CTO - Earnings call transcript Q2 2022 | CTO Realty Growth, Inc.

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Operator

Hello. Thank you for standing by, and welcome to the CTO Realty Growth Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. to Partridge, conference Chief like speaker to now Matt today, Financial would hand over the your I Officer. Please go ahead.

Matthew Partridge

Good joining us Growth thank our CEO you the today John With and operating Realty Albright. President, call. XXXX second morning, CTO quarter is conference me and today everyone, for results for

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

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

John Albright

Thanks, a and a that our returns. productive the number strong to through Matt, grow operational making high-quality call of initiatives few We've investments on of progress accretively had everyone. quarter's earnings since and last company months attractive continuing adjusted good structured combination acquisitions morning, and provide a risk

the we Watters a entered $XX into Creek. million During quarter, in preferred equity investment

into by Dallas sponsor earnings is of terrific a Texas. the property premier just there being our call, we spoke about repositioned last Allen, during As grocery-anchored retail lifestyle in that's outside a center

Marshalls, from Margaritaville one Disney outparcels corner Orlando in strongest just Resort entrance street of in the number part for program. all in retail to Orlando, originated of of around World. corridors onsite Water the that HXX loan the of portion WaterStar This Burlington of million a Florida the includes asset structured as units and Walt across construction XXX the our Park opportunistically also anchored residential investments $XX on retail is a We in is on the

While we we have own. on a we been the is in position of that investments is ended and not be of with favorable to stack close, Yards, strong to-date through of for we This readjust invested in the which will the belt the generating million a piece have generate who allow portfolio, allocated These to investment an Madison in we Georgia. a but regular Publix-anchored acted seeing given Normally, cities debt opportunity and along had challenging assets at in investments have of of assets America. out how would investments property small also of was were in as our for with are Atlanta, a largest otherwise quarter, the sheet one between to location we the priced $XX these up prioritized we to focused like bridge the we the us beginning portion rates. the type year, cap have built significant line to yield. as the relationship of returns income outsized opportunistic versus types property strongest this the growing would the infill fastest balance in a acquire a market improved acquisitions one types seller of newly a an at with the property capital acquiring market, acquisition acquisition we submarkets a these of certainty more core grocery-anchored in of of our prices Subsequent to lower the end yields see year way starting rates earlier are interest our

City the property lower rent in property of we was proceeds quarter from yield all growth quality portfolio and that reinvest our base or trophy a taking by to are this able our increases sales scenario Party us, have at one up-tier grocery-anchored first For leases. a into the the where Carpenter higher significantly this Hotel

well as leases On the the our our signed of quarter, drove by prepared were of only guidance later drive rates. to extensions the prior per to tenant largely during property note, mix. acquired disposition our and focus more vacancy leasing XX quarter, expiring rent talk excellent Legacy rates the that double square this one revised average per which in which we and office the lease same-store the Matt on an past we rent vacant. renewals lease had of that have overall remarks, assets. deliver new foot a back as of we Operationally, that actively XX,XXX in allows front, units new we some of our will square detail new quarters, NOI about outside Of initiatives, did significantly signed as over Of scenario anticipate back but and the any half than more the renewals growth property further we foot versus and during tenant $XX Similar exit year programs feet with into an average more backfill our with were square not increase through XXXX. term we existing to traffic related experienced year, evidenced property us in and leases more in a opportunistically should and In have we at X.X% sales the nearly to years. continue foot our associated positioned of during the improve to quarter, repositioning the to do growth, half the to and quarter, look

outperformer front of new vacant continues the Adjusting our of benefit project from driven new year. the lawn leasing been some for in property and year-over-year still Lane is comparison, in space. open with increases, and months. expenses, year-over-year XX% strategy. XX%. prior one-time in space as now Ashford tenants us resulted Our NOI that biggest for was This the contractual has our it will the healthy next property our the and the the to XX rent green up in only QX positive reductions The surprisingly, and being more of efforts our same-store easily the the complete a items online go. But over nearly outsized portfolio, and today a Not operating leased, progress still was growth who growth was strategic most by nearly to end drive repositioning NOI historically one-time same-store coming a will non-repeatable between of opportunity items great year-over-year excellent NOI a have combination XX% leases we

with the hopefully XX% to or end the this Santa level lease will us nicely. true get working some of We Similarly, of that the we concepts community. closer repositioning destination and higher are surrounding continues for along our make Fe exciting property to property a will before come year

will weekend, a addition on property, top garage our This for we entire for is the free lease generating previously that start we launched floor the aspect Just program this in to signed of to performance the and fill the hospitality take in about to an Rosewood Hotels activities drive use. the into parking to [indiscernible] with guidance. markets that new past this same-store income buildings which the it over to was open year NOI we vacancy quarter, XX% diligently in working the significant and translate of remaining I'll of Matt should flow, to our are the now growth property-level talk which XXXX. further capital one property-level increased earlier cash pass of

