CTO Realty Growth, Inc. (NYSE: CTO) (the “Company” or “CTO”) today
announced its operating results and earnings for the quarter ended
June 30, 2023.
Select Highlights
- Reported Net
Income per diluted share attributable to common stockholders of
$0.03 for the quarter ended June 30, 2023.
- Reported Core
FFO per diluted share attributable to common stockholders of $0.43
for the quarter ended June 30, 2023.
- Reported AFFO
per diluted share attributable to common stockholders of $0.48 for
the quarter ended June 30, 2023.
- Invested $72.5
million into three multi-tenant retail property acquisitions
totaling 464,600 square feet at a weighted average going-in cash
cap rate of 8.0%.
- Sold one
property for $2.1 million at a weighted average exit cap rate of
4.8%, generating a gain of $0.8 million.
- Reported a
decrease in Same-Property NOI of (2.5%) as compared to the
comparable prior year period.
- Signed 17 leases
totaling 60,528 comparable square feet at an average cash rent of
$32.10 per square foot, representing 8.6% comparable growth.
- Repurchased
3,931 shares of common stock at an average price of $15.73 per
share.
- Paid a common stock cash dividend
of $0.38 per share, representing a 1.8% increase over the second
quarter 2022 quarterly common stock cash dividend.
CEO Comments
“Building on our momentum from the first
quarter, the quality of our properties, progress of our
repositioning programs, and strength of our Sunbelt-focused markets
continued to drive strong leasing activity during the second
quarter,” said John P. Albright, President and Chief Executive
Officer of CTO Realty Growth. “As we look towards the back half of
the year and into 2024, we believe that our growing signed but not
open pipeline, which now represents more than 3% of current
in-place cash base rents, has us well-positioned to drive outsized
growth for the benefit of our very attractive 8.5% common
dividend.”
Quarterly Financial Results
Highlights
The table below provides a summary of the
Company’s operating results for the three months ended June 30,
2023:
|
(in thousands, except per share data) |
For the ThreeMonths
EndedJune 30, 2023 |
|
For the ThreeMonths
EndedJune 30, 2022 |
|
Variance to Comparable Period in the Prior
Year |
|
Net Income Attributable to the Company |
$ |
1,800 |
|
$ |
1,218 |
|
$ |
582 |
|
47.8 |
% |
| Net Income Attributable to
Common Stockholders |
$ |
605 |
|
$ |
22 |
|
$ |
583 |
|
2,650.0 |
% |
| Net Income per Diluted Share
Attributable to Common Stockholders (1) |
$ |
0.03 |
|
$ |
0.00 |
|
$ |
0.03 |
|
100.0 |
% |
| |
|
|
|
|
|
|
|
|
| Core FFO Attributable to
Common Stockholders (2) |
$ |
9,608 |
|
$ |
8,485 |
|
$ |
1,123 |
|
13.2 |
% |
| Core FFO per Common Share –
Diluted (2) |
$ |
0.43 |
|
$ |
0.47 |
|
$ |
(0.04 |
) |
(8.5 |
%) |
| |
|
|
|
|
|
|
|
|
| AFFO Attributable to Common
Stockholders (2) |
$ |
10,781 |
|
$ |
8,890 |
|
$ |
1,891 |
|
21.3 |
% |
| AFFO per Common Share –
Diluted (2) |
$ |
0.48 |
|
$ |
0.49 |
|
$ |
(0.01 |
) |
(2.0 |
%) |
| |
|
|
|
|
|
|
|
|
| Dividends Declared and Paid,
per Preferred Share |
$ |
0.40 |
|
$ |
0.40 |
|
$ |
0.00 |
|
0.00 |
% |
| Dividends Declared and Paid,
per Common Share |
$ |
0.38 |
|
$ |
0.37 |
|
$ |
0.01 |
|
1.8 |
% |
|
(1) |
The denominator for this measure excludes the impact of 3.3 million
and 3.1 million shares for the three months ended June 30, 2023 and
2022, respectively, related to the Company’s adoption of ASU
2020-06, effective January 1, 2022, which requires presentation on
an if-converted basis for its 2025 Convertible Senior Notes, as the
impact would be anti-dilutive. |
| (2) |
See the “Non-GAAP Financial Measures” section and tables at the end
of this press release for a discussion and reconciliation of Net
Income Attributable to the Company to non-GAAP financial measures,
including FFO Attributable to Common Stockholders, FFO per Common
Share - Diluted, Core FFO Attributable to Common Stockholders, Core
FFO per Common Share – Diluted, AFFO Attributable to Common
Stockholders and AFFO per Common Share - Diluted. |
| |
|
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,
2023:
| (in thousands, except per
share data) |
For the SixMonths
EndedJune 30, 2023 |
|
For the SixMonths
EndedJune 30, 2022 |
|
Variance to Comparable Period in the Prior
Year |
|
Net Income (Loss) Attributable to the Company |
$ |
(4,193 |
) |
|
$ |
1,420 |
|
|
$ |
(5,613 |
) |
(395.3 |
%) |
| Net Loss Attributable to
Common Stockholders |
$ |
(6,583 |
) |
|
$ |
(971 |
) |
|
$ |
(5,612 |
) |
(578.0 |
%) |
| Net Loss per Diluted Share
