CTO - Earnings call transcript Q2 2021 | CTO Realty Growth, Inc.

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Operator

Good morning, and welcome to the CTO Realty Growth Second Quarter 2021 Operating Results 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] Please note, this event is being recorded. I would now like to turn the conference over to John Albright, President and CEO. ahead. go Please

John Albright

Partridge, Good us operator. quarter and you is thank operating Officer. Thank for morning, the joining Matt me With today conference second Chief CTO for Financial results you, call. everyone, our Realty XXXX Growth’s

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

Matt Partridge

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

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

John Albright

the XX, across XXX by district American Toyota, legacy Capital Salt retailers technology is of acquisition for the One, anchored in in rate Utah mix which We our and national of cap materially of incomes contract, acquired the Thanks, number of Nevada. top very of increasing Matt. Shops offering, guidance joint surrounded extremely sits close well acre landholdings spans food the amenity-driven The Yum regional by and our is most than acquisition, people, that the $XX.X a addition exceeds us average Year-to-date, and Liberty than we at Fortune us the set amenity preferred beverage a within attractive to City, X.X%, driven which the Freeloader. North well-performing our has volume multi-tenanted properties the concentration both the of Brands, out invested rate of by a of the which properties, square Capital including is our operators progress Dallas, our cap Fedex, local recent headquarters brands. putting it of attractive most the acquired or we heart the Texas. year. and is the we at mixed-use broader cities, submarkets We $XXX anticipate is of XXX,XXX high-quality in pricing X-mile than companies, Lake Boeing, Darden quarter tenant [Technical X for first property strong and XX,XXX space. feet in under target we property by Seasons Vegas, have in active land of Mutual and more X,XXX XXX,XXX resulted driven The growing making Dallas, which Grille co-working WeWork’s end has which at the retail cap remaining population accomplish of and makeup to acquisition good received property Texas, square believe million launched of guidance $XXX,XXX. We venture equity second more at is to of initiatives master-planned submarkets one will rate anchored component Starting Las on and the year. properties quarter we’ve and had for beginning excellent late demand portfolio positioned end office initial and the also feet, Plano, it There a our and in population weighted with nearly an a the a with Legacy Texas Difficulty] are household million complementary daytime Pepsi, more

a weighted X combined I $XX of As X.X%. sale price of second million cap earlier, sold properties for quarter a single-tenant mentioned at we rate the during average

am sold we’ve since X.X%. we’ve XX of quarter, at X July, Fort the new Ashford parcels and notable of being rate than From Lane year-to-date, end properties, to a the rate per $XX the a in The combined of Georgia. quarter we’ve Superica negotiating cap we a perspective, Texas; leasing single-tenant pleased X average number work rate momentum Ross for of the actively $X.X of I Atlanta, and end out and weighted through more the made our at sold than single-tenant weighted through additional new the million of average of at cap in sale LOIs center we remaining expirations leases XX average continuing X.X%. the the shopping addressing for Lane. largest Operationally, renewals Following them for progress price dozen being a we a to foot in good of number lease Coast build at million properties. year at XXXX more Worth, various exercise West as half leasing of Albertsons a leases most in of X.X at are say square Ashford back with a $XX with signed our

income million rentable end consisted located in foot square properties feet quarter, comprising of and XX square XX property As markets. of of our the the for XX of portfolio approximately X.X

the of single at Our of result a leasing and activity selling transitional yet in closer portfolio us announced tenant portfolio of not to our taking end. being is recently was with our our stage. occupied space occupied, lease leased the the assets the last a XXX% account quarter change occupying quarter, XX% tenant XX% really into therefore, as occupied quarter lease the is in end function from the occupancy more yet that When And not of space. is

benefiting to which notable are excellent emphasis forecasted faster-growing in from located business-friendly We growth. are an put supply-demand markets continue states exhibit dynamics that population on and to

