UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
On October 28, 2020, CTO Realty Growth, Inc., a Florida corporation (the "Company"), issued a dividend press release, an earnings press release and an investor presentation relating to the Company’s financial results for the quarter ended September 30, 2020. Copies of the press releases and investor presentation are attached hereto as Exhibits 99.1, 99.2 and 99.3, respectively, and are incorporated herein by reference.
The information in Item 2.02 of this Current Report, including Exhibits 99.1, 99.2 and 99.3 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, unless it is specifically incorporated by reference therein.
Item 7.01. Regulation FD Disclosure
On October 28, 2020, the Company issued a dividend press release, and earnings press release and an investor presentation relating to the Company’s financial results for the quarter ended September 30, 2020. Copies of the press releases and investor presentation are attached hereto as Exhibits 99.1, 99.2 and 99.3, respectively, and are incorporated herein by reference.
The furnishing of these materials is not intended to constitute a representation that such furnishing is required by Regulation FD or other securities laws, or that the materials include material investor information that is not otherwise publicly available. In addition, the Company does not assume any obligation to update such information in the future.
The information in Item 7.01 of this Current Report, including Exhibits 99.1, 99.2 and 99.3 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act or the Exchange Act, unless it is specifically incorporated by reference therein.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
99.1 Dividend Press Release dated October 28, 2020
99.2 Earnings Press Release dated October 28, 2020
99.3 Investor Presentation dated October 28, 2020
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: October 28, 2020
CTO Realty Growth, Inc.
By: /s/Matthew M. Partridge
Senior Vice President, Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
Press Release
Contact: | Matthew M. Partridge Senior Vice President and Chief Financial Officer (386) 944-5643 mpartridge@ctorealtygrowth.com |
FOR IMMEDIATE RELEASE | CTO REALTY GROWTH INREASES QUARTERLY DIVIDEND BY 150%, DECLARES DIVIDEND FOR THE FOURTH QUARTER 2020 |
DAYTONA BEACH, FL, October 28, 2020 – CTO Realty Growth, Inc. (NYSE American: CTO) (the “Company” or “CTO”) announced today that its Board of Directors has authorized, and the Company has declared, an increase in the Company’s quarterly cash dividend to $1.00 per share of common stock for the fourth quarter of 2020 from its previous quarterly cash dividend of $0.40 per share of common stock. The dividend is payable on November 30, 2020 to shareholders of record as of the close of business on November 16, 2020. The 2020 fourth quarter cash dividend represents a 150% increase over the Company’s previous quarterly dividend and an annualized yield of approximately 9.5% based on the closing price of the common stock on October 27, 2020.
“This is the 44th consecutive year CTO has paid a cash dividend to its shareholders and this most recent increase of 150% reflects the continued strength and growth of our Company," said John P. Albright, President and Chief Executive Officer of CTO Realty Growth.”
The Company also announced that it has adopted a Dividend Reinvestment and Direct Stock Purchase Plan (the "Plan"). The Plan has two components: a dividend reinvestment component and a direct stock purchase component. The dividend reinvestment component allows the Company's shareholders to designate all or a portion of the cash dividends on their shares of common stock for reinvestment in additional shares of common stock. The direct stock purchase component allows shareholders and new investors to purchase shares of common stock directly from the Company.
The Plan will be administered through the Company's transfer agent, Computershare, N.A. ("Computershare"). Computershare will purchase shares for the Plan either in the open market or directly from the Company as newly issued shares of common stock, as described in the Plan. Shareholders and other persons may obtain a copy of the Plan prospectus and enrollment applications by contacting Computershare at 1-800-368-5948 or visiting Computershare’s website at www.computershare.com/investor. All shareholders and new investors considering enrollment in the Plan should carefully review the terms of the Plan and consult with their advisors as to the implications of enrollment in the Plan.
About CTO Realty Growth, Inc.
CTO Realty Growth, Inc. (NYSE American: CTO) is a Florida-based publicly traded real estate company, which owns income properties comprised of approximately 2.4 million square feet in diversified markets in the United States and an approximately 23.5% interest in Alpine Income Property Trust, Inc., a publicly traded net lease real estate investment trust (NYSE: PINE).
We encourage you to review our most recent investor presentation, which is available on our website at www.ctorealtygrowth.com.
SAFE HARBOR
Although forward-looking statements are made based upon management’s present expectations and reasonable beliefs concerning future developments and their potential effect upon the Company, a number of factors could cause the Company’s actual results to differ materially from those set forth in the forward-looking statements. Such factors may include: (1) uncertainties relating to the estimate of the amount of the Special Distribution; (2) the expected timing and likelihood of completion of the Merger; (3) the possibility that the Company’s shareholders may not approve the Merger; (4) risks related to disruption of management’s attention from ongoing business operations due to the Merger and REIT conversion; (5) the Company’s ability to remain qualified as a REIT; (6) the Company’s exposure to U.S. federal and state income tax law changes, including changes to the REIT requirements; (7) general adverse economic and real estate conditions; (8) the ultimate geographic spread, severity and duration of pandemics such as the recent outbreak of novel coronavirus, actions that may be taken by governmental authorities to contain or address the impact of such pandemics, and the potential negative impacts of such pandemics on the global economy and the Company’s financial condition and results of operations; (9) the inability of major tenants to continue paying their rent or obligations due to bankruptcy, insolvency or a general downturn in their business; (10) the completion of 1031 exchange transactions; (11) the availability of investment properties that meet the Company’s investment goals and criteria; (12) the uncertainties associated with obtaining required governmental permits and satisfying other closing conditions for planned acquisitions and sales; and (13) an epidemic or pandemic (such as the outbreak and worldwide spread of COVID-19), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, which may (as with COVID-19) precipitate or exacerbate one or more of the above-mentioned and/or other risks, and significantly disrupt or prevent us from operating our business in the ordinary course for an extended period. For additional information regarding factors that may cause the Company’s actual results to differ materially from those set forth in the Company’s forward-looking statements, the Company refers you to the information contained under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 and in the Company’s Definitive Proxy Statement on Schedule 14A dated October 19, 2020, each as filed with the Securities and Exchange Commission.
There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of future developments on the Company will be those anticipated by management. Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this release. The Company undertakes no obligation to update the information contained in this press release to reflect subsequently occurring events or circumstances.
Press Release
Contact:Matthew M. Partridge
Senior Vice President and Chief Financial Officer
(386) 944-5643
mpartridge@ctorealtygrowth.com
FOR IMMEDIATE RELEASE | CTO REALTY GROWTH REPORTS THIRD QUARTER 2020 OPERATING RESULTS |
DAYTONA BEACH, FL – October 28, 2020 – CTO Realty Growth, Inc. (NYSE American: CTO) (the “Company” or “CTO”) today announced its operating results and earnings for the quarter ended September 30, 2020.
