CTO Realty Growth, Inc. (NYSE: CTO) (the “Company” or “CTO”) today
announced its operating results and earnings for the quarter ended
June 30, 2021.
Select Highlights
- Reported a Net
Loss per diluted share of ($0.63) for the quarter ended June 30,
2021.
- Reported FFO and
AFFO per diluted share of $0.83 and $1.07, respectively, for the
quarter ended June 30, 2021.
- Paid a cash
dividend for the second quarter of 2021 of $1.00 per share on June
30, 2021 to stockholders of record as of June 21, 2021.
- During the
second quarter of 2021, acquired one multi-tenant, mixed use income
property for $72.5 million.
- During the
second quarter of 2021, disposed of eight single tenant income
properties for a total disposition volume of $60.7 million,
representing a weighted average exit cap rate of 7.1%.
- During the
second quarter of 2021, sold approximately 9,300 acres of
subsurface oil, gas and mineral rights for $0.7 million.
- Recognized a
non-cash, unrealized gain of $3.4 million on the mark-to-market of
the Company’s investment in Alpine Income Property Trust, Inc.
(NYSE: PINE) during the second quarter of 2021.
- Executed an
agreement to sell the Land JV’s (defined below) remaining holdings,
of which the Company has a retained interest, for $67.0
million.
- Priced an
underwritten public offering of 3,000,000 shares of 6.375% Series A
Cumulative Redeemable Preferred Stock for $25.00 per share (the
“Series A Preferred”).
- Book value per
share outstanding as of June 30, 2021 was $58.51.
- The Company is revising its
practice of declaring a quarterly cash common stock dividend
concurrent with its quarterly earnings and instead anticipates
announcing its quarterly cash common stock and Series A Preferred
dividends for the third quarter of 2021 and for future periods at
the end of the second month of the respective quarter.
CEO Comments
“We are encouraged by our second quarter
execution and the progress we are making in constructing a
high-quality multi-tenant, retail-based portfolio,” commented John
P. Albright, President and Chief Executive Officer of CTO Realty
Growth. “We acquired a high-quality, class A, mixed use property in
the Dallas market for $72.5 million and we continued to make good
progress with the disposition of our single tenant assets, which
totaled $61 million in the second quarter. The contract purchaser
for the remaining Daytona Beach land holdings is in due diligence
and we look forward to accretively reinvesting the expected
proceeds into our core strategy. The combination of all of this
activity, in addition to acquisition and disposition opportunities
we anticipate materializing in the back half of the year, has us
well-positioned to drive strong AFFO growth in 2022 as we execute
on our diversified, retail-based investment strategy.”
Quarterly Financial Results
Highlights
The tables below provide a summary of the
Company’s operating results for the three months ended June 30,
2021:
| (in thousands) |
For the ThreeMonths EndedJune 30, 2021 |
|
For the ThreeMonths EndedJune 30, 2020 |
|
Variance to ComparablePeriod in the Prior
Year |
|
|
Income Properties |
$ |
11,574 |
|
$ |
11,473 |
|
$ |
101 |
|
|
0.9 |
% |
| Management Fee Income |
$ |
752 |
|
$ |
695 |
|
$ |
57 |
|
|
8.2 |
% |
| Commercial Loan and Master
Lease Investments |
$ |
709 |
|
$ |
835 |
|
$ |
(126 |
) |
|
(15.1 |
%) |
| Real Estate Operations |
$ |
1,248 |
|
$ |
7 |
|
$ |
1,241 |
|
|
17,728.6 |
% |
| Total Revenues |
$ |
14,283 |
|
$ |
13,010 |
|
$ |
1,273 |
|
|
9.8 |
% |
The increase in total revenue during the three
months ended June 30, 2021 was primarily attributable to increased
revenue from real estate operations related to the sale of
subsurface interests.
| (in thousands, except per
share data) |
For the ThreeMonths EndedJune 30, 2021 |
|
For the ThreeMonths EndedJune 30, 2020 |
|
Variance to ComparablePeriod in the Prior
Year |
|
Net Income (Loss) |
$ |
(3,724 |
) |
|
$ |
12,611 |
|
$ |
(16,335 |
) |
(129.5 |
%) |
| Net Income (Loss) per diluted
share |
$ |
(0.63 |
) |
|
$ |
2.71 |
|
$ |
(3.34 |
) |
(123.2 |
%) |
| FFO (1) |
$ |
4,915 |
|
|
$ |
2,532 |
|
$ |
2,383 |
|
94.1 |
% |
| FFO per diluted share (1) |
$ |
0.83 |
|
|
$ |
0.54 |
|
$ |
0.29 |
|
53.7 |
% |
| AFFO (1) |
$ |
6,294 |
|
|
$ |
443 |
|
$ |
5,851 |
|
1,320.8 |
% |
| AFFO per diluted share
(1) |
$ |
1.07 |
|
|
$ |
0.10 |
|
$ |
0.97 |
|
970.0 |
% |
| Dividends Declared and Paid,
per share |
$ |
1.00 |
|
|
$ |
0.25 |
|
$ |
0.75 |
|
300.0 |
% |
(1) See the “Non-GAAP Financial
Measures” section and tables at the end of this press release for a
discussion and reconciliation of Net Income (Loss) to non-GAAP
financial measures, including FFO, FFO per diluted share, AFFO and
AFFO per diluted share.
