CTO - Earnings call transcript Q3 2020 | CTO Realty Growth, Inc.

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Operator

Good morning, everyone, and welcome to the CTO Realty Growth Q3 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] We also note today's event is being recorded. At this time, I'd like to turn the conference call over to John Albright. ahead. go Please

John Albright

have Good to us operator. quarter and you this pleased thank operating Financial new Thank joining team. Officer for morning, the joining me to am I today conference Matt, third Partridge, CTO for our results Chief welcome you, morning. call. everyone, Matt the Realty XXXX Growth

Matt? Matt customary disclosures the we I'll Before provide begin, turn to it today's over call. to regarding

Matt Partridge

considered forward-looking John. may no like are our remind comments The that law. everyone differ the the SEC filings. actual matters results of to under I'd Form from discussed to that time forward-looking other many statements company's undertake these in differ company's Thanks, to we from risks XX-Q future in securities federal and these today are and actual could and results detail statements, significantly greater Form disclosed duty time cause XX-K, in statements. materially update Factors to from expectations

reports our release to call You can I'll With and the earnings website find on at back John. turn over that, ctorealtygrowth.com. SEC our our

John Albright

considered are of next of CTO, phase we majority of next the approved beneficial income productive working the We Directors announced to our including quarter towards into Board now of us the producing. an July, pursuit investment conversion progress that making extremely REIT REIT our particularly our the In the shareholders number company's which third a milestones board Matt. Thanks, a continued as evolution. step we company, a to that will propel that a conversion, assets our with of key our had and accomplished for we of strategy cement the for

meeting us limitations apply conversion, X, a special reincorporate of ownership on stock. allow in approve to wholly-owned and will merger subsidiary and we have a to standard transfer to the REIT our are scheduled this a with November Maryland ensure part that to As shareholder restrictions

and to undistributed be our required prior We ensure of a our will distribution will will detail special dependable we this are remarks. related know more from I distributed meeting, But the $XX mechanics say for about as $XX forward part profits special estimate record outcome at I an explain and of Following the million. a declare this increased, and to later the million CTO previously and the shareholders Matt earnings we one-time distribution periods. transition be dividend the to delivering that have REIT prepared between aggregate amount in speak positive to we taxable to of look pay everyone here that in when excited cash I conversion.

acquisitions. to As property the quarter, we we am income happy fronts, income turn active land property sales venture, transactions sales in on and from very our report I all joint land to were including

allows million producing The or of venture Within This the for once properties. inception-to-date joint third million. totaled upside producing fully X,XXX acres into approximately partner quarter, acres our land remaining future now of $XX the we number million our account brings allowed land of assets $XX.X million. long-term joint additional to portfolio the two-thirds us $XX representing X,XXX million, land, in joint the estimate to to joint non-income give reallocate reinvest significant to million our $XX venture and and a which sold and it between $XX anticipated an from of complete, and capital million CTO sales to and will We liquidity value approximately their range income $XXX has shareholders. venture of $XX land a make monetization partner, venture capital the has us our remaining brings distributions for

in-state and The to to related the million. committing buyers sales XXX all the assets that process. resources which developers, acres approximately includes of pipeline potential out-of-state totaled land include of transaction $XX.X and remaining current Our meaningful acres of are X,XXX time these

we pursued of average properties basis include have venture the X.X%. have joint quarter both rate at also and million sold all land accretive reinvestment in These million three in two and have weighted cap to at third a growing Austin for and to properties volume purchased of our very Year-to-date, These properties of activity a addition sales resulted high In of earnings Carrabba's in a replacement of acquisition our sales, we of combined With disposed $XX.X in we identified October, opportunities release we were inclusive Italian a third of the PDQ Jacksonville, Grill Jacksonville. quarter, rate that in Wawa disposition assets sold in we estimated of investments X.X%. two attractive worth to-date, in relative our a cap quality rates that cap in Florida cost. markets. a disposition blended $XX actively the

is recently extended purchased property Company. property Ford the and of XXX,XXX-square-foot single-tenant Tampa at X.X% lease The was an first was March The through in-place in yield. leased Credit Motor purchased office investment XXXX, building to

for Miami national outside purchased credit-grade with property other in including property lease income underlying number the in retail and grocery-anchored is from a developer property Discount. The tenants, is leased a the master coming The of Hialeah. Ross retail Less of quarter Aldi, just to Dd Dress a

million of in going-in as a weighted third of of approximately states. feet two And investment, we XX of on of properties four end effectively average in payments. rate lease $XXX risk-adjusted the for the approximately of this given With quarter, million at have we X.X space properties credit of consisted X.X%. a place lease the our terrific located the feel acquired top portfolio supporting leases, have layers Year-to-date, square that of tenant cap our we rentable XX is master comprised