Select Highlights
| ● | Reported a Net Loss of ($0.33) per share for the three months ended September 30, 2020, including a non-cash, unrealized after-tax loss on the mark-to-market of the Company’s ownership of 2,039,644 shares of Alpine Income Property Trust, Inc. (“PINE”) of ($0.23) per share, after tax. |
| ● | During the three months ended September 30, 2020, the Company collected 91% of the Contractual Base Rent (as defined below) due during such period. |
| ● | During the third quarter of 2020, the joint venture entity that currently holds approximately 1,700 acres of undeveloped land in Daytona Beach, Florida (the “Land JV”) sold approximately 3,300 acres for $46.0 million. |
| ● | During the third quarter of 2020, acquired two income properties for an aggregate purchase price of $47.9 million, reflecting a going-in weighted-average cap rate of 7.7%. |
| ● | During the third quarter of 2020, sold three income properties for 12.2 million, representing a weighted-average exit cap rate of 5.5%. |
| ● | Paid a regular cash dividend for the third quarter of 2020 of $0.40 per share on August 31, 2020 to shareholders of record as of August 17, 2020. |
| ● | As of October 28, 2020, the Company has collected approximately 93% of the Contractual Base Rent (as defined below) due in October 2020. |
| ● | Declared a regular cash dividend for the fourth quarter of 2020 of $1.00 per share, representing a 150% increase to the Company’s previous regular quarterly cash dividend and an annualized yield of approximately 9.5% based on the closing price of CTO common stock on October 27, 2020. |
| ● | The Company will hold a special meeting of shareholders on Monday, November 9, 2020 at 2:00 PM ET for a vote in connection with the Company’s recently announced real estate investment trust (“REIT”) conversion for the shareholders of record on October 13, 2020. The Company plans to make a one-time special distribution to the Company’s shareholders to ensure it has distributed all of its previously undistributed earnings and profits attributable to the taxable periods ended on or prior to December 31, 2019 (the “Special Distribution”). The current aggregate amount of the Special Distribution is anticipated to be between $52 million and $56 million, of which the cash portion will in no event be less than 10% of the aggregate amount. |
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CEO Comments
“We had a very active quarter as we executed on the sale of approximately two-thirds of the remaining land in our land joint venture, recycled out of three non-core assets, and reinvested the proceeds into two high-quality additions to our income property portfolio,” noted John P. Albright, President and Chief Executive Officer of CTO Realty Growth. “We believe the evolution to a diversified investment strategy focused on risk-adjusted returns will provide the Company and our investors an opportunity to capitalize on value in what is a highly dynamic market. As we look towards a potential REIT conversion, these transaction activities and the associated increase to our guidance, combined with the 150% increase in our fourth quarter dividend and the prospects of a meaningful special dividend, continue to position the Company towards a best-in-class, diversified real estate investment company.”
Quarterly Financial Results Highlights
The tables below provide a summary of the Company’s operating results for the three months ended September 30, 2020:
| For the Three Months Ended September 30, 2020 |
| For the Three Months Ended September 30, 2019 | | Variance to Comparable Period in the Prior Year | |||||||||||||||||||
(in thousands) | | | ||||||||||||||||||||||
| | | | | | | | | | | ||||||||||||||
Income Properties | $ | 12,933 |
| $ | 10,261 | | $ | 2,672 | 26.0% | |||||||||||||||
Management Fee Income | $ | 682 | | $ | — | | $ | 682 | 100.0% | |||||||||||||||
Commercial Loan and Master Lease Investments | $ | 413 | $ | 855 | | $ | (442) | (51.7%) | ||||||||||||||||
Real Estate Operations | $ | 544 |
| $ | 214 | | $ | 330 | | 154.6% | ||||||||||||||
Total Revenues | $ | 14,572 |
| $ | 11,330 | | $ | 3,242 | | 28.6% | ||||||||||||||
The increase in total revenue was primarily attributable to income produced by the Company’s recent income property acquisitions versus that of properties disposed of by the Company during the comparative period and revenue from management fee income, the majority of which was from the external management of PINE that did not commence until late in the fourth quarter of 2019.
| For the Three Months Ended September 30, 2020 |
| For the Three Months Ended September 30, 2019 | | Variance to Comparable Period in the Prior Year | |||||||||||||||||||
(in thousands) | | | ||||||||||||||||||||||
| | | | | | | | | | | ||||||||||||||
Recurring General and Administrative Expenses | $ | 1,663 |
| $ | 1,648 | | $ | 15 | 0.9% | |||||||||||||||
Non-Cash Stock Compensation | $ | 616 | | $ | 613 | | $ | 3 | 0.5% | |||||||||||||||
REIT Conversion and Other Non-Recurring Items | $ | 1,062 | $ | — | | $ | 1,062 | 100.0% | ||||||||||||||||
Total General and Administrative Expenses | $ | 3,341 |
| $ | 2,261 | | $ | 1,080 | | 47.8% | ||||||||||||||
The operating results for the quarter ended September 30, 2020 were impacted by a 47.8% increase in general and administrative expenses, primarily related to legal, audit, and other professional fees incurred in connection with the Company’s anticipated 2020 REIT conversion.
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| For the Three Months Ended September 30, 2020 |
| For the Three Months Ended September 30, 2019 | | Variance to Comparable Period in the Prior Year | ||||||||||||||||||
(in thousands, except for per share data) | | | |||||||||||||||||||||
| | | | | | | | | | | |||||||||||||
| | | | | | | | | | | |||||||||||||
Net Income (Loss) | $ | (1,522) | | $ | 1,486 | | $ | (3,008) | (202.4%) | ||||||||||||||
Net Income (Loss) per share, basic and diluted | $ | (0.33) | $ | 0.31 | | $ | (0.64) | (206.5%) | |||||||||||||||
| | | | | | | | | | ||||||||||||||
Dividends Declared and Paid, per share | $ | 0.40 | $ | 0.11 | | $ | 0.29 | 263.6% | |||||||||||||||
The net loss for the third quarter of 2020 was primarily due to the decrease in the closing stock price of PINE resulting in a non-cash, unrealized loss on the mark-to-market of the Company’s investment in PINE of ($1.4) million and a decrease of ($1.9) million from the year-over-year difference in gains on disposition of income producing properties.
Year-to-Date Financial Results Highlights
The tables below provide a summary of the Company’s operating results for the nine months ended September 30, 2020:
| For the Nine Months Ended September 30, 2020 |
| For the Nine Months Ended September 30, 2019 | | Variance to Comparable Period in the Prior Year | |||||||||||||||||||
(in thousands) | | | ||||||||||||||||||||||
| | | | | | | | | | | ||||||||||||||
Income Properties | $ | 35,409 |
| $ | 31,361 | | $ | 4,048 | 12.9% | |||||||||||||||
Management Fee Income | $ | 2,080 | | $ | — | | $ | 2,080 | 100.0% | |||||||||||||||
Commercial Loan and Master Lease Investments | $ | 2,300 | $ | 908 | | $ | 1,392 | 153.3% | ||||||||||||||||
Real Estate Operations | $ | 631 |
| $ | 709 | | $ | (78) | | (11.0%) | ||||||||||||||
Total Revenues | $ | 40,420 |
| $ | 32,978 | | $ | 7,442 | | 22.6% | ||||||||||||||
The increase in total revenue period-over-period was primarily attributable to income produced by the Company’s recent income property acquisitions versus that of properties disposed of by the Company during the comparative period, income from commercial loan investments that were originated subsequent to the second quarter of 2019, and revenue from management fee income, the majority of which was from the external management of PINE, which did not commence until late in the fourth quarter of 2019.
| For the Nine Months Ended September 30, 2020 |
| For the Nine Months Ended September 30, 2019 | | Variance to Comparable Period in the Prior Year | |||||||||||||||||||
(in thousands) | | | ||||||||||||||||||||||
| | | | | | | | | | | ||||||||||||||
Recurring General and Administrative Expenses | $ | 5,304 |
| $ | 4,697 | | $ | 607 | 12.9% | |||||||||||||||
Non-Cash Stock Compensation | $ | 2,135 | | $ | 2,059 | | $ | 76 | 3.7% | |||||||||||||||
REIT Conversion and Other Non-Recurring Items | $ | 1,164 | $ | 125 | | $ | 1,039 | 831.2% | ||||||||||||||||
Total General and Administrative Expenses | $ | 8,603 |
| $ | 6,881 | | $ | 1,722 | | 25.0% | ||||||||||||||
The operating results for the nine months ended September 30, 2020 were impacted by a 25.0% increase in general and administrative expenses, primarily related to legal, audit, and other professional fees incurred in connection with the Company’s anticipated 2020 REIT conversion and increased audit, tax and legal fees, primarily attributable to the Company’s Land JV and the asset portfolio sale to PINE, for which fees were incurred primarily during the first quarter of 2020.