The net loss for the three months ended June 30,
2021 was primarily attributable to a non-cash impairment charge on
the Company’s retained interest in the joint venture that currently
holds approximately 1,600 acres of undeveloped land in Daytona
Beach, Florida (the “Land JV”) of $16.5 million, or $2.11 per
diluted share, net of the related income tax benefit. The non-cash
impairment charge is a result of the executed agreement to sell the
Land JV’s remaining holdings.
Additionally, during the three months ended June
30, 2021, the Company recognized gains on dispositions of
income-producing properties totaling $4.7 million, or $0.80 per
diluted share, in addition to a non-cash, unrealized gain of $3.4
million, or $0.57 per diluted share, on the mark-to-market of the
Company’s investment in PINE due to the increase in the closing
stock price of PINE during the quarter.
Net Income (Loss) per diluted share, FFO per
diluted share and AFFO per diluted share for the three months ended
June 30, 2021 and the associated year-over-year comparisons include
the dilutive effects of the Company’s previously announced special
distribution that was intended to ensure that the Company
distributed all of its previously undistributed earnings and
profits attributable to taxable periods ended on or prior to
December 31, 2019, as required in connection with the Company’s
election to be taxable as a REIT commencing with its taxable year
ended December 31, 2020. The Special Distribution was paid in the
fourth quarter of 2020 through an aggregate of approximately $5.6
million in cash and the issuance of 1,198,963 shares of the
Company’s common stock.
Year-to-Date Financial Results
Highlights
The tables below provide a summary of the
Company’s operating results for the six months ended June 30,
2021:
| (in thousands) |
For the SixMonths EndedJune 30, 2021 |
|
For the SixMonths EndedJune 30,
2020 |
|
Variance to ComparablePeriod in the Prior
Year |
|
|
Income Properties |
$ |
23,023 |
|
$ |
22,476 |
|
$ |
547 |
|
|
2.4 |
% |
| Management Fee Income |
$ |
1,421 |
|
$ |
1,397 |
|
$ |
24 |
|
|
1.7 |
% |
| Commercial Loan and Master
Lease Investments |
$ |
1,410 |
|
$ |
1,887 |
|
$ |
(477 |
) |
|
(25.3 |
%) |
| Real Estate Operations |
$ |
3,141 |
|
$ |
88 |
|
$ |
3,053 |
|
|
3,469.3 |
% |
| Total Revenues |
$ |
28,995 |
|
$ |
25,848 |
|
$ |
3,147 |
|
|
12.2 |
% |
The increase in total revenue during the six
months ended June 30, 2021 was primarily attributable to increased
revenue from real estate operations related to the sale of
subsurface interests in addition to income produced by the
Company’s recent income property acquisitions versus that of
properties disposed of by the Company during the comparative
period, offset by decreased revenue related to the timing of the
Company’s investments in and dispositions of commercial loan and
master lease investments.
| (in thousands, except per
share data) |
For the SixMonths EndedJune 30, 2021 |
|
For the SixMonths EndedJune 30,
2020 |
|
Variance to ComparablePeriod in the Prior
Year |
|
Net Income |
$ |
4,061 |
|
$ |
349 |
|
$ |
3,712 |
|
1,063.61 |
% |
| Net Income per diluted
share |
$ |
0.69 |
|
$ |
0.07 |
|
$ |
0.62 |
|
885.7 |
% |
| FFO (1) |
$ |
10,161 |
|
$ |
11,822 |
|
$ |
(1,661 |
) |
(14.1 |
%) |
| FFO per diluted share (1) |
$ |
1.73 |
|
$ |
2.52 |
|
$ |
(0.79 |
) |
(31.3 |
%) |
| AFFO (1) |
$ |
11,981 |
|
$ |
9,625 |
|
$ |
2,356 |
|
24.5 |
% |
| AFFO per diluted share
(1) |
$ |
2.03 |
|
$ |
2.06 |
|
$ |
(0.03 |
) |
(1.5 |
%) |
| Dividends Declared and Paid,
per share |
$ |
2.00 |
|
$ |
0.50 |
|
$ |
1.50 |
|
300.0 |
% |
(1) See the “Non-GAAP Financial
Measures” section and tables at the end of this press release for a
discussion and reconciliation of Net Income to non-GAAP financial
measures, including FFO, FFO per diluted share, AFFO and AFFO per
diluted share.
