CTO - Earnings call transcript Q4 2021 | CTO Realty Growth, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the CTO Realty Growth Fourth Quarter and Year-end 2021 Earnings Call. [Operator Instructions] I'd now like to hand the conference over to Matt Partridge, Chief Financial Officer.

Matt Partridge

Good morning, everyone, and thank you for joining us today for the CTO Realty Growth, Fourth Quarter and Year-end 2021 Operating Results Conference Call. With me is our CEO and President, John Albright.

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

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

John Albright

from markets, Thanks, of desirable number our remaining the The as in a highly portfolio of dispositions single-tenant leasing land and spanned opportunistic mixed-use the sale completes grocery-anchored, Matt. the investment landowning REIT, refining on final full strong executing out and joint progress retail-focused of traditional the our exit retail over tremendous In XXX our in our the and venture. monetization strategy, business, acquisitions years. first a Land we with year which assets closed made activity, year our

fourth fourth the into generated we acquiring combination proceeds as November. I'm activities activities, of As third XXXX redeployed and nearly those property outsized organic and of growth new completed portfolio our high-quality activities positioned we to had our recent quarter on million we've we a from advances CTO we have with dispositions loan and pleased down through in drive have AFFO Drilling acquisition in and further on $XXX the of impact reflect opportunities. improve our we the the our term record quarter, a external future, we very to quarter more the made and how

million including Dallas, in in most Fe, and are Atlanta, United For States, Las Vegas, some of the yield submarkets The City, X.X%. acquisitions Raleigh, and strong the we the in-demand nearly initial cities located X Salt Lake of assets of $XXX acquired year, of Santa Orlando.

growth future X% repositioning estate flows provide yield. continue residual to robust population stable Some property strong, of our leasing growth environments. attractive real In in-place to all and operating of benefit expect some value through flows, a opportunities the dividend cash drive to from our acquisitions these cash instances, we their demand, will in support business-friendly market's

on than rate and disposition with cap quarter Ashford made reflecting more progress portfolio. cap our in our acquisition incremental we've XX than average leased in occupancy XX% XX%, weighted On weighted occupancy million. properties generating $XXX for cap X%, than of front, $XX in spread more were XX exit gain points was the average sold The Operationally, Lane of nearly and which significant the our net we we of and of a single-tenant total basis representing of million the executing XXXX, between number properties in disposition rate disposition sale economic volume at weighted a investment our on more average plan gains rate. assets combined across our ended a of of XXX repositioning the

or be construction beginning in more the During same-store in significant on Lane per more early at we're more XXXX, where an leases signed rents the to our and to to foot. in to are realize is metrics fourth rates demonstrating growth during expiring forward square Atlanta, quarter. expect and rent our Of and in at higher our NOI renewals no for we per options. of these experienced contractual foot going completed impact the ability our were Ashford late new comparable square reporting of new we remaining which summer. new be leases currently first gains the quarter, average looking quarter, we extensions leases when have the the than than Most under lawn, we $XX on lease The portfolio traditional XX% XXXX retail spring leasing

Brown to at Lane Grana [indiscernible] retail Bag Sweetgreen, properties Seafood, cream, Just Superica, hall, into the foot were ice property driving doors dining all destination [indiscernible] business of for juice a the XXXX, Ashford bar, Jeni's alone and scheduled for opened increased have their transforming in the other in traffic tenants.

use. will efforts mixed over the to retail our remaining drive we now about continue we'll focus opportunities. as I'll and our and that, to on portfolio on and acquisition properties well-located upcoming our shift think the efforts turn year, Matt. office high-quality, retail we The mixed-use our disposition to With acquisition concentrate selling back As activity completing call

Matt Partridge

Thanks, John.

markets. noted, John significant year for million financial progress executed and portfolio. the we CTO with of properties We an the made was square transformation feet and strides As of as and XXXX comprised ended XX operational XX our excellent of located rentable on X.X in year space approximately XX of

Sprouts-anchored is we have of top Jacksonville, just all Raleigh, experiencing down road constructed catalysts multiyear a trends of are other include where acquired growth. Mall and demographic our center Simon's which and strong market now top for markets Phoenix, Georgia, Atlanta, newly Our Dallas, from and X the excellent

leasing Our at as had and XX.X% leased spreads And occupied in portfolio the John was highlighted, year-end. XX.X% strong we quarter.