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| For the Nine Months Ended September 30, 2020 |
| For the Nine Months Ended September 30, 2019 | | Variance to Comparable Period in the Prior Year | |||||||||||||||||
(in thousands, except for per share data) | | | ||||||||||||||||||||
| | | | | | | | | | | ||||||||||||
| | | | | | | | | | | ||||||||||||
Net Income (Loss) | $ | (1,173) | | $ | 18,551 | | $ | (19,724) | (106.3%) | |||||||||||||
Net Income (Loss) per share, basic and diluted | $ | (0.25) | $ | 3.67 | | $ | (3.92) | (106.8%) | ||||||||||||||
| | | | | | | | | | |||||||||||||
Dividends Declared and Paid, per share | $ | 0.90 | $ | 0.31 | | $ | 0.59 | 190.3% | ||||||||||||||
The net loss for the nine months ended September 30, 2020 was primarily due to the decrease in the closing stock price of PINE resulting in a non-cash, unrealized loss on the mark-to-market of the Company’s investment in PINE of ($7.1) million, a decrease of ($13.1) million from the year-over-year difference in gains on disposition of income producing properties, and aggregate losses of ($2.1) million related to the Company’s commercial loan portfolio that included impairment charges recognized in the first quarter of 2020 related to the Company’s disposition of four of its commercial loan investments.
COVID-19 Pandemic and Rent Collection Update
In March 2020, the World Health Organization declared the outbreak of the novel coronavirus as a pandemic (the “COVID-19 Pandemic”), which has spread throughout the United States. The spread of the COVID-19 Pandemic has continued to cause significant volatility in the U.S. and international markets, and in many industries, business activity has experienced periods of almost complete shutdown. There continues to be uncertainty around the duration and severity of business disruptions related to the COVID-19 Pandemic, as well as its impact on the U.S. economy and international economies.
Q3 2020 Rent Status: The Company collected 91% of the Contractual Base Rent due for the three months ended September 30, 2020. Contractual Base Rent (“CBR”) represents the amount owed to the Company under the terms of its lease agreements in each respective month. The Company has previously agreed to defer or abate certain CBRs in exchange for additional lease term or other lease enhancing additions. In general, the repayment of the deferred CBR began in the third quarter of 2020, with ratable payments continuing, in some cases, through the end of 2021. The Company has not yet reached an agreement with certain tenants responsible for approximately 6% of CBR due during the three months ended September 30, 2020.
October 2020 Rent Status: As of October 28, 2020, the Company had received payments from tenants representing approximately 93% of the CBR due during the month of October. An assessment of the current or identifiable potential financial and operational impacts on the Company as a result of the COVID-19 Pandemic are as follows:
| ● | The total borrowing capacity on the Company’s revolving credit facility is based on the assets currently in the borrowing base, as defined by the Company’s revolving credit facility agreement. Pursuant to the terms of the revolving credit facility agreement, any property in the borrowing base with a tenant that is more than 60 days past due on its contractual rent obligations would be automatically removed from the borrowing base and the Company’s borrowing capacity would be reduced. For the tenants requesting rent relief with which the Company has reached an agreement, such deferral and/or abatement agreements for current rent, under the terms of the credit facility, would not be past due if it adheres to such modification, and thus those properties would not be required to be removed from the borrowing base. The Company’s available borrowing capacity has not been limited as a result of the referenced terms of the revolving credit facility. |
| ● | As a result of the outbreak of the COVID-19 Pandemic, the federal government and the state of Florida issued orders encouraging everyone to remain in their residence and not go into work. In response to these orders and in the best interest of our employees and directors, we have implemented significant preventative measures to ensure the health and safety of our employees and Board of Directors (the “Board”), including: (i) conducting all meetings of the Board and Committees of the Board telephonically or via a visual conferencing service, (ii) permitting the |
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| Company’s employees to work from home at their election, (iii) enforcing appropriate social distancing practices in the Company’s office, (iv) encouraging the Company’s employees to wash their hands often and use face masks, (v) providing hand sanitizer and other disinfectant products throughout the Company’s office, (vi) requiring employees who do not feel well in any capacity to stay at home, and (vii) requiring all third-party delivery services (e.g. mail, food delivery, etc.) to complete their service outside the front door of the Company’s office. The Company also offered COVID-19 testing to its employees to ensure a safe working environment. These preventative measures have not had any material adverse impact on the Company’s financial reporting systems, internal controls over financial reporting or disclosure controls and procedures. At this time, we have not laid off, furloughed, or terminated any employee in response to the COVID-19 Pandemic. The Compensation Committee of the Board may reevaluate the performance goals and other aspects of the compensation arrangements of the Company’s executive officers later in 2020 as more information about the effects of the COVID-19 Pandemic become known. |
Land Joint Venture
During the three months ended September 30, 2020, the Land JV sold approximately 3,300 acres for $46.0 million. From inception through September 30, 2020, the Land JV sold approximately 3,700 acres for $68.2 million, which has resulted in distributions to the joint venture partner that reduced the partner’s capital balance to $42.3 million as of September 30, 2020.
Following these transactions, the Land JV has approximately 1,700 acres of undeveloped land, or $80 million to $110 million of potential value remaining. Following the repayment of the Land JV partner’s capital balance, the Company is scheduled to receive 90% of the additional proceeds under the terms of the Land JV agreement.
The Land JV’s current pipeline related to the remaining 1,700 acres includes approximately 134 acres of potential land sales that total $16.3 million, the majority of which are expected to close in the next 90 days. The buyers of these parcels include in-state and out-of-state developers.
Operational Highlights
During the three months ended September 30, 2020, the Company engaged in the following notable operational activities related to the existing properties within its portfolio:
| ● | Commenced rebranding and repositioning efforts on its 269,000-square foot Perimeter Place retail center in Atlanta, Georgia. As part of the rebranding efforts, the Company will relaunch the property as Ashford Lane. The revitalized property will include a redesign of the existing public areas to provide more green space, a series of outreach and marketing campaigns to drive engagement and brand awareness, and a focused effort on leasing the existing vacancy with new, complimentary tenants that will deliver an improved experience for the community. |
Subsequent to the end of third quarter of 2020, the Company entered into the following noteworthy agreements with new or existing tenants:
| ● | Entered into a new lease with a food hall operator to occupy approximately 17,000 square feet at Ashford Lane. |
| ● | Entered into an amendment with an existing beachfront restaurant tenant to expand their existing operations onto an adjacent piece of land currently owned by the Company. |
Acquisitions
During the three months ended September 30, 2020, the Company acquired the following two properties for total acquisition volume of approximately $47.9 million, reflecting a weighted-average going-in cap rate of approximately 7.7% and a weighted-average remaining lease term of approximately 13.2 years.
