CTO - Earnings call transcript Q4 2017 | CTO Realty Growth, Inc.

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John Albright

Thank you, operator. Good morning and welcome to today’s conference call to review the operating results of Consolidated-Tomoka Land Company for the quarter and year ended December 31, 2017. My name is John Albright, President and CEO of the company.

On the call with me is Mark Patten, our Chief Financial Officer; and Dan Smith, our General Counsel and Corporate Secretary. Mark and I will review the details of our fourth quarter and year-end financial results in a moment.

format over our to today comments few regarding it customary you and turn points regarding call. disclosures on the I’ll to provide Mark with a First, our of this call

Mark Patten

John. morning, Thanks, Good everyone.

to forward-looking to after risks our not statements materially made. significantly may that considered forward-looking issued the from greater that were discussed could from are these with and federal laws. the differ to certain future filings in time release actual SEC these expectations under be release The statements reflect matters last to call company’s today, detail in the night. statements, changes company’s earnings forward-looking Factors results During may in to time make securities statements revisions cause and we’ll we and be may actual statements from in the disclosed results differ our

our which on investor that Let year-end presentation XXXX note website. night, last our we me available now filed is

Our they connection as SEC filed Annual to carefully and contain company file information the directors available, investor statement XX. its of to we to in any the the read related in scheduled the connection Shareholders, intends On a of entirety of company company, you The April the in with be useful presentation officers its other another about their the note, may materials proxy with Annual in will from such this related proxy the find all the information reference and XXXX encouraged XXXX executive when participants Meeting. during may and Shareholders Wednesday, proxies Meeting SEC deemed provides materials become certain call. company’s of additional and shareholders solicitation for be statement and strongly that important with they are solicitation may the of company’s with is proxies. which proxy

to call presentation. contained the call periods our occurred and solely that We Meeting, Advisers, for behalf Annual to investor appropriately have they in quarter a John. proposal connection we the three Wintergreen that likely and and shareholder at remarks. request of XXXX and Wintergreen the fourth the as with the we hold those ask of which of results the over Lastly, We collectively will focused our in appreciate a the turn to year our on will upcoming the of during Q&A know, advisor, ensure our of your want ensure With you require our for information of during end as for on call. morning, cooperation nomination have that, year-end as serve request. very I a many interest primary funds the this will to is largest believe received you candidates wishing We which quarter Director the that much on prepared transactions the financial this attendees question is that results, the should Those to to and question your to and back applicable pertain respectfully or shareholder. today

John Albright

for another Mark. fourth us. busy was quarter quarter Thanks, The

a nearly for per During a recently XXX,XXX land sales executed at for prospective potential we the seven the contracts fourth quarter, to contract approximately X,XXX XX representing million, acres $X.X of or proceeds our price of we the addition multi-family of with pipeline, nearly added project of approximately acre. includes of acres million. our This $XX

We RaceTrac Crossing, per which convenience $XX,XXX or was of for acre store holdings, million reflecting acres, acres newly opened acre. $X.X was today, by on of Southeast of Boulevard. Williamson LPGA per at which around have approximately potential more the recently XX the terminated an pipeline Boulevard did represents proceeds one at land buyer, corner Williamson X,XXX remaining of average of as approximately contract the with total than million, our XX% of our So sale that and $XXX the is price

While this this believe we we remain interest the property. the retailers for development from of decided are contract, strong purchaser that to that terminate disappointed

or of So we’re North out Development a had developers options, acre. including interest additional reimbursements acres the included per transaction remaining the nearly at of of This looking that completing XXX,XXX development the new of at Town At price under other portion we Tomoka possibly also the closed at end million, they of infrastructure costs incurred their Center. just representing Group, to a XX over fourth and contract American build approximately number a $X.X from the year, ourselves. in with XXX,XXX the we

to our the for hard fourth they an quarter the The than to close track is in update closing our plan And for be contract their to on now and of their entitlement operating Bucky traffic gone a approval highlight site in contracts, should on to with with expect and the is parcel O’Connor some discussions on studies acre deposit, a site. of Mark Bucky the I’m allow area results. pipeline which later activities going the turn review for acres on us XXX it of on progressing our for there. Capital their development March, Specialty the some has contract X,XXX have working have we XXXX. no city to on seems under near that As Minto of they Grocer contract. portion shortly over with site plan the

the as matters. discuss I our loan our Before as well other portfolio and portfolio, in activities income some property