Matthew Partridge

at Thanks, John. trading stock a post-split outlined today effects July of split that on X-for-X results began The our and XXXX. X, quarterly year-to-date are the are before price

located nine markets our Washington, Lake properties XX% Salt feet Dallas, Atlanta for XX Houston. X-for-X acquisition Raleigh, first D.C., properties our adjusted our from million base revised our come another is However, feet, exposures, and XX our states and stock in the quarter XX and million rentable Madison rents of and the ended X for X.X approximately of annual XX% we top quarter With XX established account now and market includes our the the in market base Las Orlando has firmly rents ULI Tampa guidance nearly Digging top adjustments City, square comprising of of results. markets and with and split now have of to Phoenix, been space We into second of from square as come comprised Yards, the now XX markets. ULI Miami, of Atlanta, deeper portfolio. top Vegas, our

occupancy well give upcoming as continue Our positively locations back purchase of able markets XXXX. as eighth XX through population our with are half XX% second end $XX.X increased our tenant of reported growth, a strong XX% majority million. largest retailer portfolio X%, now us demand in number of Dallas, but at At our From be managed confidence Florida. quarter-end, retail by to Yards. Madison leased occupancy shops Jacksonville, total increases Legacy $XX.X quarter-over-quarter of XXXX we property of Strand, multi-tenant was by Texas The XX.X%. for occupied, which our revenues have submarket The driven in will in exposure number leasing approximately XXXX of following in tenant of remains tenants new is to to quarter and Total respectively our our year-to-date the XX.X% were Fidelity rollover in-place perspective, lease related the momentum property revenues and the we top AMC Publix million and our to Plano increased at and and our and

in the gains we revenue make a income progress and $X.X quarter, our interest, total driven largely year-to-date some part selling revenue quarterly by gains. but our did As revenue were both million overall, of incremental subsurface property increases

quarter removed. excluding from or one-time those same-property year-over-year one-time are second year-over-year our when referenced, second of quarter the growth increased for previously John NOI XX% was items item. or XX% XXXX the XX% As Year-to-date, NOI XX% same-property

NOI and owned of measurement statistics our include a both periods XXXX. the assets As entirety in the XXXX same-property reminder, year-over-year only for

share second XXXX, XX% share. $X.XX XX% quarter grew and the per grew FFO $X.XX AFFO per For of to to core

been impacted these previously effects X-for-X before of results of of we year eliminated on implementation sheet. our our Form our quarterly core reminder, a in results. FFO elimination beginning approximately discount AFFO comparability our of XX-Q. accounting convertible of calculation in the discount per no convertible historically AFFO, to balance amortization of impact for which outlined more has debt $XXX,XXX the has stock quarter, amortization in positively are the the of Similar our our as in the this detail held first related on at the share discount part the our are of This was on elimination was split. standards, the results by so amortization to As of debt adjusted year-over-year The certain

a a previously cash XXXX current QX stock our As dividend second $X.XX which and QX cash of company over approximately regular quarterly is of annualized XX% a the adjusted share, and year-over-year quarter per increase X%. company's yield split announced, over a cash dividend the paid XXXX increase dividend X%

quarterly out in towards XX% undrawn credit ratio million restricted XXX% share, and ended represents to quarter we a nearly in AFFO efficiently per facility. the cash under cash of of We income payout million XXXX approximately dividend of with paying XXXX. taxable Our our cash of of $XXX commitments $XX work and QX revolving continue

net debt-to-EBITDA debt transaction account price value was share, for and average share X-for-X of performance, common stock for quarter-end of in guidance, markets we on of for front, increased within XX% share adjusting $XX at was X.Xx. split. or million stock Also, $XX.XX our It revised just split. did the or was per our $XX after economic X-for-X activity common as the after we full-year current of environment net which enterprise total I $XX.XX our stock before, to adjusting our just quarter, $X.X broader our average the ATM split. strong X-for-X Our net at year-to-date price of slowdown program stock shares the share proceeds per of an stock and issuance but quarter and into We over repurchased approximately mentioned XX,XXX expectations anticipation capital capital quiet a $X.X effects issue for markets a through per takes the million of over an per