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| ● | On August 21, 2020, the Company acquired an approximately 120,000 square foot single tenant office property in Tampa, Florida. The property is occupied exclusively by Ford Motor Credit Company LLC through a lease that was recently extended through March 2026. |
| ● | On September 25, 2020, the Company acquired an approximately 108,000 square foot retail property situated on approximately eight acres in Hialeah, Florida. The property is master leased to a national retail developer (the “Master Tenant”) and is occupied by Aldi, Ross Dress for Less, Bed, Bath & Beyond and dd’s Discount. The 25-year master lease has an initial investment yield within the range of the 2020 Guidance and includes annual rental rate escalations as well as certain future purchase rights by the Master Tenant. |
During the nine months ended September 30, 2020, the Company acquired three retail properties and one office property for total acquisition volume of approximately $185.1 million, reflecting a weighted-average going-in cap rate of approximately 7.8%.
Dispositions
During the three months ended September 30, 2020, the Company sold three properties for total disposition volume of approximately $12.2 million, reflecting a weighted-average exit cap rate of approximately 5.5%. The sale of the properties generated a gain of approximately $0.3 million, or $0.05 per diluted share.
During the nine months ended September 30, 2020, the Company sold eight properties for total disposition volume of approximately $51.6 million, reflecting a weighted-average exit cap rate of approximately 4.6%.
On October 13, 2020, the Company completed the sale of the property located in Arlington, Texas, formerly leased to Macaroni Grill, for a sale price of $2.5 million. The gain on the sale was approximately $0.1 million, or $0.01 per share, after tax, of which proceeds are expected to be a part of a 1031 like-kind exchange transaction.
Also on October 13, 2020, the Company completed the sale of a vacant land parcel located adjacent to the property in Dallas, Texas, leased to 7-Eleven, which was sold in June 2020. The sales price on the vacant land parcel was $0.5 million and the gain on the sale was approximately $0.1 million, or $0.01 per share, after tax. In conjunction with the sale, the Company executed a promissory note with the buyer at a principal loan amount of $0.4 million, which bears interest at a fixed rate of 7.50% and an initial term of 2.5 years from the date of disposition.
Income Property Portfolio
The Company’s income property portfolio consisted of the following as of September 30, 2020:
(square feet in thousands) Property Type |
| # of Properties |
| Square Feet |
| Weighted-Average Remaining on Lease Term |
Single-Tenant (1) |
| 24 |
| 1,435 |
| 13.6 |
Multi-Tenant |
| 6 |
| 1,015 |
| 5.7 |
Total / Weighted-Average Lease Term |
| 30 |
| 2,450 |
| 9.9 |
| | | | | | |
% of Contractual Base Rent attributable to Retail Tenants | 67% | | | |||
% of Contractual Base Rent attributable to Office Tenants | 31% | | | |||
% of Contractual Base Rent attributable to Hotel Ground Lease | 2% | | | |||
(1)The twenty-four single-tenant properties include (i) a property leased to The Carpenter Hotel which is under a long-term ground lease and includes two tenant-repurchase options and (ii) a property in Hialeah leased to a master tenant which includes three tenant-repurchase options. Pursuant to FASB ASC Topic 842, Leases, the $16.3 and $21.0 million investments, respectively, have been recorded in the Company’s consolidated balance sheet as of September 30, 2020 as Commercial Loan and Master Lease Investments.
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2020 Guidance
The Company's guidance for 2020, which has been revised to reflect the Company’s third quarter performance and adjusted expectations, assumes improvement in economic activity, stable or positive business trends related to each of our tenants, and other significant assumptions. The Company’s outlook for 2020 is as follows:
| Actual YTD 2020 | Updated Guidance for FY 2020 | ||
Acquisition of Income-Producing Assets |
| $185 million | $185 million | |
Target Investment Yields (Initial Yield – Unlevered) |
| 7.8% | 7.8% | |
Disposition of Assets (1) |
| $55 million | $55 million - $85 million | |
Target Disposition Yields (1) |
| 4.3% | 4.5% - 5.0% |
(1) | Includes the disposition of two properties subsequent to September 30, 2020, as previously referenced. |
REIT Conversion
On September 3, 2020, the Company announced that its Board unanimously approved a plan for the Company to elect to be subject to tax as a REIT for U.S. federal income tax purposes, commencing with its taxable year ending December 31, 2020.
As part of the September 3, 2020 announcement, the Company indicated its plans to make the Special Distribution. The Company’s preliminary estimate for the aggregate amount of the Special Distribution at the time of the September 3, 2020 announcement was between $46 and $54 million.
On October 1, 2020, the Company announced that it will hold a special meeting of shareholders (the “Special Meeting”) on Monday, November 9, 2020 at 2:00 PM ET for a vote in connection with the Company’s REIT conversion. The Special Meeting will be conducted in a virtual meeting format on the internet at www.meetingcenter.io/243211225. The record date for determining those shareholders entitled to vote at the Special Meeting has been set for the close of business on Tuesday, October 13, 2020.
At the Special Meeting, shareholders will be asked to vote on: (i) a proposal to approve the previously announced merger (the “Merger”) of the Company with and into CTO NEWCO REIT, Inc. (“NEWCO”), a wholly owned subsidiary of the Company, which the Company intends to implement in connection with the Company’s conversion to a REIT; and (ii) a proposal to approve the adjournment of the Special Meeting, if necessary or appropriate, for the purpose of soliciting additional votes for the approval of the Merger.
The Company expects that the Special Distribution will be declared in the fourth quarter of 2020 and paid in December 2020. The Company expects to pay the Special Distribution in a combination of cash and common stock, with each shareholder being permitted to elect to receive the shareholder’s entire entitlement under the Special Distribution in either cash or common stock, subject to the cash limitation described below. The current aggregate amount of the Special Distribution is anticipated to be between $52 million and $56 million, of which the cash portion will in no event be less than 10% of the aggregate amount (without regard to any cash that may be paid in lieu of fractional shares). If the total amount of cash elected by the Company’s shareholders exceeds the cash limitation, then the available cash will be prorated among those shareholders that elected to receive cash. The details and tax consequences of the Special Distribution will be described in the election form and accompanying materials that have or will be mailed to shareholders in connection with the Special Distribution.
Page 7
Balance Sheet
The following table provides a summary of the Company’s long-term debt, at face value, as of September 30, 2020:
| Principal |
| Interest Rate |
| Maturity Date | |
Revolving Credit Facility (1) |
| $100.0 million |
| 0.7325% + 1.35% – 1.95% |
| May 2023 |
Revolving Credit Facility (2) |
| $50.0 million |
| 0.2200% + 1.35% – 1.95% |
| May 2023 |
Revolving Credit Facility |
| $18.8 million |
| 30-day LIBOR + 1.35% – 1.95% |
| May 2023 |
Mortgage Note Payable (3) |
| $23.4 million |
| 3.17% |
| April 2021 |
Mortgage Note Payable |
| $30.0 million |
| 4.33% |
| October 2034 |
2025 Convertible Senior Notes |
| $62.5 million |
| 3.88% |
| April 2025 |
Total Debt / Weighted-Average Interest Rate |
| $284.7 million |
| 2.47% |
|
|
(1)Effective March 31, 2020, the Company utilized an interest rate swap to achieve a fixed LIBOR rate of 0.7325% plus the applicable spread on $100 million of the outstanding balance on the revolving credit facility.