Texas, to trends. Our largest Georgia Florida, on are markets now projected these long-term capitalize Arizona, and

markets. Institute’s over quarter the million X Urban XX% XX people, with of of nearly located MSAs top come rents portfolio are from the As XX% end, in and our a Land

make interest. $X.X In sold activity, subsurface almost and acres we legacy to quarter, interest, XX,XXX bringing acres income non-income subsurface total subsurface million. of property to interest the addition year-to-date strides to sales or producing our monetizing X,XXX In landholdings we our our continue portfolio in

also sold parcel to downtown $X.XX land our $X.X Beach Beach and million, contract site for million. we Daytona a sell owned for We in are development wholly under Daytona

course, the diligence. to activity All of announced the venture. is in agreement is previously The our JV the of joint addition in of land this to in assets currently contract sell purchaser remaining due land

process this the point, during call update providing to call. So, third Matt. I’ll to at that, our turn anticipate now the With earnings quarter we an over

Matt Partridge

$XX the contractual collecting top million of strong In the were Thanks, by capital growth did our rents. we total John. start line, by the XXX% results the revenues in collection million. quarter for estate increases of base associated $XXX,XXX increased operations raising Total benefit experience and revenue year-to-date, X.X% continued of vacant to rent quarter the increases largely XX.X% the as instances, to both with sales. XXXX in real We subsurface activities. we moderate with recognize second our associated previously with driven increased second mentioned Beginning quarter, their land revenues third to and $XX.X of full

disposition the revenues from recent timing largely property the gains of proceeds. flat are by year-over-year subsequent revenue redeployment Additionally, offset acquisitions between being were income dispositions and because quarter in

late acceleration a that in the of be income Shops will the acquisition occurred second as meaningful revenues there our the realized at we quarter. property revenue Legacy from in However, benefits

assumed debt were $X.XX occurred in from with of previously our impacted of $X.XX funds the loss asset to or deferrals For extinguishment quarter that were adjusted in CMBS or by our on from $X.X the the agreements. write-off XXXX, $XXX,XXX FFO quarter. deferred the of $X.XX share Conversely, related deferral funds from Alpine fees were previously AFFO second repayments was the million loan share. onetime part second The and share as quarter impacted by required operations positively of by of rent related item sales. per of approximately funds $X.X by mentioned was financing the results operations impacted per the mentioned million approximately per operations to This

are by and comparisons $XX,XXX to represented the REIT each the of fourth existing second anticipated quarter XXXX approximately as obligations that be The of distribution third repayment materially of forward, issued to year-over-year in our conversion XXXX. per reiterate shares impacted million X.X I’ll that of to height related scheduled the company’s December going special quarters. payments our and in everyone the share the occurred the part are also of

previously second on the paid announced, quarter on $X of As shareholders share per a company regular to dividend June June XX. of cash record XX

company’s year-over-year when approximately increase dividend second the and to dividend quarter compared yield quarter is an Our XXXX second annualized X.X%. cash a represents XXX% cash

Our AFFO per quarterly a XX% XXXX cash of of dividend share. ratio payout represents QX

quarters future of practice the the As XXXX is for respective we and release, of of its the yesterday’s noted quarter. company the third in press dividend second month quarter their revising in

balance ended for the value face the of Net option approximately million capital with bought outstanding our reducing total Turning million In We of we total end May, value our million. approximately on term June, convertible restricted at to $XX In $XXX,XXX to the debt notes $XX.X was and this of debt quarter $XX.X million. existing proceeds. of long-term exercised and our we sheet. quarter markets accordion notes, XXXX loan of total enterprise to cash additional activities convertible cash an and outstanding XX%. back $XXX

closing to quarter offering we of preferred by year. guidance perpetual our million of midpoint activity midpoint we the offering, offering the and increasing disposition our AFFO of volume value our is acquisition range basis John of finally, note, up-size And debt increased and XXXX account the occurring recent and $XX.X July increasing our of to by the Today, anticipated range increased the did per earlier, approximately of As back Of the year-to-date yesterday, inaugural acquisitions share referenced at midpoint basis We cap from the in our cash capital points. expected disposition XXX X. influx our half did rates cap going by in the taking XX A an guidance the XX%. decreased with and with XX update our account volume and a of enterprise for the sales the our price we disposition rate performance asset net points. $XXX by into midpoint our million and our preferred anticipated midpoint the coupon increased Series on during

previously the activity the our FFO account AFFO our other better properties, time. fees per for net onetime to investment increasing midpoint external noted also spreads midpoint items, $X.XX we from payments $X.XX extinguishment better for per dividend in in on and reduced our account increased to income management and and We share investment investment in debt of to to share growth

future the for any proceeds current Our and I’ll outside dispositions the well timing by influenced updated now performance heavily With to and prospective into call our equity not be redeployment of include guidance acquisitions turn over tenants. that, additional as could does as John. of of subsequent assumptions it back the the and