a is at the share share, range high-end. an guidance $X.XX to per which share share per $X.XX per per the and of increase $X.XX FFO at $X.XX core new low-end Our is

which of share, stock at Our share the of take into These share per $X.XX the an per estimates low-end $X.XX new share AFFO of high-end. announced guidance full-year $X.XX is increase the do our for at per share per per range effects XXXX account $X.XX to the and split. is

and we balance also $XX now between for and call top bottom X.XX%. million the year-to-date disposition account X.XX% at now Our to of $XXX revised In and assets increases remarks. end between the his associated guidance expect $XXX expectations and back estimates our million volume at selling investment exit year. between the an for million an and initial rate over transaction anticipate activity XXXX, of of now the yields and the for end invest to I'll our X.XX% and cap and $XX million between we turn yield closing X% John to

John Albright

Matt. Thanks,

questions. backdrop disciplined excited updates shareholders. our tremendous guidance. economic for investment unpredictable I'm I made investment and work team's it that hard this At activity all on of I'm quarter to into XXXX continued will revised we and translated is earnings providing our find our remains the throughout our we'll that While time, up portfolio forward for we've continue of the look to growth support optimistic open Operator? opportunities how our and with about appreciate and further the operational growth and we progress approach, in and strong

Operator

first Mehta with [Operator from Hutton. comes EF you. Thank Gaurav Instructions] Our question

proceed. may You

Gaurav Mehta

Yes. morning. Good Thanks.

on acquisition acquisition was question did about could guys raise and for sheet, how guidance fund XXXX. balance guidance talk if to wondering First you you your the you increased your line? variable expect any kind the also you credit credit should line with permanent financing you the do have touch maybe we rate of balance expect] for upon guys [that that on that I

Matthew Partridge

Gaurav. Hey, to to we're continue is to I acquisition think anticipate what the assets you respect sell going fund to guidance, that. can With

which are this the And rate fix of new So on sheet. revolver, market rate with a we that balance terms obviously in to looking morning floating fixed some that's debt term a reduce at loan, the one will swap on announced the put and more doing before we debt the opened. balance

Gaurav Mehta

Okay. Great.

question market. Second on transaction the

seeing hearing market the from result the interest touch of You a maybe did of volume are on Can pipeline you in and color maybe in the transaction rates guys market the transaction some higher higher upon sellers? the seeing you're you what more some cap provide and as in terms rates. what

John Albright

John. is This Yes.

more the in a kind market distribution are – kind the markets seller So a larger right debt. of probably not lot now. of because securitizations to for There's the the happening. there's it really debt locked of of is sell just problematic asset, There's kind a no secured of of – no

So there's balance sheets, new lot lending. capacity of balance for a sheet not

secure debt, are market. buyer a larger folks type So to that projects a if would debt you're seller that market looking out the need secured normally and you're sell be the of and utilizing

you're to the of of buyer pool happening. even the have really the wants buyer that secured is seller smaller. be So sold end lot by less use and likely the something And the want with then a to other kind of facet might it of of higher go you year, a have is, you if and because do you're debt, to that risk buyer though a execution probably the price

may have out, seeing So cap because we the they now are are widened time, out project. and going expectations of sellers People have last earlier because and being there out good a coming more to than them the rates risk rates a out the they interest widened properties you bring of with would out right why kind just on is market. widen who's person from to coming are

of the So through kind and through office very opportunities optimistic that to fits of – we're that us we'll some shifting we're us find allows the with move something we're properties. and

Gaurav Mehta

Thanks my for right. taking questions. All

John Albright

Sure.

Operator

comes from Stevenson Thank Rob you. Instructions] Our [Operator next question Janney. with

proceed. You may

Robert Stevenson

And of forward drove in you thinking the acquisitions? share lack Good about quarter? acquisition guys. it that the are given going of repurchases morning, versus company, the John size Was what how opportunities? a the

John Albright

own been the reasons, is through good stock off particular And company. see sold of in another buyer big no know thing do we at Rob, it's significant that was of kind at and more to dip our mean, I stock stock for buying to back we've when of of very our real a a buy and as whenever an has buying our the property. being stock NAV, then dip active with to It's the opportunity sure a Yes. buy but and history, lot hell there you opinion fundamentals discount your a the in our a a there's market. when big a accretive security

are advantage selling took and advantage to it of we to when those people it. happy with for – so CTO show of And we're And not anything opportunities of do take sort themselves.