the a groundwork portfolio to asset brand name we some is mix. community and going we reposition retail build to redesign The terrific begun we ability this existing allow and When been to largest purchased tenant the to asset unlock of more As earlier spaces the stronger Ashford year, Atlanta to reinvestment Lane. value complementary we've more public rebranding through IPO identified acquire meaningful we've through us property and the XX,XXX have is from proceeds, the regional by Mercedes estate incremental and asset that North land Place we repositioning headquarters. is located, shadow feet particularly sales, of American lease-up, within continued with able have laying nearly where believe real we In tenant campus to Perimeter Farm's rebranding Alpine vacancy our and the proximity anchored upside, expansion. our State future given where is Target square close for to Benz disposition engagement,

seize design new XX,XXX-square-foot lease we're initiated announce, by the a We opportunity will food work premier make a serve. to hall and that on overall bring rebranding our with that support outdoor to the indoor and destination a food in excited have design and for concept signing tenants and our public upside new plan center the So will conceptualized, late the and we level operator with the XXXX dining hall. the on believe restaurants spaces excitement property to it of started a hall we've to their and the food bring they to for will the the enhancement surrounding vibrancy community

vacancy we're incremental leasing encouraging. activity still multi-tenanted early is but working see opportunities. shop stages, in to in some The where begun small we've to properties activity other it capitalize on Additionally, our is

the double-digit entered to with a completed be assets, expansion piece will we we Beach, to to in on operations value close Once their into a onto adjacent anticipate land. existing creative within yield for ways As unlock of rent project amendment commence, lease Crabby's we have cost. Daytona beach expand look and the on the

regarding remains operational While I've recognize we're its underlying performance highlighted on and existing encouraged the by we uncertainty impact the our perspective progress tenants. do economy of today, the

XX% we pleased very of outstanding contractual substantial rents XX-Hour with just rental portion of to I'm which for our preceding being resolved we of base related October, a have for Fitness However, to by have outside income the Washington, positively hope our year-end. D.C., to say months received our

results returns. be and markets, when estate targeted exhibit growth we that retail fundamentals, add emphasis we outside initial exhibit above flow-driven as population balance are or be that to are states estate and approach conversion, job REIT believe strong to on long-term to XXXX financial where markets potential activities. meaningful value our with real towards base properties refined leasing with execute well-positioned to We capability returns. now in targeting bringing diversified growth repositioning will on office real Finally, allow assets over to our on With Matt that, see our sheet us strategy. the look average a investment climates. value believe we creating upside combined highly add our discuss We'll stable on call with risk-adjusted asset with turn focused We'll and favorable deliver we cash to I'll business

Matt Partridge

to solid quarter, third contractual I'll the or quarter, The of rent an subsequent nearly XXXX. of the revenues to income assets of end report million. quarter were through John. remind rent producing rent. non-income the base during the in reinvestments agreed the sale the over payment includes collecting and Thanks, average everyone the Year-to-date third company abatements the the rate results million more during represents month the for company due total collection allowed XX% of each efforts, are the to total $XX.X quarter revenues deferrals into increase collection experienced rent of the third a that prior to producing These that $XX.X collection of XX% XX% and XX% respective contractually company for up than rents of properties combined with quarter, rent third third date. effects

management of Property is administrative considering management additional the $X.X coming quarter, were these management included excellent company revenue general year-over-year flat For from to outstanding and for October, notable and company's by conversion. the $XXX,XXX Trust. in large year-over-year, quarter making the further XX%, Income and to totaled representing administrative company's progress in managing expenses, economies CTO's with fee Alpine million resolve quarter scale expenses million, a and the nearly highlighted, to point, When with are when G&A more business. non-recurring fee when before general the are an by these company than expenses tenants $X.X expenses for of portion profitability this year-end. reduced administrative General the and are one-time To its the the declined is the adjusted REIT as remove encouraged which we balances third we related John to our costs expect now of of the which related Alpine company's

a is third the Alpine of Alpine non-cash, reported change CTO the will loss a non-cash unrealized largest the investment company Please difference the gains $X.XX the for reported share of and net based being company's stock quarter the with drivers from in third of investment the the that per For year-over-year share. price. XXXX, the in of quarter quarter disposition. to note quarter of on $X.XX on in of and per XXXX, net impact the loss income from item change Alpine's mark-to-market fluctuate the on in Comparatively,