John Albright

earnings we’ll our evolution. in benefits thank Matt. we for open year, investors net support. only questions. realize revised to us very prospects anticipating also are our we Alpine XXXX and for up In and investment company activity about represents of and all date Operator? beyond overall to projecting and for with What the for With of not full are activity partners meaningfully the growth and grow Thanks, continued are with closing, that, our XXXX pleased their as excited our of balance to we what the of we’re I improved want it we positions guidance. but growth our the

Operator

first Our Stevenson comes question [Operator from Instructions] Janney. today with Rob

Rob Stevenson

And to talk of million that already acquisitions of looking days? you the can of these half do in in looking assets you year. here? there back what you what $XXX these you’re or characterize under fully of expecting million Do -- guidance of lease sort $XXX new some you we contract? up? John, is are have terms essentially occupied the at of be about types are is some should What How the at

John Albright

we so are we’ve we we’re a we come of up a And didn’t this up properties. been So just good, I that, there’s chasing final, on bid there quality isn’t twofold; the being market is guidance to actually assets this it, quality higher seeing because properties, it’s out week are pretty we -- rich can breeding just environment. that make excited but it, fall but is the on some lot target we about more the to property teed one, which reason in win best and say didn’t capital that is

is, So way we lease-up the it we of a little to bought love, Legacy obviously, think bit with that opportunity. of

other are we acquisition guidance our really The that’s markets dispositions. that thing on. selling some And capital So vacancy can would capitalize there’s then the acquisitions that some be upside very assets. favorable the on sort really favorite of the on for is that driving

single-tenant the looking we’re so good. office And is at billings and candidates very good our pricing as

of kind that’s we’re what So doing.

Rob Stevenson

land deal the with that not to does then correct? And the sell subsurface anything include rights, holdings, the remaining is that

John Albright

Correct.

Rob Stevenson

go the the that? How next a current that? we be Does of monetization that further What’s some that years? X stay year, away thinking X.X thinking the for at while? Is that? point should the for about in Does for out plan

John Albright

As you’ve been seen at in our whittling it. announcement, we’ve away

and plan give we’ve get the subsurface rights always that going and -- selling months. going can we opportunity you owners on soon a their as pretty to our the service well, So, been underneath as of offering as the subsurface but price, to see. their XX lot that’s buy can yes, right land and But we been

Rob Stevenson

progress Matt construction balance is And in the the sheet? on what

Matt Partridge

that Hall right that third at So, Lane is notably a other commence mostly here the some at lot tenants, process. in that Food got we’ve for tenants also to later projects quarter. of in But build different are centers with Ashford other going out

Rob Stevenson

a XX.XX source up using into mean, funding. John, extent the the standpoint range what dispositions you of as is pushed on well a do perspective. you replacement of And some to don’t, exceeding acquisitions lining the last as reason, top get if doing a that the would the or you for even and get closing end for guys that up XXXX, one dispositions guidance pushed from reliant from wind then one the dispositions on acquisitions me. NOI remaining I

John Albright

move would that match right to comfortable feeling with fair the offices the -- that’s if the some a very opportunity I reason say that acquisition won’t without there up there’s that aren’t and candidates for at that. acquisition we pricing good

Operator

Michael Gorman comes BTIG. Our next from question with

Michael Gorman

a John, back minute. for to just if go could I the acquisitions

to And of strip center or things kind assets given potential? there’s and some this the lease-up more wondering, where seeing value you bringing commentary one favorite some heard of to around hesitancy like sell there velocity when because what lease-up about some that. types I’m your obviously, the attributed the for market they more mentioned, you the from is to owners did is are opportunity. asking You for growth Are that vacancy there, Legacy of of at we’ve that more vacancy certainty just operators of leasing they’re just kind quarter