Robert Stevenson

Okay.

how I level, that that's of whatever and So et and rate it I then the to follow-up mean XX-ish. would relative the leverage – were a like ability acquisitions versus about call being, balancing via it mean, a I I the think from wind how cetera, growth to if from guess change, at in adjusted, sort would CTO, so pipeline your to stock up company pull that that to XX for looks cap neutral, you what the today, would back was stock add your perspective back a acquisition price think of inherent implies buying especially right? split

John Albright

not want looking mean, driving going for market think again, to we're having able I AUM we're is our an we're our the those results anomaly I do look, be all But optimistic grow the have to game. happens, This results to and driving is about to shareholders about and shareholder that. and company all delivering value, in said we This we're proven if NAV. something themselves. that, so Yes. sure opportunities for

common sort one we the going keep to small stock. to those whatever and just amount converts So mind, so to to for not want get into that of in formula we out we're have of And will some thing do works deviate reason because – convert there size.

in way. going to that's So big a delever us

in going common. that us it think forward a So basically also to essence you buying as of can back stock about convert

Robert Stevenson

that the it like then vacancy leased that's left you Okay. where you guys – you are pockets can during the Of and opportunities quarter. And big of That's stuff vacancy the up the the looks some core, and helpful. it discussions vacancy in you're likely to years with where the of for the those keep any leasing assets so or are you in call three that assets? next for on those up

John Albright

still now. say and where Lane I of debt Yes. seeing at activity as as low-hanging most would we're lease right there's far up fruit some Ashford the that's

there's But So having leasing now. other a actually are leasing we would be, not we're confident have it that there year component I have on to to street we than space. core, really XX,XXX other right square we've of going level, in mean, the that, dialogue good we're so other would Santa one kind really get the a there. presentation have there a actually there feet the at very negotiations but this activity Westcliff. on, where Fe going better on demoing more is on with That's And tenants which couple had vacancy little we're bit, right be we of and now that

Now early those for that's the chunks. the kind innings but of – more those are that are space,

Robert Stevenson

Orlando so? short-term be the going the that forward? about of business And days an – how sort some repaid I just that in? you interest type the going thinking in get of we to at of nature game or that investment, you're point, would the given structured guys? Is wind and At that is what's that taking How then at up for end looking should XX Okay. that an asset there mean, that? Is you equity

John Albright

paid to price. this expect year. would it's one off certain we get the But asset, that own like a to where at On we project Yes.

of to wants want bit little the it's of So price he to we'd kind it kind be. expectation, if a developer versus gets depends the – where

could either XX-XX it So go way.

Robert Stevenson

the one continue as sizable more guys Is of is $XXX,XXX to last last you for anything from the me, be looks XXXX? there? at like about same you and worth going to sort few that reliably the the just rest Okay. rates. it think Or And more pace horizon of we $XXX,XXX, Is selling likely $XXX,XXX, have it into the of XXXX of forward? there least, been in guys – quarters, then subsurface

John Albright

would the I say same. it's more of Yes.

– of is but people around on would little a You come of do a get some chunk, those. that bit a talking bigger say probability little are I sort lower

but say same. that have I want you it's So wouldn't would out, more modeled I of the to

Robert Stevenson

Okay. Thanks Have a Appreciate weekend. good guys. it.

John Albright

you. Thank

bet. You

Matthew Partridge

Rob. Thanks,

Operator

Instructions] with you. Gorman Thank next [Operator Our comes from BTIG. Michael question

You may proceed.

Michael Gorman

the Yes. Thanks. John, Good with investment structured portfolio there. morning. maybe sticking

I'm choppiness how of business large are you you maybe right just deals think now, the to some as of choppier the piece the like debt what a the challenges with that in way you regular with maybe the acquisitions in how talked markets make if those a looks it and sellers As about the projects, you're there, source markets the pipeline and wondering about little bit to? willing different

John Albright

Yes.

looking of challenges. when said surprised there's So that business. somebody we grow of no of expect really liquidity us the of needing in sort comes anything now, that, it as of kind don't debt pipeline some us almost and bespoke of business kind not bit. Having mentioned, now, It's happens portion we're if little because market but to right the least to front strategically that so in a have it right you that I'm

nothing keep So but our it, open we the radar. on eyes for

Michael Gorman

some on by year-end, Ashford I the Okay. ones focused about up little you the tenants of a Great. opening facing And especially talked maybe, Lawn. Lane think bit and The

the If you roll Is open well of Texas, back and some some think to year online? Fe or of and a those have the between you you into assets currently occupied. will and Santa spaces leak XXXX? other start at where that this decent spread of at leased look like do half that When as