Net income for the six months ended June 30,
2021 includes gains on dispositions of income-producing properties
totaling $5.4 million, or $0.92 per diluted share, in addition to a
non-cash, unrealized gain of $8.2 million, or $1.40 per diluted
share, on the mark-to-market of the Company’s investment in PINE
due to the increase in the closing stock price of PINE during the
period. Additionally, the Company recognized a non-cash impairment
charge on the Company’s retained interest in the Land JV of $16.5
million, or $2.11 per diluted share, net of the related income tax
benefit. The non-cash impairment charge is a result of the executed
agreement to sell the Land JV’s remaining holdings.
Net Income per diluted share, FFO per diluted
share and AFFO per diluted share for the six months ended June 30,
2021 and the associated year-over-year comparisons include the
dilutive effects of the Company’s previously announced special
distribution that was intended to ensure that the Company
distributed all of its previously undistributed earnings and
profits attributable to taxable periods ended on or prior to
December 31, 2019, as required in connection with the Company’s
election to be taxable as a REIT commencing with its taxable year
ended December 31, 2020. The Special Distribution was paid in the
fourth quarter of 2020 through an aggregate of approximately $5.6
million in cash and the issuance of 1,198,963 shares of the
Company’s common stock.
Acquisitions
During the three months ended June 30, 2021, the
Company acquired one multi-tenant, mixed use property for $72.5
million.
During the six months ended June 30, 2021, the
Company acquired three multi-tenant retail-based properties for
total acquisition volume of $111.0 million. These acquisitions
represent a weighted average going-in cash cap rate of 8.5%.
Dispositions
During the three months ended June 30, 2021, the
Company sold eight single tenant income properties for total
disposition volume of $60.7 million, reflecting a weighted average
exit cap rate of 7.1%. The sale of the properties generated
aggregate gains of $4.6 million.
During the six months ended June 30, 2021, the
Company sold ten, primarily single tenant income properties for
total disposition volume of $65.5 million, reflecting a weighted
average exit cap rate of 7.1%. The sale of the properties generated
aggregate gains of $5.4 million.
On July 14, 2021, the Company sold a property
leased to Chick-fil-A for a sales price of $2.9 million, reflecting
an exit cap rate of 4.5%. The property is an outparcel to
Crossroads Towne Center, the Company’s multi-tenant income property
located in Chandler, Arizona.
On July 27, 2021, the Company sold a property
leased to JPMorgan Chase Bank for a sales price of $4.7 million,
reflecting an exit cap rate of 4.6%. The property is also an
outparcel to Crossroads Towne Center.
Income Property Portfolio
As of June 30, 2021, the Company’s portfolio had economic
occupancy of 90.6% and physical occupancy of 90.4%.
The Company’s income property portfolio consisted of the
following as of June 30, 2021:
|
Property Type |
|
# of Properties |
|
Square Feet |
|
Weighted AverageRemaining on Lease Term |
| Single-Tenant (1) |
|
12 |
|
1,115 |
|
21.1 years |
| Multi-Tenant |
|
8 |
|
1,566 |
|
6.3 years |
| Total / Weighted Average Lease
Term |
|
20 |
|
2,681 |
|
12.2 years |
| |
|
|
|
|
|
|
| % of Cash Rent
attributable to Retail Tenants |
58% |
|
|
| % of Cash Rent
attributable to Office Tenants |
40% |
|
|
| % of Cash Rent
attributable to Hotel Ground Lease |
2% |
|
|
Square feet in thousands.
(1) The 12 single-tenant properties include
(i) a property leased to The Carpenter Hotel which is under a
long-term ground lease and includes two tenant repurchase options
and (ii) a property in Hialeah leased to a master tenant which
includes three tenant repurchase options. Pursuant to FASB ASC
Topic 842, Leases, the $16.3 and $21.0 million investments,
respectively, have been recorded in the Company’s consolidated
balance sheets as Commercial Loan and Master Lease Investments.
Operational Highlights
During the second quarter of 2021, CTO signed
leases totaling 186,055 square feet. A summary of the Company’s
leasing activity is as follows:
|
Retail |
|
SquareFeet |
|
WeightedAverageLease Term |
|
Cash Rent PerSquare Foot |
|
TenantImprovements |
|
LeasingCommissions |
|
New Leases |
|
22.1 |
|
9.9 years |
|
$ |
21.08 |
|
$ |
2,734 |
|
$ |
146 |
| Renewals & Extensions |
|
164.0 |
|
5.3 years |
|
$ |
8.98 |
|
|
633 |
|
|
23 |
|
Total / Weighted Average |
|
186.1 |
|
6.4 years |
|
$ |
10.42 |
|
$ |
3,367 |
|
$ |
169 |
In thousands except for per square foot and
lease term data.
Land Joint Venture
During the three months ended June 30, 2021, the
Land JV entered into an agreement to sell its remaining land
holdings, including any land previously under contract, for $67.0
million. The sale is anticipated to occur prior to the end of
2021.
Subsurface Interests
During the three months ended June 30, 2021, the
Company sold approximately 9,300 acres of subsurface oil, gas and
mineral rights for $0.7 million, resulting in a gain equal to the
sales price.