(2) | Effective August 31, 2020, the Company utilized an interest rate swap to achieve a fixed LIBOR rate of 0.2200% plus the applicable spread on $50 million of the outstanding balance on the revolving credit facility. |
(3) | The mortgage note payable is subject to an interest rate swap to achieve a fixed interest rate of 3.17%. |
3rd Quarter Earnings Conference Call & Webcast
The Company will host a conference call to present its operating results for the quarter ended September 30, 2020, on Thursday, October 29, 2020, at 9:00 AM ET. Shareholders and interested parties may access the earnings call via teleconference or webcast:
Teleconference: USA (Toll Free)1-888-317-6003
International: 1-412-317-6061
Canada (Toll Free): 1-866-284-3684
Please dial in at least fifteen minutes prior to the scheduled start time and use the code 3896766 when prompted.
A webcast of the call can be accessed at: https://services.choruscall.com/links/cto201029.html.
To access the webcast, log on to the web address noted above or go to http://www.ctorealtygrowth.com and log in at the investor relations section. Please log in to the webcast at least ten minutes prior to the scheduled time of the Earnings Call.
About CTO Realty Growth, Inc.
CTO Realty Growth, Inc. is a Florida-based publicly traded real estate company, which owns income properties comprised of approximately 2.4 million square feet in diversified markets in the United States and an approximately 23.5% interest in Alpine Income Property Trust, Inc., a publicly traded net lease real estate investment trust (NYSE: PINE).
We encourage you to review our most recent investor presentation, which is available on our website at www.ctorealtygrowth.com.
Page 8
Safe Harbor
Certain statements contained in this press release (other than statements of historical fact) are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can typically be identified by words such as “believe,” “estimate,” “expect,” “intend,” “anticipate,” “will,” “could,” “may,” “should,” “plan,” “potential,” “predict,” “forecast,” “project,” and similar expressions, as well as variations or negatives of these words.
Although forward-looking statements are made based upon management’s present expectations and reasonable beliefs concerning future developments and their potential effect upon the Company, a number of factors could cause the Company’s actual results to differ materially from those set forth in the forward-looking statements. Such factors may include: (1) uncertainties relating to the estimate of the amount of the Special Distribution; (2) the expected timing and likelihood of completion of the Merger; (3) the possibility that the Company’s shareholders may not approve the Merger; (4) risks related to disruption of management’s attention from ongoing business operations due to the Merger and REIT conversion; (5) the Company’s ability to remain qualified as a REIT; (6) the Company’s exposure to U.S. federal and state income tax law changes, including changes to the REIT requirements; (7) general adverse economic and real estate conditions; (8) the ultimate geographic spread, severity and duration of pandemics such as the recent outbreak of novel coronavirus, actions that may be taken by governmental authorities to contain or address the impact of such pandemics, and the potential negative impacts of such pandemics on the global economy and the Company’s financial condition and results of operations; (9) the inability of major tenants to continue paying their rent or obligations due to bankruptcy, insolvency or a general downturn in their business; (10) the completion of 1031 exchange transactions; (11) the availability of investment properties that meet the Company’s investment goals and criteria; (12) the uncertainties associated with obtaining required governmental permits and satisfying other closing conditions for planned acquisitions and sales; and (13) an epidemic or pandemic (such as the outbreak and worldwide spread of COVID-19), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, which may (as with COVID-19) precipitate or exacerbate one or more of the above-mentioned and/or other risks, and significantly disrupt or prevent us from operating our business in the ordinary course for an extended period. For additional information regarding factors that may cause the Company’s actual results to differ materially from those set forth in the Company’s forward-looking statements, the Company refers you to the information contained under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 and in the Company’s Definitive Proxy Statement on Schedule 14A dated October 19, 2020, each as filed with the Securities and Exchange Commission.
There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of future developments on the Company will be those anticipated by management. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company undertakes no obligation to update the information contained in this press release to reflect subsequently occurring events or circumstances.
Page 9
Consolidated Balance Sheet
|
| (Unaudited) September 30, |
| December 31, | ||
ASSETS |
|
|
|
|
|
|
Property, Plant, and Equipment: |
|
|
|
|
|
|
Income Properties, Land, Buildings, and Improvements |
| $ | 473,126,519 |
| $ | 392,841,899 |
Other Furnishings and Equipment |
|
| 735,049 |
|
| 733,165 |
Construction in Progress |
|
| 81,409 |
|
| 24,788 |
Total Property, Plant, and Equipment |
|
| 473,942,977 |
|
| 393,599,852 |
Less, Accumulated Depreciation and Amortization |
|
| (28,269,448) |
|
| (23,008,382) |
Property, Plant, and Equipment—Net |
|
| 445,673,529 |
|
| 370,591,470 |
Land and Development Costs |
|
| 7,200,397 |
|
| 6,732,291 |
Intangible Lease Assets—Net |
|
| 52,746,436 |
|
| 49,022,178 |
Assets Held for Sale |
|
| 29,413,951 |
|
| 833,167 |
Investment in Joint Ventures |
|
| 55,772,263 |
|
| 55,736,668 |
Investment in Alpine Income Property Trust, Inc. |
|
| 31,716,464 |
|
| 38,814,425 |
Mitigation Credits |
|
| 2,220,167 |
|
| 2,322,596 |
Commercial Loan and Master Lease Investments |
|
| 39,679,612 |
|
| 34,625,173 |
Cash and Cash Equivalents |
|
| 6,351,772 |
|
| 6,474,637 |
Restricted Cash |
|
| 2,425,944 |
|
| 128,430,049 |
Other Assets |
|
| 12,231,426 |
|
| 9,703,549 |
Total Assets |
| $ | 685,431,961 |
| $ | 703,286,203 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
Accounts Payable |
| $ | 1,705,922 |
| $ | 1,385,739 |
Accrued and Other Liabilities |
|
| 9,697,498 |
|
| 5,687,192 |
Deferred Revenue |
|
| 3,684,843 |
|
| 5,830,720 |
Intangible Lease Liabilities—Net |
|
| 24,910,921 |
|
| 26,198,248 |
Liabilities Held for Sale |
|
| 831,320 |
|
| 831,320 |
Income Taxes Payable |
|
| 3,597,093 |
|
| 439,086 |
Deferred Income Taxes—Net |
|
| 83,105,934 |
|
| 90,282,173 |
Long-Term Debt |
|
| 276,916,118 |
|
| 287,218,303 |
Total Liabilities |
|
| 404,449,649 |
|
| 417,872,781 |
Commitments and Contingencies |
|
|
|
|
|
|
Shareholders’ Equity: |
|
|
|
|
|
|
Common Stock – 25,000,000 shares authorized; $1 par value, 6,105,732 shares issued and 4,710,808 shares outstanding at September 30, 2020; 6,076,813 shares issued and 4,770,454 shares outstanding at December 31, 2019 |
|
| 6,049,253 |
|
| 6,017,218 |
Treasury Stock – 1,394,924 shares at September 30, 2020 and 1,306,359 shares at December 31, 2019 |
|
| (77,540,735) |
|
| (73,440,714) |
Additional Paid-In Capital |
|
| 33,502,507 |
|
| 26,689,795 |
Retained Earnings |
|
| 320,690,858 |
|
| 326,073,199 |
Accumulated Other Comprehensive Income (Loss) |
|
| (1,719,571) |
|
| 73,924 |
Total Shareholders’ Equity |
|
| 280,982,312 |
|
| 285,413,422 |
Total Liabilities and Shareholders’ Equity |
| $ | 685,431,961 |
| $ | 703,286,203 |
|
|
|
|
|
|
|
Page 10
CTO Realty Growth, Inc.
