. However, cash and cash equivalents increased from $1.6 million to $2.0 million, indicating a shift in asset composition.

Total liabilities also decreased, from $23.1 million to $11.2 million, with notes payable dropping from $18.0 million to $8.2 million. Despite these reductions, net assets in liquidation decreased from $5.2 million to $4.1 million, reflecting a net decrease of approximately $1.0 million over the nine months ended September 30, 2024. This decrease was attributed to a lower sale price for properties in San Francisco and a decline in the net realizable value of remaining properties in Los Angeles and Hospira, California.

The company executed a significant asset disposition on September 12, 2024, selling five properties in San Francisco for approximately $10.9 million, resulting in net cash proceeds of $9.8 million after costs. These proceeds were utilized to partially repay the SRT Loan, which had a principal balance of approximately $8.2 million as of September 30, 2024. The company is currently in maturity default on this loan, which was due on January 9, 2024, and is secured by the Silverlake Collection in Los Angeles. The default has led to increased debt service payments due to a default interest rate of 5% above the standard rate.

Strategic Realty Trust is in the process of implementing a Plan of Liquidation, approved by stockholders on August 23, 2023, with the objective of maximizing stockholder value through asset sales and distributions. The company adopted a liquidation basis of accounting on July 1, 2023, adjusting its investments in real estate to their estimated net realizable value. As of September 30, 2024, the estimated liquidating distributions were approximately $0.38 per share of common stock.

The company’s current portfolio consists of one wholly-owned income-producing retail property in Los Angeles, fully leased with approximately 11,000 rentable square feet. The ongoing economic conditions, including a slowdown and higher interest rates, pose risks to the liquidation plan, particularly regarding tenant revenue and the potential for foreclosure on the Silverlake Collection.