Mark Patten

would Thanks, momentum if our you over of years help neighborhood. John. activity highlights in the area. past few productive the some appreciate and investment of activities in to development be On breadth land, of economic the we provided the thought sold we’ve our all the for everyone development it We

center distribution is development first built at its ground Tomoka Lobby, more have Sports dates than for announced XX, delivery And XXXX. facility of sale. those Burlington as the December North they Academy as available Minto Ross, And square-foot homes of XXX,XXX BBraun, the inventory. vertical power including Warehouse, of have XXX contracts phase Communities Designer quarter and has as Shoe Ulta by in and Beauty, Latitude quarter it, tenants, Hobby to community, Margaritaville, XXXX. the opened built Dave Town we begun VanTrust, on half second open of The beginning first Center early XXX,XXX master-planned Busters, broken phase as understand being first Factory. occur with Maxx, age-restricted square-foot the XXXX, due approximately approximately American of Coat contracts for TJ and & to The Outdoors, its X,XXX-home retail of by

year In their on XX-plus with acquired rental which most announced luxury recently, American March in Eastwind North apartment in project, addition, us from Development December they of unit last this partnership a construction year. of acres on starts XXX

called their In development residential addition, ICI project into Mosaic. Homes of X,XXX-home the is well

of is growth So midst a level the creation. terms activity our tremendous development in in of both neighborhood job of and

pleased As for John for mentioned, results with were our quarter the our and results full-year. the we

results While morning release provided the guidance operating for will full-year earnings for remarks results, XXXX. on our highlights the this focus quarter our the largely and fourth my

our share full-year strategy revenues, the clearly demonstrate executing and income Our successfully from per income. earnings land of into net converting our results

an by than to over increased revenue increase XXXX. million, of nearly $XX record XX% approximately a company more of $XX for level million Our and revenues our

adjust tax per $X.XX basic or net share, our was million earnings deferred earnings and our net net Included approximately income share respectively. to to per per a million, were resulting rate tax per expense our share income Our to approximately the $X.XX share of federal benefit XX%. liability and down $XX.X and tax new income of our $XX.X

this in our buyout which share, per income the than the million a first and golf quarter, respectively. moment, Excluding net $X.XX further and of land impact earnings back I’ll of on were per non-cash lease adjustment, property the in share discuss more the $XX our

top acquired six well acquisitions we guidance for for proceeds and weighted our a of our X%. land million, rate those midpoint year. after-tax. exchange totaled million, purchase Subsurface of X% an the cap $X.XX for acre of net properties acres, of million, Including land interest of the of in our like-kind above average XX% approximately year, of and of effectively investment highlight $XX.X the during of beginning end total more than Deploying I’ll cap for structure, the first XXXX XXXX acres income guidance $XX.X aggregate or terms the total representing of the quarter, X,XXX sale at back the sales $XX,XXX in per So $XX million, aggregate in our an sold approximately approximately of per resulting at was third sales approximately approximately price the approximately rate approximately the or XXXX range We through our guidance share $XX.X which the of XXXX. and with X.X%, dispositions of to the gains price above monetization in

As acquisitions the in late XXXX million quarter income. $X.X results in a approximately provided in revenues result, $X.X of the our full of and approximately contribution and XXXX from million acquisitions the operating increases in

the I income full-year benefited for rate the the and XXXX tax results new fourth in law, XX%. of tax to As our reduction mentioned, quarter from federal specifically federal XX%

the deferred As primarily structure. have related like-kind the utilizing large on tax our and you liability, deferred net XXXX a sales to land know, we exchange gains

liability. is reduced XX% in net mentioned rate, liabilities result decrease tax per that from a full-year of as I liability And tune a share. the I tax benefit by that as reduced federal approximately As to the we deferred noted net the million, reduced our which earlier, deferred of $XX.X earlier, $X.XX about income

reconversion. and the in you current rate We the profits our of cash by the expanded distributed, where our of wondering, year impact earnings credit facility. that those by estimate strong a generated no the enhanced our tax to federal borrowing available unsecured liquidity we’re in pursue potential operations be substantive would a For the on position, on the change had and capacity finished

related liquidity of nearly cash, including Our of approximately to $XX.X also at of end million $X.X cash included XXXX million the transactions. restricted exchange year our the

our of goals we compares new value, mention XXXX favorably XX% million in facility $XX of becomes acquisition expanded that leverage throughout help of level expanded also the XXXX facility the down leverage to by total the stayed credit achieve borrowing that of pay the under line the our commitment to which level year. total value. accordion enterprise to XX% commitment to a guidance the to utilizing supported after at the our Our base when million, I’ll upon and assets portion restricted advance flat unrestricted enterprise The approximately of will utilizing year-end, just the completion the cash of us transactions relatively relative $XXX is of cash feature.

for fiscal earnings per income and land leverage, last the release for provided Lastly, property our share sales, night guidance dispositions, and acquisitions XXXX.

