Consolidated-Tomoka Land Co. (NYSE MKT:CTO) (the “Company”)
today announced its operating results and earnings for the third
quarter ended September 30, 2014.
OPERATING RESULTS
Operating results for the third quarter ended September 30, 2014
(as compared to the same period in 2013):
- Net income was $0.60 per share, an
increase of $0.38 per share, or 172.7%;
- Revenue from Income Properties totaled
approximately $3.9 million, an increase of 17.2%;
- Revenue from Commercial Loan
Investments totaled approximately $382,000, a decrease of
40.7%;
- Revenue from Real Estate Operations
totaled approximately $8.6 million, an increase of 531.3%; and
- Revenue from Golf Operations increased
by 1.4% and net operating results improved by 7.4%.
Operating results for the nine months ended September 30, 2014
(as compared to the same period in 2013):
- Net income was $0.99 per share, an
increase of $0.67 per share, or 209.4%;
- Revenue from Income Properties totaled
approximately $10.8 million, an increase of 14.6%;
- Revenue from Commercial Loan
Investments totaled approximately $1.6 million, an increase of
145.5%;
- Revenue from Real Estate Operations
totaled approximately $10.9 million, an increase of 443.3%;
and
- Revenue from Golf Operations increased
by 2.3% and had a net operating loss of approximately $311,000, an
improvement of 21.5%.
OTHER HIGHLIGHTS
Other highlights for the third quarter ended September 30, 2014
include the following:
- Book value per outstanding share
increased from $20.53 as of December 31, 2013 to $21.64 as of
September 30, 2014;
- The Company has completed,
year-to-date, total acquisitions of income properties and
commercial loan investments of approximately $50.2 million as of
September 30, 2014;
- The weighted average lease duration of
our income property portfolio was 9.7 years as of September 30,
2014, down from 10.2 years as of September 30, 2013;
- The Company completed a five year
extension of the lease with Best Buy in McDonough, GA with four
one-year extension options at a slightly reduced rate;
- Received approximately $137,000 and
$260,000 for impact fees for the quarter and nine months ended
September 30, 2014, respectively, versus approximately $96,000 and
$181,000 in the same periods in 2013, respectively; and
- Debt totaled approximately $81.2
million at September 30, 2014, with approximately $54.2 million of
available borrowing capacity on our credit facility, and cash
(excluding restricted cash) was approximately $2.2 million. The
Company’s net debt to total market capitalization equaled 21.4% at
September 30, 2014.
Income Property Portfolio
Update
Property Acquisitions
On July 17, 2014, the Company acquired a 52,665 square-foot
building situated on approximately 7 acres leased to American
Signature Inc., in Daytona Beach, Florida. The lease has
approximately 6 years remaining on its term. The total purchase
price was approximately $5.3 million, and is located within an
approximately 250,000 square-foot retail shopping center anchored
by Best Buy, PetSmart and Barnes & Noble. The Company also owns
the property leased to Barnes & Noble.
Commercial Loan Investments
Update
On September 30, 2014, the Company acquired a mezzanine loan
secured by the borrower’s equity interest in an upper upscale hotel
in Dallas, Texas. The Company purchased the $10.0 million
performing loan at par. The loan matures in September 2016 and
bears a floating interest rate of 30-day LIBOR plus 725 basis
points. The loan is junior to a $64.0 million first mortgage on the
hotel in Dallas, Texas. Interest revenue recognized during the
three and nine months ended September 30, 2014 was approximately
$2,000.
Land Update
On August 15, 2014 we sold approximately 75.6 acres of land
located on the east side of Interstate 95 at a sales price of
approximately $7.8 million, or approximately $103,000 per acre,
with approximately $7.2 million recognized in the quarter ended
September 30, 2014 and resulting in a gain of approximately $3.9
million. An additional gain from the sale of approximately $324,000
will be recognized as certain road improvements relating to the
site are completed by Volusia County which is expected to be
completed by the end of the first quarter of 2015. As part of the
contractual agreement we agreed to incur costs to prepare the pad
site for vertical construction in an estimated amount of $2.1
million in costs. The pad was delivered and accepted in September
2014. We received a payment of $400,000 from the CEO Business
Alliance, a local private economic development organization, as
reimbursement for a portion of the costs to prepare the pad. In
addition, we have a commitment from Volusia County to receive
additional payments totaling approximately $1.1 million as certain
milestones are reached in connection with the buyer’s development
and operations of the distribution center. We believe the
milestones could be reached in late 2015.