While reporting, their respective fourth any quarter including way from income. company and and reporting GAAP not or adjusted most consistently net year-end beginning the non-GAAP do AFFO REITs the in providing do REIT operations from does industry operations or release, with with reported to funds FFO reconciliations measures report funds of more the earnings we anticipate standards earnings

as declared providing in As and August has XX. $X.XX close to establishing consistent forward-looking to shareholders XXXX, that approved November of $X be increase the a CTO and XXth should a dividend is XXX% dividend The closing November cash dividend any of this in In company's policy XX, of our XX, an includes anticipates and the to dividend of This the August on be quarterly declared previous XXXX, our stock shareholders will and is company's has over regular a divided that cash consecutive annual price quarter taken of previously announced, conversion when Board business reliable an in paid X.X% to on part quarterly dividend. paid dividend consideration a annualized has October This paid third paid company company conversion. yield conversion, special cash which the based XX, of as company XX. Directors per and the board noted approach year company's XXXX. our on row fourth dividend has the quarter be approximately record on record REIT a REIT that to represents cash the It dividend addition is that the CTO's of the of on share a shareholders. on

held one-time $XX.XX would be elect the the of and share record When October with regular be total meeting distribution John connection portion this As with of as on XX. meet special the estimated special special Immediately with taxable shareholder the distribution mentioned, a distribution meeting REIT REIT combination of our an $X increased the John to assuming that will Based CTO's anticipate price event, October connection November paid on stock REIT period million will one-time per distribution. meeting, be forward per QX record conversion cash merger between to in cash between declare special to with a XXXX. aggregate will, These as less be in previously XX.X% and move dividends yield range will in would shareholders conversion, stated recently special we stock to shareholders one-time the the for holding anticipate XX% shareholders profits connection also the determined $XX of be the ended represent on XX.X% the special share following This date XX. will conversion. closing in merger cash the for and of we and $XX.XX special no for the be and combined special based distribution set shareohlders its of and We vote prior to and $XX in X, million, in XXXX. paid board QX of on the that distribution It distribution the or earnings cash to will up estimated than XX, stock on will the through distribution is dividend XXXX special undistributed the special date. a date. to of the payment declared record with on December

end total debt was sheet, Finally, back of value when debt XX%. cash million restrict was cash enterprise total and I'll at September total With Net John. and balance over as XX, to approximately million. looking turn to the was $X.X quarter long-term equivalents outstanding to call that, cash, the $XXX.X

John Albright

of Matt. a this team open our we'll to to their Thanks, for I it thank questions. up want I continued partners for want all investors congratulations time, At and support. And our to quarter. Operator? say now on great

Operator

Please first Janney. Instructions] go [Operator question from Stevenson comes with today Rob Our from ahead question. your

Rob Stevenson

just near options? post-REIT preferred John, guys. insight maybe you in dispositions via next with thinking give Is in stock as you the to about guys about are Good XXs, you morning, the how batch the some about low the thinking funding how of term, acquisitions? Other are Can doing us thinking it conversion? that?

John Albright

Yes. Sure. Thanks, Rob.

year look, mean, this the of our almost did So I we same amount cap. acquisitions market as

that I we So see a of will on multi-tenanted properties front-loaded be time. can lot single-tenant properties lineup like properties, be, our into of as you over feel there'll we they'll recirculate But basically acquisitions.

brokers expect kind And in of of around to off do see to to be second of quarter, opportunities we'd so people we and first next sales hold say sell are lot quarter, investment BOVs in that kind deciding would would the until doing again, talking a the a lot I more that actually country, first year to quarter, After morph the where second more property. where quarter. active they're

be good timing So for should us.

most of be capital So the recirculating will base. just it

Rob Stevenson

willing close Okay. to And with there? the did assets, would pay? market to pricing essentially them the into mean, Alpine of are versus of have any then some Alpine? how the in with how of been single-tenant been I what negotiations has sort And come Alpine going

John Albright

Yes.

that will time CTO Alpine like want that Alpine's at are to Alpine, that way there'll be have CVS things by passes that given of So next some too year. cap the guidance. and There purchase first assets low Wawa we most that enough quarter of a rate at the ones likely and like were for

our So at time passed and had by the for XXXX needs CTO.

target So the were we cap but at will very Pine, we've the there sold for year this some ones are last in CTO think, that that Alpine. rates way below fit nicely,

Rob Stevenson

expect any to vote forward the go time does shareholder the look as and actual then Okay. benchmarks for major of on completing as other the sort you goes sort REIT REIT disgorgement like payment, assuming you the X, what conversion. November of frame And the conversion

Matt Partridge

the Rob, of Board with the set be payment as vote and that, Matt. that, date. on assuming to Hey after then meet payment for as both the E&P the timing and directly The X, it’s will will it goes the Directors well associated shareholder date record through, the

it'll So following be set vote. the

Rob Stevenson

does by to is XX? it doing just be than there to sooner rather And need later? any Or done benefits, December drawbacks, basically that

Matt Partridge

I can't there's in on that now we're right or to we speak whether is want procedural But following the and line say. to can everything we've Obviously, we can drawbacks, and time say filed. what we limited somewhat say that that outlined. the SX benefits we're

Rob Stevenson

one or that think to here, point me, Okay. And XXXX, and of down need afford like as some as The pay what at at this is what point to pay? to is adjustment a increase conversation? likely and Like can you a dividend sort this versus much just CTO REIT there's to last then what your is you to and just be what one triangulation of would assuming out for how need ratcheting another in basically guess best guess best they'll pay Matt. upward REIT a this this is

Matt Partridge

Yes.

for to dividend providing pay and is The mission annualized QX $X we part our dividend, as is the the the big a of what So a that line returns as dividend company. REIT. $X a with more shareholder declared we in via expect

will. and And the we will as talked further, into so to recycles we if and as board evaluate quarter-by-quarter, John need divided the about, capital, the grows it company grow

Rob Stevenson

it. Appreciate guys. thanks right, All Okay.