John Albright

are and a of lot are prepared assets attempted coming It’s So, transactions hearing has this take COVID of that not like we didn’t that not pricing. the fall that were what to pre-COVID pricing going getting to the is we’re market the seeing that get to really people they’re after but discount they the the were around. feel pre-COVID, gone to kind came they take when back summer

another chance exit. I like So, feel is this at an

up they you’re And so of again. of had with seeing risk and think that doors lined assets and COVID kind going to happen, what now is it the not to sell to they’re kind rushing that’s I people pre-COVID

to there’s the What And to deciding the can lease-up, leasing market little if then it. some if so are is there, they come to seeing they longer a do regards the get to expect so paid seller wait with don’t assets, -- we some property vacancy. vacancy is and for with

for asking by value if is they’re assume now. but of them for for vacancy, it they give buyer has not you going that. got -- a a haven’t to value lease because So can a that How

Michael Gorman

there was during doing transaction quarter. with Obviously, then OP an on structure just side. capital some the with And the pine, success unit

potential are in units you OP be tool to equity the potential for as think capital here value future especially a acquisitions higher, CTO, about Just structure going moves if well? the the curious as

John Albright

equity have Yes. of an We structure And we issuing don’t at wouldn’t so OP yet, these not. definitely unit at prices. type CTO be

So properties. luckily, through still land subsurface single-tenant internal have capital we -- the the can re-monetizing we through through sale sale,

rely we on to really company. grow to the capital. I don’t look, we But So need want outside mean,

options. So better, we’ll pricing when look equity the is at of the those

Michael Gorman

kind their And and the parcels, that’s what mean these step. on question -- here diligence gone land the But of selling through then having land side? that Are on the I or they land the of of in involved due just zoning looking looking level so one buyers they and what diligence in certainty at or process? due kind Obviously, what’s sale. improvement of the potential? last the at Are rights next what’s kind

John Albright

properties. Engaging engineers, planning Right developments parcel. architects developing actually they look how the now, on they’re would into at civil the on deep

been with appropriately a there’s zoned talking spending talking So with lot Everything’s uses. time rezoning developers. they’re for of And the different no risk. brokers, consultants,

And the of really cost of land and utilities a of of better market nothing kind what any roads and putting is that thing, to the development and the to issues all getting for just feel zoning entitlement. regards so or and they’re and better kind with but subject the

Operator

Our Instructions] Riley. question next Kucera B. comes with Craig from [Operator

Craig Kucera

land to follow-up on wanted the JV I sale.

$XX balance. another a I million. to to think about Is got million on do we any contract basis? tied receive The partner that? net has there expect taxes has, that? for how should And $XX-plus You’ve think, you What

Matt Partridge

This around expect held taxable is REIT in receive before $XX we subsidiary. So, million somewhere a to taxes.

maneuver of potential of depending get kind the the on I to result have $XX being be, we taxable think that million a more going REIT. work worst So up that think basis, than in I a But side it’s on the how things. as we to through considerations maybe TRS. that of there’s to some net nets case, it we to But the have tax

Craig Kucera

contract. thinking under Is close? And million when mentioned might the And had you are of in you kind I that what that parcel know that guidance? $X Daytona you

John Albright

year. in of close but it the by the not would guidance, end That’s

Craig Kucera

preferred guidance -- And Can how your and changing think just but you’re you acquiring like stack? million. do about the that $XX you’re now preferred million selling I issued you about in that you’re it thinking to the have talk we $XXX about million capital $XX thinking looks you more, leverage

Matt Partridge

coverage debt got basis. from leverage perspective, forma we’ve think a the preferred I service perspective, a new coverage So, pro a from with strong on even

leverage that So, but preferred the I look about capital. to at feel where perpetual common, good as the it pretty is we stands.

that So, equity has it certainly quality.

the so hopefully leverage And back year to the about. move in the of think talked as have some we room in half identify I opportunities we backup like John market

we’ll over the and between obviously, I but run, around, run debt-to-EBITDA long Xx will timing. Xx So, on probably it net depending somewhere think that move

We’re at to the net today. value total low debt XX% end right now at enterprise

Operator

concludes closing This any I’d back our John question-and-answer to to session. remarks. turn over like call for Albright the

John Albright

Thank attending of and you. talking days. the much you next couple in the call, forward to you very for look to Thank

Operator

conference Thank today’s now concluded. for presentation. The you has attending

You may now disconnect.

CTO Realty Growth (CTO) 30 Jul 212021 Q2 Earnings call transcript