During the six months ended June 30, 2021, the
Company sold approximately 34,500 acres of subsurface oil, gas and
mineral rights for $2.6 million, resulting in a gain on the sale of
$2.5 million. As of June 30, 2021, the Company owns full or
fractional subsurface oil, gas, and mineral interests underlying
approximately 420,000 “surface” acres of land owned by others in 20
counties in Florida.
Capital Markets and Balance
Sheet
During the three months ended June 30, 2021, the
Company completed the following notable capital markets
transactions:
- On April 1,
2021, the Company filed a shelf registration statement on Form S-3,
registering the possible issuance and sale of common stock,
preferred stock, warrants, rights, and units with a maximum
aggregate offering price of up to $350.0 million.
- On April 30,
2021, the Company implemented a $150.0 million “at-the-market” or
ATM equity offering program (the “2021 ATM Program”) pursuant to
which the Company may sell, from time to time, shares of the
Company’s common stock. The Company was not active under the ATM
Program during the six months ended June 30, 2021.
- On May 14, 2021,
the Company repurchased $0.8 million aggregate principal amount of
2025 convertible senior notes.
- On June 28,
2021, the Company priced a public offering of 3,000,000 shares of
its 6.375% Series A Cumulative Redeemable Preferred Stock at a
public offering price of $25.00 per share. The offering closed on
July 6, 2021 and generated total net proceeds to the Company of
$72.4 million, which were utilized to pay down the Company’s
revolving credit facility.
- On June 30, 2021, the Company’s
$30.0 million mortgage note payable was assumed by PINE in
connection with the Company’s sale of six net lease properties to
PINE.
The following table provides a summary of the
Company’s long-term debt, at face value, as of June 30, 2021:
|
Component of Long-Term Debt |
|
Principal |
|
Interest Rate |
|
MaturityDate |
| Revolving Credit Facility
(1) |
|
$100.0 million |
|
0.7325% + [1.35% – 1.95%] |
|
May 2023 |
| Revolving Credit Facility |
|
$84.3 million |
|
30-day LIBOR + [1.35% - 1.95%] |
|
May 2023 |
| 2025 Convertible Senior
Notes |
|
$61.7 million |
|
3.88% |
|
April 2025 |
| 2026 Term Loan (2) |
|
$65.0 million |
|
0.2200% + [1.35% – 1.95%] |
|
March 2026 |
| Total Debt / Weighted Average
Interest Rate |
|
$311.0 million |
|
2.27% |
|
|
(1) Effective March 31, 2020, the
Company utilized an interest rate swap to achieve a fixed LIBOR
rate of 0.7325% plus the applicable spread on $100.0 million of the
outstanding balance on the revolving credit facility.
(2) Effective March 10, 2021, the
Company redesignated the interest rate swap that previously hedged
$50.0 million of the outstanding balance on the revolving credit
facility to $50.0 million principal balance on the term loan.
Dividends
The Company paid a cash dividend for the second
quarter of 2021 of $1.00 per share, on June 30, 2021 to
stockholders of record as of the close of business on June 21,
2021.
The Company is revising its practice of
declaring a quarterly cash common stock dividend concurrent with
its quarterly earnings and instead anticipates announcing its
quarterly cash common stock and Series A preferred stock dividends
for the third quarter of 2021 and for future periods at the end of
the second month of the respective quarter.
2021 Outlook
The Company has revised its outlook for 2021 to
take into account the Company’s second quarter performance and the
expected impact of the Company’s various investment activities and
capital markets transactions, including the recent Series A
preferred equity issuance.
The Company’s outlook for 2021, which does not
include any potential tax expense or tax benefit related to the
Company’s retained ownership in the Land JV, assumes continued
improvement in economic activity, stable or positive business
trends related to each of our tenants and other significant
assumptions.
| |
|
|
2021 Outlook |
|
|
|
|
Low |
High |
| Acquisition of Income
Producing Assets |
|
|
$175.0 million |
$225.0 million |
| Target Investment Initial Cash
Yield |
|
|
7.25% |
7.50% |
| Disposition of Assets |
|
|
$125.0 million |
$150.0 million |
| Target Disposition Cash
Yield |
|
|
5.75% |
6.25% |
| |
|
|
|
|
| FFO Per Diluted Share |
|
|
$3.65 |
$3.85 |
| AFFO Per Diluted Share |
|
|
$4.00 |
$4.20 |
| |
|
|
|
|
| Weighted Average Diluted
Shares Outstanding |
|
|
6.0 million |
6.0 million |
COVID-19 Pandemic
In March 2020, the World Health Organization
declared the outbreak of the novel coronavirus as a pandemic (the
“COVID-19 Pandemic”), which has spread throughout the United
States. The impact of the COVID-19 Pandemic has evolved rapidly,
with many jurisdictions taking drastic measures to limit the spread
of the virus by instituting quarantines or lockdowns and imposing
travel restrictions. Such actions have created significant
disruptions to global supply chains, and adversely impacted several
industries, including airlines, hospitality, retail and the broader
real estate industry.