John Albright

Thank you.

Matt Partridge

Thanks.

Operator

from with Please Our your Instructions] Craig next [Operator go from question ahead question. Securities. Kucera Riley comes

Craig Kucera

with want quarter. real guys. items morning about estate operations I talk to good line your Thanks,

that quarter. some credits first be that large some you I this happened in quarter? sold had were that you quarter expensed on to color what's led the Can give think fairly us a had that mitigation to loss in

Matt Partridge

Yes.

the joint put Craig, have, venture of back So, that quarter. mitigation we each to ability credits those our joint to some partner has venture the us

of expense those some as this did held we credits so to the an And sheet on back put they're asset. balance us and quarter

Craig Kucera

Okay.

sort we basis doesn't recurring a for that, of going one-off that, that's nature sort forward? like I a event recurring more sound when of you, that's be about is think it of to going guess So on the

John Albright

on a balance of some It's selling these contributed actually for sale we in when like on estate earlier land just mentioned, be the side, have transactions going kind basically some basically land credits developers. you one-off we'll land because to be But sheet, them of of of did for most have our we Most basis, likely forward cash developers cases, real a we the land in year, cash. the the the as higher the from and though, the and buying will have it's on parcels. credits complications us we

Craig Kucera

And know said thoughts to it. acquisition forward. office in have rest point? be you know mostly I latest or office also for the I towards side kind you're Got year-to-date. retail of I guidance at here Okay. tilting this of that are the the your going quarter, active, But unchanged. was you building the certainly you on but mix retail did year, guess going in by third the not done Tampa

John Albright

Miami, credit been lot acquisition both equal as in open what far opportunity on paying more really are. I the last opportunities liked that would see think But us we the a best center because we're the plus to where seeing sides. have has Also as I interesting developer and grocery-anchored, segments we to lens grocery-anchored obviously risk-adjusted I keep an Yes. a retail we've rent. seen. it both mean, a say we us

kind love of we So situations. those

but say, So office. in more we're in we're lens open, keeping retail seeing the I'd the general, than side

Craig Kucera

market, or point for just thinking relative a that Do correct? be And of fairly be circling know a to to reaffirmed there quarters. it. new know I you Fitness, to to it's are XX-Hour Got it's I back tenant? going low rent that you at been that's out expect this couple

John Albright

Yes.

for expect in top-performing for nation. gyms to that sure. retain important them. We their It's site of It's one them very the

expect to we So that. them fully retain

Craig Kucera

that it. do some have expect or of Atlanta. of to of recycling for Got you're to example, there At any additional circling to And performing Place, just are repositioning you well? back in tenants you need sort there Perimeter rebranding the place do pretty the in and going tenants

John Albright

some struggles even kind recycling there. mean I I time of that one are of over center – in the have which key and but, of the a able pre-pandemic out the pandemic, tenants transitioning they satisfaction, basically in them. is willingness the we're – keep to Yes. will all out the that operating tenant been we'll very we say some tenancy locations of to be would the the because of of has and thought to to our that it's important smaller upgrade and be thought stay center because shown the we strength

that there. So going the opportunities your tenants fill the and should type be to spots us being some vibrancy. more to are in energy really going to will a the lot and for the question, to drive bring hall with of in to add help to some food lease that's of center executed, of And answer retenant current there

Craig Kucera

And for me. Got one just more it.

that that think board and can regard? I least TBD? goes, be dividend from Do special the it XX% cash, as going thinking far XX% have may Or sense said in know is at a out range you've still you to it's where XX%. come is As to that the I of

Matt Partridge

It's on until still it vote. can't really special TBD and we the comment after

Craig Kucera

Thanks Okay. guys.

John Albright

you. Thank

Matt Partridge

Craig. Thanks,

Operator

with Ladies turn like back for today's we'll over I'd remarks. question-and-answer Albright closing to call conference and the gentlemen, any that, to John session. conclude

John Albright

to talking you forward you we Thank call, with attending the and for look soon.

Operator

today's thank with conclude We today's call. gentlemen, you we'll attending do for that, presentation. and conference Ladies

disconnect You your may now lines.

CTO Realty Growth (CTO) 31 Oct 202020 Q3 Earnings call transcript