$X.XX transactions, to tax. You likely guidance is share per share, of the land earnings net other closing upon year are dependant level that for we was approvals, $X.XX of an noticed believe is by governmental dependent control. close earnings estimated heavily the closing those activities, driven of transactions and this per authorities and out will which our the have range This largely of on permits significantly

discuss to our and back closing and it over income turn John I’ll Now, portfolio to portfolio property activities some in comments. loan

John Albright

Thanks, Mark.

more sold principal, IRR of in X.XX% outstanding two balance principal two below Wells both you for We on our which to approximately We for we our loans October, As a our loan we portfolio Wells With loans acquired acquired back as property tenant remaining has $XX activity these XX replacement cap years both and investment were achieved portfolio, property, of loans bought aggregate just Oregon those totaling outside in investments back guidance, two mezzanine our in under office at Portland, which Hillsboro, high-end bases loans, a occupied have a income just investment pleased than with leaves October, the that’s lease costs. combined mature That years. know, loan year-end million par, to slight we of leads approximately those unleveraged million this and eight sold $XX announced Fargo $XX premium at rate to at in acquisition well of term we’re property the to million. single regards this as two with that of in year. Fargo an back in that’s XXXX. and has

side. Beach. opening Grill restaurant in also our & for previously on now property our a foot income square foot are results restaurant square beach Bar XXX These LandShark two X,XXX survival oceanfront parcel they’re Restaurant grand six-acre increased beach the on of properties Daytona nearly two XXXX in the approximately Daytona encouraging open a restaurants We portfolio the with for early and property. new vacant Cocina on provide of The X,XXX beginning January

enthusiastically We local community. have been embraced by the

back perspective corporate we his Carlson we’ll Chris point, governance Haga bring will to continued and commitment as our our perspective importantly, and experience, Board concludes new investment November. Board, questions. company as good Director for final a Chris time, to refresh the and Operator? our company. a knowledge and efforts at of wealth remarks. and open for is in in continuous As welcome welcomed the Capital diverse our prepared to governing a partner up our this a to addition That At fresh our has

Operator

We now Instructions]. [Operator the begin will question-and-answer session.

B. question ahead. first FBR. Riley The go from from comes David Please Corak

David Corak

morning, good guys. Hey,

identified be kind office, assets you’re helpful precise. to color Looking would as at et all, sense the can single disposition maybe seems some you And you the to guidance, Do of what to cetera? then at have give just acquisitions us multi-retail tenant be or there? a pretty looking acquire guidance

John Albright

No. Thanks, David.

– the acquisition low retail more in markets, we’re given on seeing volatility we’re that little the opportunity. side, So bit the

As we’re little past, seeing saw have a opportunity. right But on office on more more we now, discussed opportunity bit we now we side. the balance year in in retail and the of a certainly last we’re retail, the office

we’re of now. in what of us So that’s front seeing kind

be And we’re balanced – now. seeing that side kind hopefully, than more able to try various different acquire at more little so on But so rather retail as of office. retail opportunities, we we a the the of kind on retail have bit looking side can to

of multi-tenanted properties, we some as on the On look focus on single take at side, a we side. tenant sharpen the do our the plan disposition

– – might there say looking not at tenant opportunity to tenant or tenant and single the we’re a into single properties type So perhaps some property multi-tenanted that, property. core back that capital looking be taking that recap that into capital And to sell here the single to move not there more move focus.

the So you could properties. multi-tenanted but that, something see like it’s mainly on

David Corak

terms of kind Okay, are be guys And on leverage enough. in expecting a then of and on fair LTV of those market mentioned what you we acquisitions? You what leverage those, but should thinking? kind target,

John Albright

Yes.