As a result of the approval of multiple COVID-19
vaccines for use and the distribution of such vaccines among the
general population, a number of jurisdictions have reopened and
loosened restrictions. However, wide disparities in vaccination
rates and continued vaccine hesitancy, combined with the emergence
of COVID-19 variants and surges in COVID-19 cases, could trigger
the reinstatement of further restrictions. Such restrictions could
include mandatory business shut-downs, travel restrictions, reduced
business operations and social distancing requirements.
The future impact of the COVID-19 Pandemic on
the real estate industry and the Company’s financial condition and
results of operations is uncertain and cannot be predicted
currently since it depends on several factors beyond the control of
the Company, including, but not limited to: (i) the uncertainty
surrounding the severity and duration of the COVID-19 Pandemic,
including possible recurrences and differing economic and social
impacts of the COVID-19 Pandemic in various regions of the United
States; (ii) the effectiveness of the United States public health
response; (iii) the COVID-19 Pandemic’s impact on the United States
and global economies; (iv) the timing, scope and effectiveness of
additional governmental responses to the COVID-19 Pandemic; (v) the
availability of a treatment and effectiveness of vaccines approved
for COVID-19 and the willingness of individuals to get vaccinated;
(vi) changes in how certain types of commercial property are used
while maintaining social distancing and other techniques intended
to control the impact of COVID-19; (vii) the impact of phase out of
economic stimulus measures, the inflationary pressure of economic
stimulus, and the eventual halt and reversal by the U.S. Treasury
of asset purchases; and (viii) the uneven impact on the Company’s
tenants, real estate values and cost of capital.
2nd Quarter Earnings Conference Call
& Webcast
The Company will host a conference call to
present its operating results for the quarter ended June 30, 2021,
on Friday, July 30, 2021, at 9:00 AM ET. Stockholders and
interested parties may access the earnings call via teleconference
or webcast:
|
Teleconference: USA (Toll Free) |
1-888-317-6003 |
| International: |
1-412-317-6061 |
| Canada (Toll Free): |
1-866-284-3684 |
Please dial in at least fifteen minutes prior to
the scheduled start time and use the code 7119381
when prompted.
A webcast of the call can be accessed at:
https://services.choruscall.com/links/cto210730.html.
To access the webcast, log on to the web address
noted above or go to http://www.ctoreit.com and log in at the
investor relations section. Please log in to the webcast at least
ten minutes prior to the scheduled time of the Earnings Call.
About CTO Realty Growth,
Inc.
CTO Realty Growth, Inc. is a publicly traded
real estate investment trust that owns and operates a portfolio of
high-quality, retail-based properties located primarily in higher
growth markets in the United States. CTO also owns an approximate
16% interest in Alpine Income Property Trust, Inc. (NYSE: PINE), a
publicly traded net lease REIT.
We encourage you to review our most recent
investor presentation, which is available on our website at
www.ctoreit.com.
Safe Harbor
Certain statements contained in this press
release (other than statements of historical fact) are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking
statements can typically be identified by words such as “believe,”
“estimate,” “expect,” “intend,” “anticipate,” “will,” “could,”
“may,” “should,” “plan,” “potential,” “predict,” “forecast,”
“project,” and similar expressions, as well as variations or
negatives of these words.
Although forward-looking statements are made
based upon management’s present expectations and reasonable beliefs
concerning future developments and their potential effect upon the
Company, a number of factors could cause the Company’s actual
results to differ materially from those set forth in the
forward-looking statements. Such factors may include, but are not
limited to: the Company’s ability to remain qualified as a REIT;
the Company’s exposure to U.S. federal and state income tax law
changes, including changes to the REIT requirements; general
adverse economic and real estate conditions; the ultimate
geographic spread, severity and duration of pandemics such as the
recent outbreak of the novel coronavirus, actions that may be taken
by governmental authorities to contain or address the impact of
such pandemics, and the potential negative impacts of such
pandemics on the global economy and the Company’s financial
condition and results of operations; the inability of major tenants
to continue paying their rent or obligations due to bankruptcy,
insolvency or a general downturn in their business; the loss or
failure, or decline in the business or assets of PINE or the
venture formed when the Company sold its controlling interest in
the entity that owned the Company’s remaining land portfolio, of
which the Company has a retained interest; the completion of 1031
exchange transactions; the availability of investment properties
that meet the Company’s investment goals and criteria; the
uncertainties associated with obtaining required governmental
permits and satisfying other closing conditions for planned
acquisitions and sales; and the uncertainties and risk factors
discussed in the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2020 and other risks and
uncertainties discussed from time to time in the Company’s filings
with the U.S. Securities and Exchange Commission.
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. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date of this press release. The Company undertakes
no obligation to update the information contained in this press
release to reflect subsequently occurring events or
circumstances.