As of September 30, 2014, we had four executed purchase and sale
agreements to sell land to four different buyers, whose intended
use for the land would include retail, office and residential.
These agreements, in aggregate, represent the potential sale of
approximately 15% of our remaining land holdings with potential
sales proceeds totaling more than approximately $42 million. Each
of the transactions are in varying stages of due diligence by the
various buyers, including, in some instances having made
submissions to the planning and development departments of the
applicable governmental authorities. Estimated closing dates range
from the fourth quarter of 2014 to year end 2016. In addition to
other customary closing conditions, the majority of these
transactions are conditioned upon both the receipt of approvals
from various governmental authorities, as well as other matters
that are beyond our control. If such approvals are not obtained,
the prospective buyers may have the ability to terminate the
respective agreement prior to closing. As a result, there can be no
assurances regarding the likelihood or timing of any one of these
potential land transactions being completed or the final terms,
including the sales price.
Subsurface Interests
Update
On September 19, 2014 the Company received a payment of
approximately $2.5 million from Kerogen Florida Energy Company LP
for the fourth year payment on its eight-year oil exploration
lease, representing approximately $1.9 million of rent for the
adjusted acreage of 42,000 acres and $600,000 related to the
drilling requirements contained in the lease.
With the reduced acres leased by Kerogen, the Company has nearly
50,000 acres in Hendry County and approximately 86,000 acres in Lee
County to pursue additional leasing opportunities as both counties
have existing or have had working oil production.
Financing Update
On August 1, 2014 the Company executed the third amendment of
the Company’s unsecured Credit Facility. The amendment increased
the borrowing capacity to $75.0 million under the accordion
feature, extended the term an additional two years to August 1,
2018 and, decreased the borrowing rate to a rate ranging from the
30-day London Interbank Offer Rate (“LIBOR”) plus 135 basis points
to the 30-day LIBOR plus 200 basis points based on the total
balance outstanding under the Credit Facility as a percentage of
the total asset value of the Company as defined in the Credit
Facility. The third amendment also adjusted a number of the
restrictive covenants and maintenance covenants in the Credit
Facility, primarily to provide the Company with increased
flexibility in its investment activities. The Company paid a fee
for increasing the borrowing commitment level pursuant to the
credit facility terms.
On September 30, 2014, the Company closed on a $30.0 million
loan originated with Wells Fargo Bank, N.A., secured by the
Company’s interest in six income properties. The mortgage loan
matures in October 2034, and carries a fixed rate of 4.33% per
annum during the first ten years of the term, and requires payments
of interest only during the first ten years of the loan. After the
tenth anniversary of the effective date of the loan the cash flows
generated by the underlying six income properties must be used to
pay down the principal balance of the loan until paid off or until
the loan matures. The loan is fully pre-payable after the tenth
anniversary date of the effective date of the loan.
Financial Results
Revenue
Total revenue for the quarter ended September 30, 2014 increased
122.8% to approximately $14.1 million, as compared to approximately
$6.3 million during the same period in 2013. This increase was
primarily the result of an increase of approximately $566,000, or
17.2%, in revenue generated by our income properties, an increase
of approximately $7.3 million, or 531.3%, in revenue from our real
estate operations, and an increase of approximately $162,000 in
revenue from our agricultural operations, or 776.6%. In the quarter
ended September 30, 2014 compared to the same period in 2013
revenue from our real estate operations benefited from a land sale
of approximately $7.8 million of which $7.2 million was recognized
at the closing of the transaction.