John Albright

just Mainly everything's longer into XXXX, from out. taken negotiations to lease leak build

more I XXXX. So say would a it's of

Michael Gorman

piece, but wanted the on is quick out close just two year, expect an guidance? disposition check? in in investment both to same your financing, and the was development originate just investment then curious the guidance. just the assuming then in when ones Okay. I'm have And guidance, Great. you And that second Hialeah like you I'm that double Matt, maybe maybe to

Matthew Partridge

Yes.

guidance, guidance. were originating question, in For disposition the also that about back the yields there. to the reinvest and we we and there in it, that originations obviously yes, in into that'll With respect investment question But if WaterStar roll capital was of former get at. terms the including Hialeah latter we're

almost There'll recycling in XXX as you we to that some that dip ongoing. the back So double be from sense can't WaterStar. it's if model XXX a get the out capital full

Michael Gorman

Okay, How perfect. And then quick the going give with did maybe you one option? Hialeah. last they just much to their notice one exercise that [indiscernible] were

John Albright

like We've been days. for on working it XX about

Michael Gorman

Okay. Great. Thanks so much, guys.

John Albright

Thanks you.

Operator

Thank you. [Operator Instructions] Our next question JonesTrading. comes from Matthew Erdner with

You may proceed.

Matthew Erdner

Hey good guys. for and question Thanks the quarter. on congrats the

rates more guess, difference is the guys be those seeing of I cap the So what strength rate? right high a two now in worth what family other? one institutional Are between office you than and would net cap

John Albright

were I wouldn't would just offices the definitely institutions assets they they that cap the family a little have are at this been say out rates the bit but been. quality seen cap kind more say would active re-engaging, priced that, rates a of that them get more I of becomes now. different. that's to And I late I than say of higher are good happening for opportunity on think say have would before. they've I then Previously, slower

group say just same, that rates a be say clearing cap I you're little the than of other. are one would seeing more active the wouldn't So be prices bit different. the I would that kind the roughly

Matthew Erdner

do moving forward for assets those? develop timeline desire it. be to then and Got what And would what the you helpful. Thanks. That's

John Albright

buy able We been done that that that too has – with we the or really a and whole we're really has like been much. and kind lot planning, leasing. think the developing don't of the costs, risk rather the below a acquire in and it didn't project would development of work really come happened, we that's Well, something forma developed hit it pro entitlement, to hard the a associated

and lot together put a for development. there's of so And capital time

rather of those kind in out of group they we buys and So that planned. as when would didn't comes really kind projects work the be

Matthew Erdner

provide on and where Could an quarter? more. update of then one to is guys the compared Awesome. I Bank got Mitigation And you that last kind

John Albright

some on credit Yes. more We've seeing activity started more – sales.

expect sales I of to being out credit of the would to Mitigation from more here So the see year end us you sure. Bank on for active the

Matthew Erdner

Awesome. you. Thank

John Albright

Thank you.

Operator

Instructions] Thank from you. [Operator James. Milligan question Raymond RJ with next comes Our

You may proceed.

Richard Milligan

Hey guys.

question, of Matt, of that's quick lease paying maybe my have answered, and how one gap should color next between most for you could rent obviously a and and the trend bit on quarters? to occupied important questions give expected as Just couple over expect the been and but we little timing, that

Matthew Partridge

Yes. more XXXX rent you I QX Fe, us. lease Hey, Santa RJ. Legacy probably probably Ashford To – at is lease whereas occupied wave are think, John's a when at the look commencement, spread and those XXXX at the versus commitment spread for point,

The Lawn. all the with going stuff online out the over coming next it's or with So XX a be around to months spread QX so it being little Ashford in lumpy

Richard Milligan

it. Got

So least of next second online through at year? the will come still rent that quarter

Matthew Partridge

Yes.

Richard Milligan

it guys. for Thanks That's Okay. me.

John Albright

Thanks.

Operator

Chief I'm John showing questions call And further would I to you. and back Albright, now over any not Thank any remarks. the Executive time. like for further to this Officer turn at President

John Albright

the attending for you Thank call.

Operator

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

now may You disconnect.

CTO Realty Growth (CTO) 29 Jul 222022 Q2 Earnings call transcript