income increases meaningful compared over strategy, quarter X.X% of our supplemental the acquired leases calculations, portfolio of that that occupancy a space in with we've that reflects been and renewals new XX.X% existing go-forward net blended expanded since is we the website spreads first to expiring years of on when that for exclude past for for additional vacant has rents metrics amounts industry-standard XXXX, and these were and the were report XX.X% of available Because a leases. our plan options With new vacancy, X and comparable beginning operating same-store we've acquisition. overall asset provide disclosure information. our from to we do transformed better with number Our signed to up properties

amortization was We started currently FFO NAREIT and NAREIT share. future per core that was share, report $X.XX adjusted nature, certain FFO quarter, FFO fourth the calculation. $X.XX was FFO share, is FFO to financing adjust the $X.XX transactional any transactions, permitted not in core and mark-to-market but within to for onetime per For adjustments per

Our XXXX aligned we results provided earnings FFO to in and core our FFO future yesterday, our XXXX directly as XXXX accounts our these release core noted adjustments. previously guidance potential FFO guidance for

end core $X.XX year, was $X.XX guidance the the XXXX For our beat per share, NAREIT of at per FFO per and share which was was FFO top range. an $X.XX share

share per range. guidance share XXXX was $X.XX Our end our represents AFFO of $X.XX and AFFO per top a the at beat

dividend on dividend, December XX. common per paid earlier quarter share XX the As an XX. of $X regular November, this on previously quarter be in announced cash for company regular will we paid increase to common And announced of cash which March March a first week, shareholders record stock XXXX our fourth stock on X%

yield quarter dividend per and cash an share our per the XXXX midpoint approximately based annualized of common stock XX% Our $X.XX an share implied guidance. annualized AFFO of represents of first new X% payout ratio on

million the number nearly of net X.Xx. most transactions, there repurchasing the dollar active of of in stock an value in term at November, entering repurchasing As end and Net and during notable our price of Pine value, fourth total cash in per outstanding XXXX into modest embedded $XXX cash a million purchase as aspects we senior debt than loan different common quarter, and while capital significant ownership. is of had quarter more at share in was per our approximately total $XX.XX we an pine to million. of XX,XXX million shares XXXX, year-end notes, $XX.XX believe markets debt-to-EBITDA And enterprise including XX%, $XX to our X,XXX continue convertible stock shares restricted our total did $XXX were price debt value of of with average a new at unrealized the of average in was long-term $XX share. We we

As yesterday, earnings for we did anticipated release release earnings transaction XXXX. and guidance part the of

Our of assets cost valuations, at at overall funds limited ability number raise that our for economy an to acceptable tenants. our to not guidance acquire and including, our relies on but ability significant underlying to, sell investment and supports assumptions, capital, of reasonable stable a

a $XXX to $XXX X.XX% properties expect million to of at yield investment invest between We to blended X.XX%. in million

of into Our like first competitive the otherwise through some offer increasingly own allow preferred agreements. also us gain to the to yields can right within interest take form yield structured obtain we first of and pipeline loans a higher account would transaction assumes and potentially investments shadow options of where preferred acquisition the an and or refusal right environment assets and equity in investment in or equity that volume or loan of development we opportunities a

sales million Our to dispositions $XX rate cap a at exit X.X%. $XX asset between blended X.X% guidance of and assumes million

to which mixed-use pure-play disposition our focus and to expect towards move our remaining we a portfolio single strategy. properties, on noted, continue tenant and office retail noncore John As efforts our will multi-tenant

dedicated delivered range the XXXX that our as is implies year shareholder of our and in per recently a look XX% core market to shaping free to part of John from appreciate a and Matt. XXXX on support increased cash We're our outperformance have coverage from forward growth, repositioning our $X.XX we continued to current a to The closing now index growth meaningful return very share, of and year Part shareholders our being which remarks. XX% our AFFO is $X.XX $X.XX full the per back We on midpoint success look full guidance process very be XXXX. is year XXXX another stock first year-over-year of And I'll of overall our limited and still momentum future is throughout think and as call recognizing our to turn our is improving guidance our opportunity AFFO in our Our Overall, business $X.XX REIT, range the proud portfolio large year outperformance total provided up which guidance our driving the we as dividend efforts FFO also year from REIT shareholder executed and success. we flow. to strong share. strategy. the ownership. Thanks, is is partners, we XXXX. maximize our given over dividend his continued re-rated as for capitalize to by we was and business significantly

per share For that we range, the has XXXX, growth. XX% the deliver AFFO top poised guidance of to end provided

announced that recently dividend And of dividend headquarters are this we Florida. some in of markets is did And to provides by is the growing our moving high-quality all based outsized Our we driven with our improved AFFO the yield strongest Park, States. a coverage. Winter announce United increase on portfolio finally,

your of Park deeper our a employee us to And Daytona larger that, pool MSA that open team. up office, maintain we We questions. appreciate access talented We is all to it Operator? give in to a Winter continue as support. to grow our but Beach look with will we will