Consolidated Statement of Operations
(Unaudited)
| Three Months Ended |
| Nine Months Ended | ||||||||
| September 30, |
| September 30, |
| September 30, |
| September 30, | ||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
Income Properties | $ | 12,933,029 |
| $ | 10,260,831 |
| $ | 35,409,172 |
| $ | 31,360,544 |
Management Fee Income |
| 682,153 |
|
| — |
|
| 2,079,805 |
|
| — |
Commercial Loan and Master Lease Investments |
| 413,092 |
|
| 855,559 |
|
| 2,300,331 |
|
| 908,324 |
Real Estate Operations |
| 543,700 |
|
| 213,589 |
|
| 630,841 |
|
| 709,261 |
Total Revenues |
| 14,571,974 |
|
| 11,329,979 |
|
| 40,420,149 |
|
| 32,978,129 |
Direct Cost of Revenues |
|
|
|
|
|
|
|
|
|
|
|
Income Properties |
| (3,592,875) |
|
| (1,476,288) |
|
| (8,274,432) |
|
| (5,043,496) |
Real Estate Operations |
| (1,681,583) |
|
| (8,484) |
|
| (3,262,584) |
|
| (94,780) |
Total Direct Cost of Revenues |
| (5,274,458) |
|
| (1,484,772) |
|
| (11,537,016) |
|
| (5,138,276) |
General and Administrative Expenses |
| (3,340,982) |
|
| (2,260,728) |
|
| (8,603,393) |
|
| (6,881,524) |
Impairment Charges |
| — |
|
| — |
|
| (1,904,500) |
|
| — |
Depreciation and Amortization |
| (4,762,057) |
|
| (4,286,836) |
|
| (14,335,715) |
|
| (11,707,710) |
Total Operating Expenses |
| (13,377,497) |
|
| (8,032,336) |
|
| (36,380,624) |
|
| (23,727,510) |
Gain on Disposition of Assets |
| 289,736 |
|
| 2,187,332 |
|
| 7,365,594 |
|
| 20,869,196 |
Gain on Extinguishment of Debt |
| — |
|
| — |
|
| 1,141,481 |
|
| — |
Other Gains and Income |
| 289,736 |
|
| 2,187,332 |
|
| 8,507,075 |
|
| 20,869,196 |
Total Operating Income |
| 1,484,213 |
|
| 5,484,975 |
|
| 12,546,600 |
|
| 30,119,815 |
Investment and Other Income (Loss) |
| (1,029,496) |
|
| 33,048 |
|
| (5,746,282) |
|
| 86,363 |
Interest Expense |
| (2,477,232) |
|
| (3,253,908) |
|
| (8,382,792) |
|
| (9,219,195) |
Income (Loss) from Continuing Operations Before Income Tax Expense |
| (2,022,515) |
|
| 2,264,115 |
|
| (1,582,474) |
|
| 20,986,983 |
Income Tax Benefit (Expense) from Continuing Operations |
| 501,011 |
|
| (573,731) |
|
| 409,635 |
|
| (5,289,584) |
Income (Loss) from Continuing Operations |
| (1,521,504) |
|
| 1,690,384 |
|
| (1,172,839) |
|
| 15,697,399 |
Income (Loss) from Discontinued Operations (Net of Income Tax) |
| — |
|
| (204,364) |
|
| — |
|
| 2,853,520 |
Net Income (Loss) | $ | (1,521,504) |
| $ | 1,486,020 |
| $ | (1,172,839) |
| $ | 18,550,919 |
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Information: |
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted |
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) from Continuing Operations | $ | (0.33) |
| $ | 0.35 |
| $ | (0.25) |
| $ | 3.11 |
Net Income (Loss) from Discontinued Operations (Net of Income Tax) |
| — |
|
| (0.04) |
|
| — |
|
| 0.56 |
Basic Net Income (Loss) per Share | $ | (0.33) |
| $ | 0.31 |
| $ | (0.25) |
| $ | 3.67 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common Shares: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
| 4,654,329 |
|
| 4,868,133 |
|
| 4,673,049 |
|
| 5,053,407 |
Diluted |
| 4,654,329 |
|
| 4,868,133 |
|
| 4,673,049 |
|
| 5,054,218 |
Page 11
Exhibit 99.3
| REALTY GROWTH OCTOBER 2020 |
| 2 CTO Realty Growth, Inc. FORWARD LOOKING STATEMENTS Certain statements contained in this presentation (other than statements of historical fact) are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can typically be identified by words such as “believe,” “estimate,” “expect,” “intend,” “anticipate,” “will,” “could,” “may,” “should,” “plan,” “potential,” “predict,” “forecast,” “project,” and similar expressions, as well as variations or negatives of these words. Although forward-looking statements are made based upon management’s present expectations and reasonable beliefs concerning future developments and their potential effect upon the Company, a number of factors could cause the Company’s actual results to differ materially from those set forth in the forward-looking statements. Such factors may include:(1) uncertainties relating to the estimate of the amount of the Special Distribution;(2) the expected timing and likelihood of completion of the Merger;(3) the possibility that the Company’s shareholders may not approve the Merger;(4) risks related to disruption of management’s attention from ongoing business operations due to the Merger and REIT conversion;(5) the Company’s ability to remain qualified as a REIT;(6) the Company’s exposure to U.S. federal and state income tax law changes, including changes to the REIT requirements;(7) general adverse economic and real estate conditions;(8) the ultimate geographic spread, severity and duration of pandemics such as the recent outbreak of novel coronavirus, actions that may be taken by governmental authorities to contain or address the impact of such pandemics, and the potential negative impacts of such pandemics on the global economy and the Company’s financial condition and results of operations;(9) the inability of major tenants to continue paying their rent or obligations due to bankruptcy, insolvency or a general downturn in their business;(10) the completion of 1031 exchange transactions;(11) the availability of investment properties that meet the Company’s investment goals and criteria;(12) the uncertainties associated with obtaining required governmental permits and satisfying other closing conditions for planned acquisitions and sales; and (13) an epidemic or pandemic (such as the outbreak and worldwide spread of COVID-19), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, which may (as with COVID-19) precipitate or exacerbate one or more of the above-mentioned and/or other risks, and significantly disrupt or prevent us from operating our business in the ordinary course for an extended period. For additional information regarding factors that may cause the Company’s actual results to differ materially from those set forth in the Company’s forward-looking statements, the Company refers you to the information contained under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 and in the Company’s Definitive Proxy Statement on Schedule 14A dated October 19, 2020, each as filed with the Securities and Exchange Commission. There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of future developments on the Company will be those anticipated by management. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company undertakes no obligation to update the information contained in this presentation to reflect subsequently occurring events or circumstances. Investor Inquiries: Matthew M. Partridge Chief Financial Officer (386) 944-5643 mpartridge@ctorealtygrowth.com |