Non-GAAP Financial Measures
Our reported results are presented in accordance
with GAAP. We also disclose Funds From Operations (“FFO”) and
Adjusted Funds From Operations (“AFFO”), both of which are non-GAAP
financial measures. We believe these two non-GAAP financial
measures are useful to investors because they are widely accepted
industry measures used by analysts and investors to compare the
operating performance of REITs.
FFO and AFFO do not represent cash generated
from operating activities and are not necessarily indicative of
cash available to fund cash requirements; accordingly, they should
not be considered alternatives to net income as a performance
measure or cash flows from operating activities as reported on our
statement of cash flows as a liquidity measure and should be
considered in addition to, and not in lieu of, GAAP financial
measures.
We compute FFO in accordance with the definition
adopted by the Board of Governors of the National Association of
Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as
GAAP net income or loss adjusted to exclude extraordinary items (as
defined by GAAP), net gain or loss from sales of depreciable real
estate assets, impairment write-downs associated with depreciable
real estate assets and real estate related depreciation and
amortization, including the pro rata share of such adjustments of
unconsolidated subsidiaries. The Company also excludes the gains or
losses from sales of assets incidental to the primary business of
the REIT which specifically include the sales of mitigation
credits, impact fee credits, subsurface sales, and the land sales
gains included in discontinued operations. To derive AFFO, we
modify the NAREIT computation of FFO to include other adjustments
to GAAP net income related to non-cash revenues and expenses such
as straight-line rental revenue, amortization of deferred financing
costs, amortization of capitalized lease incentives and above- and
below-market lease related intangibles, and non-cash compensation.
Such items may cause short-term fluctuations in net income but have
no impact on operating cash flows or long-term operating
performance. We use AFFO as one measure of our performance when we
formulate corporate goals.
FFO is used by management, investors and
analysts to facilitate meaningful comparisons of operating
performance between periods and among our peers primarily because
it excludes the effect of real estate depreciation and amortization
and net gains on sales, which are based on historical costs and
implicitly assume that the value of real estate diminishes
predictably over time, rather than fluctuating based on existing
market conditions. We believe that AFFO is an additional useful
supplemental measure for investors to consider because it will help
them to better assess our operating performance without the
distortions created by other non-cash revenues or expenses. FFO and
AFFO may not be comparable to similarly titled measures employed by
other companies.
CTO Realty Growth,
Inc.Consolidated Balance Sheets(In
thousands, except share and per share data)
| |
|
As of |
|
|
|
(Unaudited)June 30, 2021 |
|
December 31, 2020 |
|
ASSETS |
|
|
|
|
|
|
| Real Estate: |
|
|
|
|
|
|
|
Land, at cost |
|
$ |
172,304 |
|
|
$ |
166,512 |
|
|
Building and Improvements, at cost |
|
|
320,769 |
|
|
|
305,614 |
|
|
Other Furnishings and Equipment, at cost |
|
|
682 |
|
|
|
672 |
|
|
Construction in Process, at cost |
|
|
1,351 |
|
|
|
323 |
|
|
Total Real Estate, at cost |
|
|
495,106 |
|
|
|
473,121 |
|
|
Less, Accumulated Depreciation |
|
|
(31,211 |
) |
|
|
(30,737 |
) |
|
Real Estate—Net |
|
|
463,895 |
|
|
|
442,384 |
|
| Land and Development Costs |
|
|
6,684 |
|
|
|
7,083 |
|
| Intangible Lease Assets—Net |
|
|
71,470 |
|
|
|
50,176 |
|