Operator

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

Rob Stevenson

the the that now gotten bad land this would for And JV, forward? else of point you've what REIT rid current what's subsurface considered do you Matt, the portfolio? going guys rights have John, be for the at income that plan

John Albright

selling to rights, of owns mineral large ranch. subsurface a piece a Whether or the owners. individual on we've property So someone service been a of transactions lot small

capital we which we've the is and also mitigation going They're would a it. and look accounting sizes, about off. been to properties, it owners, the try selling So selling just it. that's income reinvesting and then let year the dollar the bring the for on talk And way be bank I'll proactively but bank, that. activity Matt amount of It service part fair kind of of some reaching the credits sell we'll to in granularly throughout to whole on in small out we're about have

Matt Partridge

the component in the On the nothing than side, of fee that. Alpine. other related through the is that's biggest else there that's really bad TRS to income flowing management There's income substantial

Rob Stevenson

of XXXX your in for any are likely space? near-term the any you are or to size I for signed? your vacancy currently feel XXXX of leases but what then occupancy, a have you that do portfolio? of guys the et And mean Okay. XXX% lower leasing And most occupied, confident cetera. assets are redevelopment, also the that expectations in be occupied few move-outs on Any

John Albright

Yes.

So leasing the on activity discussed. especially at we the leasing very is robust, Ashford side, as Lane,

do to we has that out move have of some expiring leases. that can tenants or with And

advantage pure lower might it's to of have So be but taking leasing the a it leading. tenant be rate may not that rental vacancy,

all I'll with of example discussions, And we of that. negotiations existing Ashford adjacent take lots we're to there's activity give One our space mentioned leasing in we on lease press an a tenant occupied so release in vacancy. empty bought, is you building LOI Lane. and as And to

So there. on discussions active we and have then on in Santa vacancy lots on, Fe, of some going

has general, to very year. be say So But vacancy. with we'll the robust rents low what do that's it building that leasing with would throughout able on very in tenants optimistic of advantage and activity to do on we're I and taking

Matt Partridge

And I would we've addressed half in Rob, backfill of of on the the and than XXXX biggest move-out us. more the have say we've one, side, we kind lease for -- tenant expirations a

pretty in shape we're good So there.

Rob Stevenson

the Okay. What was rate City to cap disposition Party on the pine?

Matt Partridge

was I going was in say to high it the Texas.

Rob Stevenson

less neutral every And CTO you last pine. when you going to inside you're shares companies of going companies. And cash do in both situations? basis, John, repurchase shares as your dollar buying then it $X.XX me, given are put do shares, the the balance view both you repurchasing undervalued? pine to Okay. stocks being match versus within even theoretically for does do put able on board how only leverage one How of taking knowledge nations that if when or Obviously, CTO CTO dollar work Board to forward versus buying undervalued, work incremental and buy your the a you're where unique of those

John Albright

active as both Well, fronts. on we see, can were you

we so invest to that repurchasing dislocation have Stock. say stock basically in it’s want more CTO and levels Pine either we that where when And there’s opportunity either buying or we certain

levels really and in having it’s interest of So we function the opportunity have a set both. where

little combination. So bit a a it’s of

Operator

Securities. Kucera Next question with comes Riley Craig B. from

Craig Kucera

the does include monetization tenant, maybe guidance any And I or of the properties? mix mitigation sort want rights? just guidance. confirm, that out with of to is of Or the of disposition to sales credits a just first start expected some single office

John Albright

and tenant mitigation properties. credits single the be to guidance. or the addition any subsurface or office the mitigation just is in The That would bank

Craig Kucera

Got it.

some but guess, the the sounded Okay. Or And basis, bulk on success TBD? a And I credits have selling still subsurface a started that sale? is you've far? you had so going like as of of kind one-off marketing mitigation it more that is how

Matt Partridge

have Yes, complicated -- and bit done It's and little made we a have investment. people a that offers interested some analysis. are of done

So folks it. aren't a as about of lot knowledgeable

So that them price interested price through level that bank that. to optimistic transacting. we in where and But and a have sell a basically smaller, we walked will the the gets we're in we'll mind up as we've credits fairly come

for It's sector been just a So the right pretty anyway, it's it's active, us. and really finding that people source capital like.