Wells do in in a side, max of more from secured lease. instance, our kind trying we’ll the still line in that secured with like to away lot shy to a a want the Fargo obviously, felt lastly very made leverage for bought sense that we’re there. We But and and So long-term Riley building debt kind utilize keep flexibility. lock of general, and to to we

advance as – that goes leverage we land these events as land And down with of the used we sale. through, know, that deleverage take come So that you was buy these land in to sales in to perhaps of properties then sales. acquisition

lending. looking enterprise still total governor really we’re below secured of So leverage as XX% and rev targeting kind the to do that

David Corak

year, Do we you have is a of fluid? as course kind or debt the more just option the in permanent of that kind of mind through go

John Albright

want to now no CMBS something. on – we that debt Yes, say, to right go put No. we there’s nothing that’s -- want

comes it service took really it had sense. of lots from gives debt time of extraordinarily we portfolio that, us, and if for of there to experience think, transact, this sold we through the our would the had the to that that most comes us in a somebody somebody to line acquire instance, Southern and assumption. wants Having out to and the CMBS get allows property up flexibility California, and the the line assets assume where it we think I long the on makes on us on

and we if limits debt, it nimbleness. encumber the secured flexibility with just So properties our

David Corak

know line? deck. on slide take us of an XX% project that of how Can the an Okay, how thinking are fair but is then I there enough. terms you I And it updated give Winter of the you XXX%? Park occupancy, time see near-term in update you a to that longer-term? asset occupancy But about in you goal do kind

John Albright

Yes. Sure.

point, occupancy, too we by now XXs on in low-XXs and year. been say lease the there been of lot a into be the of that properties LLIs – And thing right this get at the better a monetizing difficult performance the expectation now of to has just it’s asset. in has it with end interest may going the lot the look let’s the negotiations right expected it, because at the percent So and that have we than wouldn’t

opening tenants that, we’ll So low-hanging their of to we’ve the had stores of so of we’ve – on delays have lot of – really the fruit lot their delayed have I in kind try been a tenants side. they the permanent – take open. just stores of because a advantage say been counting that getting in still delays, inundated it’s And will of had we the front have us. had has

more So I leases we we’ll of on timeline. will store Walmart suspect they’ve more done, and their in which indicated have hope that by some then And here that their kind momentum late have openings. We’ll spring, spring, site the tenants starts that’s off. really take

David Corak

And just the that industrial contract, the of per were of three land Okay. realize acre lowest was parcel kind on I we achievable a $XX,XXX per you the maybe but or over was be industrial about flipping bit pricing the under that I to lot? a value then thinking. on Is an was acres maybe thinking industrial you have other to XXX the side, the the below have, put still those? parcels? acre read-through that update $XX,XXX little on Do two How what still should to lot

John Albright

Yes.

is of a that has that a XX%, maybe range little under tremendous the XX% on in different. I parcel. parcel say, So put the property amount would we that property wetlands, of That contract,

acre you sold a parcel smaller still comfortable range, the XXX per that On for saw acres, we instance, $XX,XXX, $XX,XXX in in range. the that we’re

right acre more focusing that parcel now. XXX we’re on So,

users down kind for kind can larger looking acre of of XX it chunks rather X a than We’re or that the of take piece.

about we land and wetland the that was heavily it and project feel that. under that just contract I-X, between was you’re is So just put talking XX good That US composition. still that we about

David Corak

Okay.

substantially So and better lot it? the wetland less is bigger look at

John Albright

Yes, other in I in mean, users there. are roads there’s there, there

So it’s and of the just one-off. other are kind properties more established

David Corak

kind bigger And value been last land Beach kind the cycle, picture right. the you think Daytona kind overall? of – the I then on all peak general. of valuations since recovery has the how in Okay, question mean, the or how prior do of last in in

John Albright

we’re a was acquisition – use, we’re really last our tenant an parcels What and with Even of the least, with discount Yes, at it’s an experienced the leverage. on speculation that users, XX% in it’s developer that be we’re in still, off-peak. is, XX% the peak seeing speculation use, instances seeing and far kind all activity though would or activity interested history, to – are think more land. intended people the interesting. any triangulates had on peak, some company’s not the values more as I whether really the And heavy a land we ever have land intended are of below into as

So of a that’s last kind missing component the peak. from

David Corak

one Okay, bigger fair picture. And then enough. kind me another last of for

company had you company to – do years? mean, the years? be think is two on in two acquired, does what the you if you this Just Assuming like the look towards want see you your this general, company what end highest the what to value? in do you What isn’t of rudders, company do What in I XXXX? be guys

John Albright

Yes.

become something the land sales given – of make having of gone sense decision since that versus single been tenant are dependent and the So point. how that to market it single G&A sense company, single REIT a add we know some REIT the income is larger a on, relevant on sense lease and of land before know and it’s a lot company we our allows of some know not as a strategy geographically for that land makes away certainly make the for makes sense a us net that strategy, we in investments on at space as would and income lot for lot makes for think even we we composition REIT pipeline to that think, net without G&A, side, a you Board but efficient you presentations makes and And us the an in the sense of lease assets most transition, side, to that has us have discussed some disperse that you far the it we’re be – it’s adding so the in into think as that strong too to I it’s it and the able tenant not we’ve property public a made have to on we’ve tenant the category.