| Assets Held for Sale |
|
|
3,720 |
|
|
|
833 |
|
| Investment in Joint Ventures |
|
|
32,497 |
|
|
|
48,677 |
|
| Investment in Alpine Income
Property Trust, Inc. |
|
|
38,794 |
|
|
|
30,574 |
|
| Mitigation Credits |
|
|
2,621 |
|
|
|
2,622 |
|
| Commercial Loan and Master Lease
Investments |
|
|
38,884 |
|
|
|
38,320 |
|
| Cash and Cash Equivalents |
|
|
4,701 |
|
|
|
4,289 |
|
| Restricted Cash |
|
|
13,918 |
|
|
|
29,536 |
|
| Refundable Income Taxes |
|
|
599 |
|
|
|
26 |
|
| Deferred Income Taxes—Net |
|
|
473 |
|
|
|
— |
|
| Other Assets |
|
|
11,616 |
|
|
|
12,180 |
|
|
Total Assets |
|
$ |
689,872 |
|
|
$ |
666,700 |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
| Liabilities: |
|
|
|
|
|
|
|
Accounts Payable |
|
$ |
1,332 |
|
|
$ |
1,047 |
|
|
Accrued and Other Liabilities |
|
|
11,437 |
|
|
|
9,090 |
|
|
Deferred Revenue |
|
|
4,036 |
|
|
|
3,319 |
|
|
Intangible Lease Liabilities—Net |
|
|
22,459 |
|
|
|
24,163 |
|
|
Liabilities Held for Sale |
|
|
831 |
|
|
|
831 |
|
|
Deferred Income Taxes—Net |
|
|
— |
|
|
|
3,521 |
|
|
Long-Term Debt |
|
|
304,886 |
|
|
|
273,830 |
|
|
Total Liabilities |
|
|
344,981 |
|
|
|
315,801 |
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
Stockholders’ Equity: |
|
|
|
|
|
|
|
Preferred Stock – 100,000,000 shares authorized; $0.01 par value,
no shares issued or outstanding at June 30, 2021; 50,000 shares
authorized; $100.00 par value, no shares issued or outstanding at
December 31, 2020 |
|
|
— |
|
|
|
— |
|
|
Common Stock – 500,000,000 shares authorized; $0.01 par value,
5,955,154 shares issued and outstanding at June 30, 2021;
25,000,000 shares authorized; $1.00 par value, 7,310,680 shares
issued and 5,915,756 shares outstanding at December 31, 2020 |
|
|
60 |
|
|
|
7,250 |
|
|
Treasury Stock – 0 shares at June 30, 2021 and 1,394,924 shares at
December 31, 2020 |
|
|
— |
|
|
|
(77,541 |
) |
|
Additional Paid-In Capital |
|
|
13,676 |
|
|
|
83,183 |
|
|
Retained Earnings |
|
|
331,895 |
|
|
|
339,917 |
|
|
Accumulated Other Comprehensive Loss |
|
|
(740 |
) |
|
|
(1,910 |
) |
|
Total Stockholders’ Equity |
|
|
344,891 |
|
|
|
350,899 |
|
|
Total Liabilities and Stockholders’ Equity |
|
$ |
689,872 |
|
|
$ |
666,700 |
|
CTO Realty Growth,
Inc.Consolidated Statements of Operations
(Unaudited, in thousands, except share, per share and dividend
data)
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, 2021 |
|
June 30, 2020 |
|
June 30, 2021 |
|
June 30, 2020 |
| Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Income Properties |
$ |
11,574 |
|
|
$ |
11,473 |
|
|
$ |
23,023 |
|
|
$ |
22,476 |
|
|
Management Fee Income |
|
752 |
|
|
|
695 |
|
|
|
1,421 |
|
|
|
1,397 |
|
|
Interest Income from Commercial Loan and Master Lease
Investments |
|
709 |
|
|
|
835 |
|
|
|
1,410 |
|
|
|
1,887 |
|
|
Real Estate Operations |
|
1,248 |
|
|
|
7 |
|
|
|
3,141 |
|
|
|
88 |
|
|
Total Revenues |
|
14,283 |
|
|
|
13,010 |
|
|
|
28,995 |
|
|
|
25,848 |
|
| Direct Cost of Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Income Properties |
|
(2,787 |
) |
|
|
(2,568 |
) |
|
|
(5,704 |
) |
|
|
(4,681 |
) |
|
Real Estate Operations |
|
(533 |
) |
|
|
(57 |
) |
|
|
(615 |
) |
|
|
(1,581 |
) |
|
Total Direct Cost of Revenues |
|
(3,320 |
) |
|
|
(2,625 |
) |
|
|
(6,319 |
) |
|
|
(6,262 |
) |
| General and Administrative
Expenses |
|
(2,665 |
) |
|
|
(2,171 |
) |
|
|
(5,797 |
) |
|
|
(5,263 |
) |
| Impairment Charges |
|
(16,527 |
) |
|
|
— |
|
|
|
(16,527 |
) |
|
|
(1,905 |
) |
| Depreciation and
Amortization |
|
(5,031 |
) |
|
|
(5,021 |
) |
|
|
(9,861 |
) |
|
|
(9,573 |
) |
|
Total Operating Expenses |
|
(27,543 |
) |
|
|
(9,817 |
) |
|
|
(38,504 |
) |
|
|
(23,003 |
) |
| Gain on Disposition of
Assets |
|
4,732 |
|
|
|
7,076 |
|
|
|
5,440 |
|
|
|
7,076 |
|
| Gain (Loss) on Extinguishment
of Debt |
|