Craig Kucera

Can it. XXX seeing noted gears, haven't I you what's about disclosure leasing And leases, Got when spread leased occupied. tenants the take between economic a any would point increased somewhere mid will helpful. paying those us Changing a about the there's color activity. be have you there and sense which appreciate a that but Or you currently 'XX? on basis Is rent, of started signed I give just occupancy? -- think what's

John Albright

macro on a trying with signed Yes, longer as chains, taking that slotting have locations to with I'll inflation, little within our labor larger and the in that is so and they're you markets tenants in going with start platforms. that, would I imagine, we can as as everything supply multiple have everything, their that. and open say openings leases everything they're far

that are so could August imagine. that because of this going you kind just them got and all will it's architects really in, would I mean, a and And just It's contractors interested what July, the projects slip. contractors mid-year in saying is where of hiring be and they bigger because say doing coming I on. can not they're say, a to, bulk I of would June, function

say and to would quarter. third I midyear So mid-

Craig Kucera

risk-adjusted historically, sort that pipeline, pipeline and loans, And guess meaningful your -- I thinking return outside XXXX in mezzanine from and more cetera, done of property on should as equity? business. you amount those And you've about et see guess to you loans of a how enough. are as your about the in to I investment of thinking of investment a are that side? preferred sort relative of kind out investments far guess, just got expect And Fair Okay. I we

John Albright

a highlight Yes. good mean Craig, wanted I it's and why to it. that's I question,

It's We were different properties we or time may than in we're on are opportunity. little investments have doing in that fit that But to love a may bit at before now this our we'd on good risk-adjusted looking seeing structured our yields the not structured investments finance portfolio. properties portfolio. in

bids bridging it. they've say, equity that project, come developer contractor us the rather For a basically instance, seeing has They're let's than is are to back, with short duration. gotten bids than we're the a for XX% a XX% a what calling price that, higher to budget gap has

about And equity, sort We're of just we duration. And seeing probably duration, keeps to that be than X- of opportunity like more business assets but yields get to relationships talking like. so X-year the on that X-year we if but we'd with were a to that it owners we're that keeps us fair a It or basically of that really higher do us top developers to with own. with. assets of amount going to like on we'd we're really won't sort long

that us future it will in we or long-term so a could. properties feel for the like be kind to And lead equity transaction of

Craig Kucera

XXXX the closing can? external X what just that months see more a And us sense what of give kind you you're Can you you may X of again Great. of me, pipeline Okay. on? a that vein. side. kind year one working looks be of next pretty in active And growth for the to your in like is same on kind current the

Matt Partridge

opportunity should that we're week. been next actively not on pipeline let's the we are close in literally rates property to a a us assets. have almost do cap hard bidding to trying But days. better at issues hoping yields. we macro market that And the we're The we've come assets down XX every relatively buy mean buy have say, -- I bit super provide in soon, of but some quite will the for Yes.

being putting about offers we're that the prudent we're So out.

there's amount so coming the a of fair or are And good market. news the is that to on assets market

So out we'll we're feel side, and what the market. picking that acquisition we to spots, fill we're our seeing optimistic coming given just

Operator

question [Operator comes Jones Jason next Instructions] Stewart Trading. Our with from

Jason Stewart

like up Are environment sounds to on follow around into is impacted the wanted the coming the people's your appetite. competitive not and macro acquisition sector? I from and capital players? It volatility you seeing new environment existing comments this there. has the acquisition Or rate

Matt Partridge

existing from during mainly well It's basically have pandemic said, during has the done players were the the sidelines pandemic. that on fairly okay, and retail

coming people like market portfolio they're retail. back are feel into so And and in their the underrepresented on

It's seeing So kind of capital, lot of catch-up would I say. you're a capital. a

we're allocations. the better way soon, acquisitions, pretty about up to kind just we'll so bit that those properties, that people we're because out actively out able investing stay But portfolio and and little and pursuing And yield. biding be on lots to they're of taken And and kind buying of basically time. the they're gets of of learning kind we're behind their hopefully, all buy a we're trying where a there players of our are