Total revenue for the nine months ended September 30, 2014
increased 71.4% to approximately $27.4 million, as compared to
approximately $16.0 million during the same period in 2013. This
increase was primarily the result of an increase of approximately
$1.4 million, or 14.6%, in revenue generated by our income
properties, an increase of approximately $8.9 million, or 443.3%,
in revenue from our real estate operations, and approximately
$938,000, or 145.5% in revenue from our commercial loan
investments. Revenue from our real estate operations benefited from
two land transactions of approximately 75.6 acres and 3.06 acres,
which generated revenue of $7.2 million and $392,000,
respectively.
Net Income
Net income for the quarter ended September 30, 2014 was
approximately $3.5 million, compared to approximately $1.2 million
in the same period in 2013, an increase of 180.0%. Our results in
the third quarter of 2014 benefited from increased revenues of
approximately $7.8 million, or 122.8%, offset by an increase in
operating expenses of approximately $4.2 million, or 106.6%.
Included in the increased operating expenses were increased direct
costs of revenues of approximately $3.3 million for our real estate
operations relating to the basis in the 75.6 acres of land sold in
the quarter including the costs incurred to prepare the pad site
for vertical construction, increased depreciation and amortization
expense of approximately $154,000 reflecting our larger income
property portfolio, and increased general and administrative
expenses of approximately $299,000. The increased operating
expenses were also impacted by an impairment charge of
approximately $421,000 relating to an income property we were under
contract to sell with a sales price and estimated closing costs
that resulted in an estimated loss. We did not recognize any
impairment charges in the third quarter of 2013. The 24.8% increase
in general and administrative expenses in the third quarter of
2014, as compared to the same period in 2013, was due primarily to
an increase in stock compensation costs of approximately $169,000,
due to our higher stock price compared to 2013 and additional
payroll related costs. Net income per share for the quarter ended
September 30, 2014, was $0.60 per share, compared to $0.22 per
share during the same period in 2013, an increase of $0.38 per
share or 172.7%.
Net income for the nine months ended September 30, 2014 was
approximately $5.7 million, as compared to approximately $1.8
million in the same period in 2013, an increase of 211.4%. Our
results in the first nine months of 2014 benefited from increased
revenue of approximately $11.4 million, or 71.4%, offset by an
increase in operating expenses of approximately $4.1 million, or
31.9%. Included in the increased operating expenses were increased
direct costs of revenues for our income properties of approximately
$242,000, increased direct cost of real estate operations revenues
of approximately $3.3 million pertaining to our land sales,
increased depreciation and amortization of approximately $377,000
reflecting our larger income property portfolio, and increased
general administrative expenses of approximately $341,000 or 8.1%.
While net income was also impacted by the approximate $421,000
impairment charge related to an income property under contract to
be sold we also recognized an impairment in the same period in 2013
of approximately $616,000. The 8.1% increase in general and
administrative expenses is comprised primarily of increased stock
compensation expenses of $169,000 over the same period in 2013 as
well as an environmental reserve of approximately $110,000
recognized in the second quarter of 2014 and service costs related
to our information systems. Net income for the nine months ended
September 30, 2014, was $0.99 per share, as compared to $0.32 per
share during the same period in 2013, an increase of $0.67 per
share or 209.4%.
CEO and CFO Comments on Operating
Results
Mark E. Patten, senior vice president and chief financial
officer, stated, “We are pleased with our third quarter results and
the cash flows generated by not only our growing portfolio of
income producing investments but also a significant land sale and
the continuation of our subsurface lease. We have achieved or are
approaching a number of key elements of our full year guidance for
2014 including earnings per share, our target for acquisitions, and
our target for completed land transactions.” Mr. Patten also noted,
“We’re also pleased to have completed an amendment to our credit
facility which extended the maturity to 2018, favorably adjusted
our Libor based borrowing rates to Libor plus 135 up to Libor plus
200 and provided additional flexibility in the covenants and the
execution of a fixed rate $30 million mortgage loan on six of our
income properties at 4.33% and interest only for the first ten
years of the twenty year term. As a result of these financings our
fixed to floating ratio is 74% to 26%, respectively, while our
weighted average term to maturity is 11.1 years and our weighted
average borrowing rate is 3.40% on approximately $81.2 million of
debt.”