| 3 CTO Realty Growth, Inc. CTO BY THE NUMBERS FIDELITY,ALBUQUERQUE, NM WELLS FARGO, RALEIGH, NC GENERAL DYNAMICS INFO TECH, RESTON, VA THE STRAND, JACKSONVILLE, FL As of September 30, 2020 or as otherwise noted; any differences a result of rounding. (1) Based on monthly Contractual Base Rent (“CBR”), which represents the amount owed to the Company under the terms of its lease agreements in each respective month. (2) Calculated on 2,039,644 common shares and partnership units CTO owns in PINE and PINE’s October 27, 2020 closing stock price. (3) Calculated on 4,710,808 shares outstanding as of September 30, 2020. (4) Includes cash, cash equivalents, restricted cash and borrowing availability on the Company’s revolving credit facility. (5) As announced on October 28, 2020; yield based on CTO’s October 27, 2020 closing stock price. (6) Based on the CTO’s October 27, 2020 closing stock price of $42.08 per share, as compared to the NAV/share of $76.18 provided in the B.Riley Securities research note dated October 2, 2020. 30 11 INCOME PROPERTIES 2.4M $38M $29M $208M $285M $484M STATES SQUARE FEET IN-PLACE NET OPERATING INCOME INVESTMENT IN ALPINE INCOME PROPERTY TRUST(2) EQUITY MARKET CAP(3) OUTSTANDING DEBT TOTAL ENTERPRISE VALUE (Net of Cash)(4) Q4 2020 ANNUALIZED DIVIDEND(5) $4.00/share 44.8% STOCK PRICE DISCOUNT TO ESTIMATED NET ASSET VALUE(6) $49M ESTIMATED LAND JV VALUE (Undiscounted Book Value) 93% OCTOBER RENT COLLECTION(1) 9.5% CURRENT ANNUALIZED DIVIDEND YIELD(4) $40M AVAILABILE LIQUIDITY(3) |
| 4 CTO Realty Growth, Inc. STRATEGIC FOCUS & Q3 EXECUTION ASHFORD LANE, ATLANTA, GA ASHFORD LANE, ATLANTA, GA ASHFORD LANE, ATLANTA, GA Position the Company for REIT Conversion Board of Directors approved a 2020 REIT conversion; will result in a $52 - $56 million special dividend in the form of cash and stock to shareholders if approved ✓ ✓ Provide an attractive and sustainable dividend Increased the Q4 2020 dividend by 150% to $1.00 per share, which is the 44th consecutive year the company has paid a dividend(1) ✓ Sell land to monetize non-income producing assets Sold nearly two-thirds of the remaining land in the land joint venture for $46 million, reducing our JV partner capital account balance to $42 million ✓ Actively reposition the portfolio through non-core asset sales Sold three properties for $12 million at a 5.5% weighted-average exit cap rate ✓ Reinvest proceeds utilizing a disciplined acquisition strategy Acquired two properties for $48 million, one retail and one office, in our target markets of Miami and Tampa for a 7.7% weighted-average initial investment yield (1) As announced on October 28, 2020. |
| 5 CTO Realty Growth, Inc. INVESTMENT STRATEGY Miami Orlando Tampa Atlanta Jacksonville Nashville Charlotte Raleigh-Durham Northern Virginia Dallas Houston Austin Denver Boulder Salt Lake City Las Vegas Reno Phoenix Diversified Asset Investment Strategy Markets that project to have above-average job and population growth States with favorable business climates Initial focus on value-add retail and office properties with strong real estate fundamentals Seeking leasing or repositioning upside or highly stable assets with an identifiable opportunity to drive long-term, outsized risk- adjusted returns CTO’s investment strategy is focused on generating outsized returns for our shareholders through a combination of asset-level value creation, acquiring at meaningful discounts to replacement cost, and sustainably growing organizational level cash flow Acquiring at meaningful discounts to replacement cost and below market rents |
| 6 CTO Realty Growth, Inc. TENANT STRATEGY CTO’s tenant strategy is to align its investments with high-quality, sector leading tenants who support stable operating fundamentals and who promote community engagement More than 45% of Contractual Base Rent(1) comes from these high- quality tenants As of September 30, 2020 or as otherwise noted. (1) Contractual Base Rent (“CBR”), which represents the amount owed to the Company under the terms of its lease agreements in each respective month. |
| 7 CTO Realty Growth, Inc. LAND JOINT VENTURE Land Joint Venture Summary of Terms ▪ Approximately 1,700 acres remaining in the land joint venture ▪ Estimated market value of remaining land is $80 - $110 million ▪ JV Partner’s current capital account balance is approximately $42 million ▪ JV Partner is guaranteed a preferred return of < 13% ▪ CTO receives 90% of all proceeds once the JV Partner capital account is $0 and the preferred return is achieved ▪ Book value of CTO’s interest in the land JV before taxes is approximately $49 million As of September 30, 2020 or as otherwise noted. Largest Remaining Parcels to Sell 850 Acres - Industrial Park Estimated Value: $20M - $30M 32 Acres - Florida Hospital Estimated Value: $5M - $8M 177 Acres - Tomoka North Estimated Value: $25M - $35M 155 Acres - Tomoka Village Estimated Value: $7M - $10M |
| 8 CTO Realty Growth, Inc. PORTFOLIO AT A GLANCE 6 Number of Income Producing Properties CTO Target Market/State Non-Target State Where CTO Owns a Property 1 1 2 12 1 2 1 2 1 1 FL 32% GA 13% AZ 13% NC 9% NM 9% TX 9% VA 7% CO 5% Other 3% 31% 67% 2% Office Retail Hotel 54% 46% Single-Tenant Multi-Tenant 30 11 INCOME PROPERTIES 2.4M $38M STATES SQUARE FEET IN-PLACE NOI As of September 30, 2020 or as otherwise noted. Portfolio diversity based on monthly Contractual Base Rent (“CBR”), which represents the amount owed to the Company under the terms of its lease agreements in each respective month. |
| 9 CTO Realty Growth, Inc. IMPACT OF COVID-19 93% 93% 92% 90% October September August July Paid Deferred Unresolved CTO has averaged a 92% Contractual Base Rent(1) collection rate over the last four months, with deferral agreements generally deferring rent into late 2020 or early 2021 As October 27, 2020 (1) Based on monthly Contractual Base Rent (“CBR”), which represents the amount owed to the Company under the terms of its lease agreements in each respective month. More than 50% of unresolved Contractual Base Rent(1) collections is related to one tenant, which is expected to be resolved before year-end |