Jason Stewart

rest tenant returns lease is then properties terms required it the are Got go net it. single to too that Or of And in high? expectation pine? dispositions, of the your there

Matt Partridge

will -- seeing pine, than interest. take we're go but very would where cap the Yes. to an could be a there's probably where few transactions lower rates pine there's have that I mean place,

Jason Stewart

Got it.

touched don't Wells And we've the Okay. then office. think I on

quick give update, great. be you just would us could If that a

Matt Partridge

wells that the owns over Hillsboro. talking in Pine You're about

Jason Stewart

the it CTO just that as of awesome. terms If way portfolio. to about relates, you're and relates would office be this in thinking Yes, it dispositions

Matt Partridge

Yes.

in meet want have, Pine. that given up sell, I’ll basically talk with or So update assets do but at CTO, to to given we’ve we about you that we’re as CTO, just X acquisitions. X office know, we But that trying those

the that have property that side for market multi-tenant And even on we property we in is so the have strong Jacksonville. the

that be confident we’re selling on very we’ll so to assets. able those And transact

just l’g acquisition of finding We’re — really it. it’s the

from acquisitions, side. are we using office selling —as on further that So we're the part plan we capital on the down pursuing of

Operator

Our next Michael question with BTIG. comes Gorman from

Michael Gorman

flows. I them more you your maybe the versus think the about kind about potential I to John, income-producing but shift balance there strategy as as versus in-place apologize portfolio if in continue occupancy? could in-place talk What's of missed comfort towards value-add of it, you occupancy assets you little and level bit upside between construction terms stable just a assets cash

John Albright

we Yes. low trade cash as vacancy the -- very I yield. a The mean, a good market multiple, having about at equity like and paying we strong additional we returns flow nice have and question. we I dividend right mean, can concerned and look, flow that not bat. such where we're such off have finding given outsized cash

for us where low-hanging to look lot for was And and Fe fruit. a example, so instance great XX% a that allows assets of occupied where Santa

on assets cap mean, assets very But competitive, out to where we stabilized we below going way So well, good bidding -- as those but seeing can of chasing we stabilized probably for I activity, activity the do not there. like can look, replacement those leasing assets. rates lot and with sort and given of are work a be buy very there low tenant lot a we now. you're locations good we robust right capital as feel the like costs in yes, some we

something we'd other of bit of with rather a little vacancy the that capital doesn't find So providers. lot fit a

Michael Gorman

flow coming the cash into cash the Great. pipeline? increase thinking that to dividend about getting report the that, Okay. the strong And here. some -- just with Obviously, your And but necessity ratio the a talk by the versus can nice or goes And investment you how how about here fund one were maybe driven down, guidance, increase just that's you definitely then with was on much versus you AFFO recognized the about increase retaining the strategy in just even here flow? excess marketplace think payout the dividend. maybe

JohnAlbright

help you there. background give as let will it I'll you about Matt Yes. talk some that

Matt Partridge

maximizing we're Yes, flow. cash very focused Mike, on

see payout the you flow. track continue do to we're increase, trying to So income. with to taxable pretty of a retained XXX% increasing it. dividend the just it's us not of for sake be to We're We're not dividend doing largely -- it cash efficient when to increase

the the for think noted, we're I AFFO you continue now ratio, terms in payout is people. market we mid-XXs much In recognition, more of for an improve as to payout as the which ratio, palatable

get think we'll to I recognition start that the and outsized was we're year, obviously, for providing, dividend coming it this more elevated. yield more into but the

I So think that's a good step forward.

Michael Gorman

Okay. Great.

And Matt, so probably AFFO just a to way that think reduction should right it, growth about going still see it payout ratio? how that I Or dividend the we dividend maybe is think forward? in could forward? think guess, growth the point little about a track bit this we of the should Or will we from

Matt Partridge

payout shield that quo, would on And the deployment a you capital a more the see down depreciation to capital, FFO and flow. try come as bit assume of should of I Yes. to say we have continue it cash status raise with the additional growth. maximize attracts ratio then if we additional you’ll

Operator

further at like call Albright this I'd for no turn time. I'm queue to back closing in remarks. showing the John questions to

John Albright

we quarter. much Thank this attending the call, for to look forward you with talking very you and throughout Thank you.

Operator

today's This participating. you conference for concludes call. Thank

disconnect. may You now

CTO Realty Growth (CTO) 25 Feb 222021 Q4 Earnings call transcript