John P. Albright, president and chief executive officer, stated,
“We are pleased to have closed on the sale of 76 acres of land for
the construction of a 630,000 square foot distribution center at
east of Interstate 95 on Dunn Avenue. Published reports indicate
this development project will represent an estimated $80 million in
capital investment and is expected to create more than 450 jobs
locally.” Mr. Albright continued, “The closing of this transaction
in the quarter demonstrates the potential of our company’s growth
in earnings and book value.” Mr. Albright also noted, “We are also
pleased to have completed our recent acquisitions including the
Whole Foods Market Center in Sarasota, Florida which brings a
strong urban retail property into our income property
portfolio.”
About Consolidated-Tomoka Land
Co.
Consolidated-Tomoka Land Co. is a Florida-based publicly traded
real estate company, which owns a portfolio of income properties
and loan investments in diversified markets in the United States,
and over 10,500 acres of land in the Daytona Beach, Florida area.
Visit our website at www.ctlc.com.
Forward-Looking
Statements
Certain statements contained in this press release (other than
statements of historical fact) are forward-looking statements. The
words “believe,” “estimate,” “expect,” “intend,” “anticipate,”
“will,” “could,” “may,” “should,” “plan,” “potential,” “predict,”
“forecast,” “project,” and similar expressions and variations
thereof identify certain of such forward-looking statements, which
speak only as of the dates on which they were made. Forward-looking
statements are made based upon management’s expectations and
beliefs concerning future developments and their potential effect
upon the Company. There can be no assurance that future
developments will be in accordance with management’s expectations
or that the effect of future developments on the Company will be
those anticipated by management.
The Company wishes to caution readers that the assumptions which
form the basis for forward-looking statements with respect to or
that may impact earnings for the year ended December 31, 2013, and
thereafter include many factors that are beyond the Company’s
ability to control or estimate precisely. For a description of the
risks and uncertainties that may cause actual results to differ
from the forward-looking statements contained in this press
release, please see the Company’s filings with the Securities and
Exchange Commission, including, but not limited to the Company’s
most recent Annual Report on Form 10-K. Copies of each filing may
be obtained from the Company or the SEC.
While the Company periodically reassesses material trends and
uncertainties affecting its results of operations and financial
condition, the Company does not intend to review or revise any
particular forward-looking statement referenced herein in light of
future events.
Disclosures in this press release regarding the Company’s
quarter-end financial results are preliminary and are subject to
change in connection with the Company’s preparation and filing of
its Form 10-K for the year ended December 31, 2013. The financial
information in this release reflects the Company’s preliminary
results subject to completion of the yearend review process. The
final results for the year may differ from the preliminary results
discussed above due to factors that include, but are not limited
to, risks associated with final review of the results and
preparation of financial statements.
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30,
2014
December 31, 2013
ASSETS Property, Plant, and Equipment: Land, Timber, and Subsurface
Interests $ 15,312,067 $ 15,291,911 Golf Buildings, Improvements,
and Equipment 3,298,993 3,103,979 Income Properties, Land,
Buildings, and Improvements 172,641,924 154,902,374 Other
Furnishings and Equipment 994,941 955,597 Construction in Progress
— 987,303 Total Property, Plant,