(641 |
) |
|
|
504 |
|
|
|
(641 |
) |
|
|
1,141 |
|
|
Other Gains and Income |
|
4,091 |
|
|
|
7,580 |
|
|
|
4,799 |
|
|
|
8,217 |
|
|
Total Operating Income (Loss) |
|
(9,169 |
) |
|
|
10,773 |
|
|
|
(4,710 |
) |
|
|
11,062 |
|
| Investment and Other Income
(Loss) |
|
3,903 |
|
|
|
8,470 |
|
|
|
9,235 |
|
|
|
(4,716 |
) |
| Interest Expense |
|
(2,421 |
) |
|
|
(2,453 |
) |
|
|
(4,865 |
) |
|
|
(5,906 |
) |
|
Income (Loss) from Operations Before Income Tax Benefit
(Expense) |
|
(7,687 |
) |
|
|
16,790 |
|
|
|
(340 |
) |
|
|
440 |
|
| Income Tax Benefit
(Expense) |
|
3,963 |
|
|
|
(4,179 |
) |
|
|
4,401 |
|
|
|
(91 |
) |
|
Net Income (Loss) |
$ |
(3,724 |
) |
|
$ |
12,611 |
|
|
$ |
4,061 |
|
|
$ |
349 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Per Share Information: |
|
|
|
|
|
|
|
|
|
|
|
| Basic and Diluted |
$ |
(0.63 |
) |
|
$ |
2.71 |
|
|
$ |
0.69 |
|
|
$ |
0.07 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Weighted Average Number of
Common Shares: |
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
5,898,280 |
|
|
|
4,653,627 |
|
|
|
5,888,735 |
|
|
|
4,682,511 |
|
| Diluted |
|
5,898,280 |
|
|
|
4,653,627 |
|
|
|
5,888,735 |
|
|
|
4,682,511 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Dividends Declared and
Paid |
$ |
1.00 |
|
|
$ |
0.25 |
|
|
$ |
2.00 |
|
|
$ |
0.50 |
|
CTO Realty Growth,
Inc.Non-GAAP Financial
Measures(Unaudited, in thousands, except per share
data)
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, 2021 |
|
June 30, 2020 |
|
June 30, 2021 |
|
June 30, 2020 |
|
Net Income (Loss) |
$ |
(3,724 |
) |
|
$ |
12,611 |
|
|
$ |
4,061 |
|
|
$ |
349 |
|
|
Depreciation and Amortization |
|
5,031 |
|
|
|
5,021 |
|
|
|
9,861 |
|
|
|
9,573 |
|
|
Gains on Disposition of Assets |
|
(4,732 |
) |
|
|
(7,076 |
) |
|
|
(5,440 |
) |
|
|
(7,076 |
) |
|
Losses (Gains) on the Disposition of Other Assets |
|
(748 |
) |
|
|
32 |
|
|
|
(2,575 |
) |
|
|
1,421 |
|
|
Impairment Charges, Net |
|
12,474 |
|
|
|
— |
|
|
|
12,474 |
|
|
|
1,905 |
|
|
Unrealized (Gain) Loss on Investment Securities |
|
(3,386 |
) |
|
|
(8,056 |
) |
|
|
(8,220 |
) |
|
|
5,650 |
|
| Funds from Operations |
$ |
4,915 |
|
|
$ |
2,532 |
|
|
$ |
10,161 |
|
|
$ |
11,822 |
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Straight-Line Rent Adjustment |
|
(490 |
) |
|
|
(802 |
) |
|
|
(1,175 |
) |
|
|
(1,140 |
) |
|
COVID-19 Rent Repayments (Deferrals), Net |
|
434 |
|
|
|
(1,151 |
) |
|
|
654 |
|
|
|
(1,151 |
) |
|
Amortization of Intangibles to Lease Income |
|
(338 |
) |
|
|
(444 |
) |
|
|
(734 |
) |
|
|
(918 |
) |
|
Contributed Leased Assets Accretion |
|
(38 |
) |
|
|
(44 |
) |
|
|
(159 |
) |
|
|
(87 |
) |
|
Loss (Gain) on Extinguishment of Debt |
|
641 |
|
|
|
(504 |
) |
|
|
641 |
|
|
|
(1,141 |
) |
|
Amortization of Discount on Convertible Debt |
|
319 |
|
|
|
256 |
|
|
|
629 |
|
|
|
760 |
|
|
Non-Cash Compensation |
|
742 |
|
|
|
699 |
|
|
|
1,700 |
|
|
|
1,518 |
|
|
Non-Recurring G&A |
|
62 |
|
|
|
— |
|
|
|
155 |
|
|
|
102 |
|
|
Amortization of Deferred Financing Costs to Interest Expense |
|
159 |
|
|
|
73 |
|
|
|
324 |
|
|
|
223 |
|
|
Accretion of Loan Origination Fees |
|
(1 |
) |
|
|
(69 |
) |
|
|
(1 |
) |
|
|
(157 |
) |
|
Non-Cash Imputed Interest |
|
(111 |
) |
|
|
(103 |
) |
|
|
(214 |
) |
|
|
(206 |
) |
| Adjusted Funds from
Operations |
$ |
6,294 |
|
|
$ |
443 |
|
|
$ |
11,981 |
|
|
$ |
9,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| FFO per diluted share |
$ |
0.83 |
|
|
$ |
0.54 |
|
|
$ |
1.73 |
|
|
$ |
2.52 |
|
| AFFO per diluted share |
$ |
1.07 |
|
|
$ |
0.10 |
|
|
$ |
2.03 |
|
|
$ |
2.06 |
|
| Contact: |
Matthew M.
Partridge |
| |
Senior Vice President, Chief Financial Officer and
Treasurer |
| |
(386) 944-5643 |
| |
mpartridge@ctoreit.com |
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