| 10 CTO Realty Growth, Inc. INCOME PROPERTY PORTFOLIO Tenant/Property Location Property Type Asset Type Square Feet % of CBR(1) Germantown, MD Retail Single Tenant 25,589 0.9% Phoenix, AZ Retail Single Tenant 34,512 0.9% N. Richland Hills, TX Retail Single Tenant 70,891 2.1% Phoenix, AZ Retail Single Tenant 4,766 0.3% Jacksonville, FL Retail Single Tenant 7,950 1.2% Daytona Beach, FL Retail Single Tenant 5,780 0.7% Phoenix, AZ Retail Single Tenant 2,260 0.3% Jacksonville, FL Retail Single Tenant 6,948 0.7% Charlotte, NC Retail Single Tenant 45,089 1.8% Phoenix, AZ Retail Single Tenant 4,500 0.4% Daytona Beach, FL Retail Single Tenant 6,264 0.5% Katy, TX Retail Single Tenant 131,644 2.3% Phoenix, AZ Retail Single Tenant 6,527 0.5% As of October 28, 2020 or as otherwise noted; any differences a result of rounding. (1) Based on monthly Contractual Base Rent (“CBR”), which represents the amount owed to the Company under the terms of its lease agreements in each respective month. (2) Outparcel to Crossroads Towne Center in Phoenix, AZ. (2) (2) (2) (2) |
| 11 CTO Realty Growth, Inc. INCOME PROPERTY PORTFOLIO Tenant/Property Location Property Type Asset Type Square Feet % of CBR(1) Jacksonville, FL Retail Single Tenant 3,111 0.4% Phoenix, AZ Retail Single Tenant 5,627 0.4% Phoenix, AZ Retail Single Tenant 8,000 0.4% Austin, TX Retail Single Tenant 6,176 0.5% Oceanside, NY Retail Single Tenant 15,500 0.9% Phoenix, AZ Retail Single Tenant 12,000 0.5% Renton, WA Retail Single Tenant 16,280 1.4% Sarasota, FL Retail Single Tenant 18,120 0.7% Phoenix, AZ Retail Single Tenant 4,500 0.4% Clermont, FL Retail Single Tenant 13,650 0.8% Falls Church, VA Retail Single Tenant 46,000 3.5% Aspen, CO Retail Single Tenant 19,596 4.7% Hialeah Center Hialeah, FL Retail Single Tenant 108,000 3.6% As of October 28, 2020 or as otherwise noted; any differences a result of rounding. (1) Based on monthly Contractual Base Rent (“CBR”), which represents the amount owed to the Company under the terms of its lease agreements in each respective month. (2) Outparcel to Crossroads Towne Center in Phoenix, AZ. (2) (2) (2) (2) |
| 12 CTO Realty Growth, Inc. INCOME PROPERTY PORTFOLIO Tenant/Property Location Property Type Asset Type Square Feet % of CBR(1) Albuquerque, NM Office Single Tenant 210,067 8.5% Reston, VA Office Single Tenant 64,319 3.8% Raleigh, NC Office Single Tenant 450,393 6.9% Tampa, FL Office Single Tenant 120,500 4.6% Riverside Jacksonville, FL Office Multi-Tenant 136,856 6.8% Crossroads Towne Center Phoenix, AZ Retail Multi-Tenant 197,929 8.6% The Strand Jacksonville, FL Retail Multi-Tenant 212,402 11.5% Westcliff Forth Worth, TX Retail Multi-Tenant 136,185 1.3% Ashford Lane Atlanta, GA Retail Multi-Tenant 268,572 13.4% Brandon, FL Retail Multi-Tenant 6,715 0.4% Phoenix, AZ Retail Multi-Tenant 8,000 0.7% Austin, TX Hospitality Single Tenant N/A(3) 2.3% Total 2,441,218 100.0% As of October 28, 2020 or as otherwise noted; any differences a result of rounding. (1) Based on monthly Contractual Base Rent (“CBR”), which represents the amount owed to the Company under the current terms of its lease agreements (2) Outparcel to Crossroads Towne Center in Phoenix, AZ. (3) N/A because The Carpenter Hotel is a long-term ground lease. (2) |
| 13 CTO Realty Growth, Inc. $23.4 $150.0 $150.0 $62.5 $30.0 $18.8 $18.8 $31.2 $31.2 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Fixed Floating Total Commitments BALANCE SHEET AND VALUATION Debt Maturities ($ in millions) As of September 30, 2020 or as otherwise noted; any differences a result of rounding. (1) Effective March 31, 2020, the Company utilized an interest rate swap to achieve a fixed LIBOR rate of 0.7325% plus the applicable spread on $100 million of the outstanding balance on the revolving credit facility. (2) Effective August 31, 2020, the Company utilized an interest rate swap to achieve a fixed LIBOR rate of 0.2200% plus the applicable spread on $50 million of the outstanding balance on the revolving credit facility. (3) The mortgage note payable is subject to an interest rate swap to achieve a fixed interest rate of 3.17%. The Company’s credit facility has a 1-year extension option to extend the maturity to May 2024 Balance Sheet Highlights: ▪ Including extension options, CTO only has 8% of debt maturing prior to May 2024 ▪ CTO has minimal interest rate volatility with only 7% variable rate debt ▪ Approximately 19% of CTO’s debt is secured; the remaining 81% is unsecured Component of Long-Term Debt Principal Interest Rate Maturity Date Revolving Credit Facility (1) $100.0 million 0.7325% + 1.35% – 1.95% May 2023 Revolving Credit Facility (2) $50.0 million 0.2200% + 1.35% – 1.95% May 2023 Revolving Credit Facility $18.8 million 30-day LIBOR + 1.35% – 1.95% May 2023 Mortgage Note Payable (3) $23.4 million 3.17% April 2021 Mortgage Note Payable $30.0 million 4.33% October 2034 2025 Convertible Senior Notes $62.5 million 3.88% April 2025 Total Debt / Weighted-Average Interest Rate $284.7 million 2.47% |
| 14 CTO Realty Growth, Inc. ASSET AND LIABILITY COMPONENTS Net Operating Income $38.3 $38.3 $38.3 $38.3 ÷ Capitalization Rate 6.5% 7.0% 7.5% 8.0% Income Portfolio Value $589.2 $547.1 $510.7 $477.2 Other Assets: + Estimated Value for Subsurface Interests, Wholly Owned Excess Land, Mitigation Credits and Billboards $16.5 $16.5 $16.5 $16.5 + Value of Loan Portfolio 2.5 2.5 2.5 2.5 + Cash, Cash Equivalents & Restricted Cash 8.8 8.8 8.8 8.8 + Book Value of Land JV Interest(1) 49.0 49.0 49.0 49.0 + Value of Alpine Income Property Trust (PINE)(2) 29.1 29.1 29.1 29.1 + Value of PINE Management Agreement 7.0 7.0 7.0 7.0 Other Assets Value $112.9 $112.9 $112.9 $112.9 Total Implied Asset Value $702.1 $660.0 $623.6 $590.1 - Total Debt, Accounts Payable and Accrued and Other Liabilities $296.1 $296.1 $296.1 $296.1 As of September 30, 2020 or as otherwise noted; any differences a result of rounding. (1) As of October 28, 2020. (2) Calculated on 2,039,644 common shares and partnership units CTO owns in PINE and PINE’s October 27, 2020 closing stock price. |
| 15 CTO Realty Growth, Inc. 2020 GUIDANCE Actual Year-To-Date Updated Full Year 2020 Acquisition of Income-Producing Assets $185 million $185 million Target Investment Yield (Initial Yield – Unlevered) 7.8% 7.8% Disposition of Income-Producing Assets $55 million $55 million - $85 million Target Disposition Yield 4.3% 4.5% - 5.0% CROSSROADS TOWNE CENTER, PHOENIX, AZ CROSSROADS TOWNE CENTER, PHOENIX, AZ CROSSROADS TOWNE CENTER, PHOENIX, AZ (1) Includes the disposition of two properties subsequent to September 30, 2020, as previously referenced. |
| 16 CTO Realty Growth, Inc. REALTY GROWTH OCTOBER 2020 |