and Equipment 192,247,925 175,241,164 Less, Accumulated
Depreciation and Amortization (14,865,344 )
(13,260,856 ) Property, Plant, and Equipment - Net
177,382,581 161,980,308 Land and Development Costs 22,863,889
23,768,914 Intangible Assets - Net 6,697,873 6,359,438 Assets held
for Sale 3,153,762 — Impact Fee and Mitigation Credits 5,649,220
6,081,433 Commercial Loan Investments 27,399,082 18,845,053 Cash
and Cash Equivalents 2,219,256 4,932,512 Restricted Cash 1,425,507
366,645 Investment Securities 864,342 729,814 Net Pension Asset
492,806 407,670 Other Assets 4,188,156
2,711,893 Total Assets $ 252,336,474 $
226,183,680 LIABILITIES AND SHAREHOLDERS’
EQUITY Liabilities: Accounts Payable $ 712,355 $ 872,331 Accrued
Liabilities 5,483,109 4,726,809 Deferred Revenue 3,449,265
3,344,351 Accrued Stock-Based Compensation 428,217 247,671 Income
Taxes Payable 110,559 1,044,061 Deferred Income Taxes - Net
33,989,478 32,552,068 Long-Term Debt 81,190,011
63,227,032 Total Liabilities
125,362,994 106,014,323
Shareholders’ Equity: Common Stock -25,000,000 shares authorized;
$1 par value, 5,907,650 shares issued and -5,867,180 shares
outstanding at September 30, 2014; 5,866,759 shares issued and
5,852,125 shares outstanding at December 31, 2013 5,831,083
5,767,192 Treasury Stock – 40,470 shares at September 30, 2014;
14,634 shares at December 31, 2013 (1,381,566 ) (453,654 )
Additional Paid-In Capital 10,565,383 8,509,976 Retained Earnings
112,111,407 106,581,305 Accumulated Other Comprehensive Loss
(152,827 ) (235,462 ) Total Shareholders’ Equity
126,973,480 120,169,357 Total
Liabilities and Shareholders’ Equity $ 252,336,474 $
226,183,680
See Accompanying Notes to Consolidated
Financial Statements
CONSOLIDATED-TOMOKA LAND CO. CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
Nine Months Ended September 30, September
30, September 30, September 30,
2014 2013 2014 2013 Revenues Income
Properties $ 3,864,632 $ 3,298,447 $ 10,821,121 $ 9,445,677
Interest Income from Commercial Loan Investments 382,087 644,198
1,581,746 644,198 Real Estate Operations 8,645,034 1,369,397
10,925,215 2,010,722 Golf Operations 994,651 981,118 3,844,428
3,758,629 Agriculture and Other Income 182,731 20,845 258,052
149,028 Total Revenues 14,069,135 6,314,005 27,430,562
16,008,254 Direct Cost of Revenues Income Properties
(456,869 ) (427,341 ) (1,281,380 ) (1,038,922 ) Real Estate
Operations (3,435,357 ) (174,411 ) (3,758,283 ) (480,152 ) Golf
Operations (1,309,789 ) (1,321,337 ) (4,155,009 ) (4,154,338 )
Agriculture and Other Income (34,158 ) (33,821 ) (144,690 )
(120,275 ) Total Direct Cost of Revenues (5,236,173 )
(1,956,910 ) (9,339,362 ) (5,793,687 ) General and
Administrative Expenses (1,506,964 ) (1,207,593 ) (4,562,645 )
(4,221,831 ) Impairment Charges (421,040) — (421,040) (616,278 )
Depreciation and Amortization (886,618) (732,427) (2,505,007)
(2,128,185) Total Operating Expenses (8,050,795 ) (3,896,930
) (16,828,054 ) (12,759,981 ) Operating Income 6,018,340
2,417,075 10,602,508 3,248,273 Interest Income 14,246 —
42,564 391 Interest Expense (569,154 ) (509,898 ) (1,554,583 )
(1,316,026 ) Income from Continuing Operations Before Income
Tax Expense 5,463,432 1,907,177 9,090,489 1,932,638 Income Expense
Benefit (1,984,741 ) (735,713 ) (3,388,483 ) (736,121 )
Income from Continuing Operations 3,478,691 1,171,464 5,702,006
1,196,517 Income from Discontinued Operations (Net of Tax) — 70,840
— 634,602 Net Income $ 3,478,691 $ 1,242,304 $ 5,702,006 $
1,831,119 Per Share Information: Basic and Diluted
Income from Continuing Operations $ 0.60 $ 0.21 $ 0.99 $ 0.21
Income from Discontinued Operations (Net of Tax) — 0.01 — 0.11
Net Income $ 0.60 $ 0.22 $ 0.99 $ 0.32 Dividends
Declared and Paid $ 0.00 $ 0.00 $ 0.03 $ 0.03
See Accompanying Notes to Consolidated Financial Statements
Consolidated-Tomoka Land
Co.Mark E. Patten, 386-944-5643Sr. Vice President and
CFOmpatten@ctlc.comFacsimile: 386-274-1223
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