David Corak

right. All

Thanks, guys. Okay.

John Albright

Thanks, David.

Operator

Steven The with Please next ahead. Graff go question comes from Wintergreen.

Steven Graff

in Hi, buy quarter I’d being buybacks to in the the for for to just company’s in in thereof lack good explain discuss increase Could the been shares. program? not saw we which able in you the like explanation to has criteria morning. since buyback particular quarter, historically trading or detail volume back company’s the a shareholders the big the

John Albright

sets, as – we the opportunistically volume we not and quarterly said and determines look buy so the at that So it’s as buyback on regarding Board we’ve a program a buyback the Board the a course buyback back is market the the that policy reviews really of we past, of price Board in to just it’s business. particular to that stock volume the and have price something stock are dependent the the obviously

you could words that what as stock above other price went large strong buyback the the Board we look stock we at where in in so get so situation. probably set discounts activity, buyback quarter run the the last determine has can obviously in and really the a So very

Steven Graff

from XX%, realizes shareholder buyback the published that – the company? interested away stock, much back you think you stepping a to understand that have for you you’d you possible in as selling it shows discount doesn’t presents last that a that prevents but this XX% that, see to and looks from night previously seem Yeah, know shares terrible, management it effectively return. type – of then So, it’s in that that have know NAV to just perspective be company and for company’s we the as the share I it a from management buying thank confidence of price your

John Albright

So we million, before of ever stock bought a of last think have the last as and so single very back land $XX in the back, what, permitting and we the are I so the strong, of contingent which $X we’ve four and million before we come sales we’re year is money spend to more years we we so don’t five on know lots year sales in stock in last shy years bank as you it but discussed bought not buying than or done so. so forth over have through and about in the the land like a tempo has have been lot

Steven Graff

build did So the a could in step with particular position aside increased you new that so shareholders volume?

John Albright

I don’t not understand ask do again? sure, that, you to want that I’m

Steven Graff

competing lot was sure, and those that new for a mean the so volume in back did obviously so with positions? you shareholders shareholders Sure, company quarter, I couple a new step there the of weren’t

John Albright

of question. ridiculous That’s kind

Mark Patten

don’t though. It happen way that

Steven Graff

especially didn’t upcoming you in Wintergreen’s you overall Did increase know light proxy so shares battle? an stop of position buying

John Albright

contests make. the proxy seen probably about don’t so year that’s right I shares year, conclusion last So, bought buying we your when so had weren’t think shy what we running you’re for last a back you you’ve we to –

Steven Graff

it and is plenty in unrestricted your there to Okay wanted up looking again, it is had unrestricted it plenty fourth the of the $X you so looks million just room at to cash a have presentation looks quarter? room of stock, in you $X then million like like in like so buyback rather, if looks there wrap

John Albright

in addressed makes answered earlier that I we So for the determinations quarterly know you Board think basically I you. so is, in price buying there we’re completeness it back in the interested on question the that that stock, just I think

Steven Graff

position reduction XX%? we Okay, corporate of on so light the to in – REIT the maybe your reevaluated if in company Has on to over could rate jump the specifically the the its REIT. the tax comments

John Albright

looked REIT company would you still a in our at rate obviously the obviously I we a as make can certain makes to tax zero in a company. sense point regards the at thing in thing a with rate, a lot see So for corporate corporate going so to I zero from great sense that XX% the good strategy it the helps the and be still time is that of is so certainly earnings the, from say, ton, would tax a reduction complete announcements for always think but to

Steven Graff

that’s have shareholders the own to lot on capital a out, well stock. but do pay perspective mean a of that’s worth will you as I it to if the For shareholder’s as look from a tried distributed, shareholders at company, evaluating as we’ve point XX% gains tax the E&P

John Albright

takes valuation lots once you shareholder there a a Yeah be if moment and that we of that. of know we and as so will and time I’m get, to sure vote, get it discussion

Steven Graff

very you much. thank Well,

John Albright

Steven. Thanks

Operator

conference this like turn back remarks. closing over session, for the our Instructions] [Operator any question-and-answer Okay Albright John to I would to concludes

John Albright

for Thank attending very the much call. you

Operator

today’s is you you conference The for disconnect. presentation, now thank concluded, may now attending

CTO Realty Growth (CTO) 8 Feb 182017 Q4 Earnings call transcript