Attributable to Common Stockholders (1) |
$ |
(0.29 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.24 |
) |
(480.0 |
%) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Core FFO Attributable to
Common Stockholders (2) |
$ |
18,475 |
|
|
$ |
16,712 |
|
|
$ |
1,763 |
|
10.5 |
% |
| Core FFO per Common Share –
Diluted (2) |
$ |
0.82 |
|
|
$ |
0.94 |
|
|
$ |
(0.12 |
) |
(12.8 |
%) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| AFFO Attributable to Common
Stockholders (2) |
$ |
20,644 |
|
|
$ |
17,607 |
|
|
$ |
3,037 |
|
17.2 |
% |
| AFFO per Common Share –
Diluted (2) |
$ |
0.91 |
|
|
$ |
0.99 |
|
|
$ |
(0.08 |
) |
(8.1 |
%) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dividends Declared and Paid,
per Preferred Share |
$ |
0.80 |
|
|
$ |
0.80 |
|
|
$ |
0.00 |
|
0.0 |
% |
| Dividends Declared and Paid,
per Common Share |
$ |
0.76 |
|
|
$ |
0.73 |
|
|
$ |
0.03 |
|
3.6 |
% |
|
(1) |
The denominator for this measure excludes the impact of 3.3 million
and 3.0 million shares for the six months ended June 30, 2023 and
2022, respectively, related to the Company’s adoption of ASU
2020-06, effective January 1, 2022, which requires presentation on
an if-converted basis for its 2025 Convertible Senior Notes, as the
impact would be anti-dilutive. |
|
(2) |
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) Attributable to the Company to non-GAAP financial
measures, including FFO Attributable to Common Stockholders, FFO
per Common Share - Diluted, Core FFO Attributable to Common
Stockholders, Core FFO per Common Share – Diluted, AFFO
Attributable to Common Stockholders and AFFO per Common Share -
Diluted. |
|
|
|
Investments
During the three months ended June 30, 2023, the
Company invested $72.5 million into three multi-tenant retail
property acquisitions totaling 464,600 square feet at a weighted
average going-in cash cap rate of 8.0%. The Company’s second
quarter 2023 investments included the following:
- Purchased Plaza at Rockwall, a
446,500 square foot multi-tenant retail power center in the
Rockwall submarket of Dallas, Texas for a purchase price of $61.2
million. The property is situated on 42 acres along I-30 just over
20 miles northeast of downtown Dallas, Texas and is anchored by
Best Buy, Ulta Beauty, Dick’s Sporting Goods, JCPenney, Belk, Five
Below, and HomeGoods.
- Acquired three buildings in the
28,100 square foot retail portion of Phase II of The Exchange at
Gwinnett in Buford, Georgia for a purchase price of $11.3 million.
The Company is under contract to acquire the final remaining
property that makes up the retail portion of Phase II of The
Exchange at Gwinnett for a purchase price of $2.3 million. The
Company previously purchased the Sprouts-anchored Phase I portion
of The Exchange at Gwinnett in December 2021 and currently holds
the development loan for the unfinished retail portion of Phase II
of The Exchange at Gwinnett.
During the six months ended June 30, 2023, the
Company invested $75.8 million into four retail property
acquisitions totaling 470,600 square feet and originated one
structured investment to provide a $15.0 million first
mortgage. These investments represent a blended weighted
average going-in cash yield of 8.1%.
Dispositions During the three and
six months ended June 30, 2023, the Company sold one retail
property for $2.1 million at a weighted average exit cap rate of
4.8%, generating a gain of $0.8 million.
Portfolio Summary
The Company’s income property portfolio consisted of the
following as of June 30, 2023:
|
Asset Type |
|
# of Properties |
|
Square Feet |
|
Weighted Average Remaining Lease Term |
| Single Tenant |
|
8 |
|
436 |
|
5.6 years |
| Multi-Tenant |
|
16 |
|
3,749 |
|
4.4 years |
| Total / Weighted Average Lease
Term |
|
24 |
|
4,185 |
|
5.3 years |
Square feet in thousands.
|
Property Type |
|
# of Properties |
|
Square Feet |
|
|
% of Cash Base Rent |
|
Retail |
|
16 |
|
2,434 |
|
|
54.6 |
% |
| Office |
|
3 |
|
395 |
|
|
9.3 |
% |
| Mixed-Use |
|
5 |
|
1,356 |
|
|
36.1 |
% |
| Total / Weighted Average Lease
Term |
|
24 |
|
4,185 |
|
|
100 |
% |
| |
|
|
|
|
|
|
|
|
| Square feet in thousands. |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Leased Occupancy |
|
|
|
93.4 |
% |
|
|
|
| Occupancy |
|
|
|
91.4 |
% |
|
|
|
| |
|
|
|
|
|
|
|
|
Same Property Net Operating
Income
During the second quarter of 2023, the Company’s
Same-Property NOI totaled $10.9 million, a decrease of 2.5% over
the comparable prior year period, as presented in the following
table.
| |
For the Three Months EndedJune 30,
2023 |
|
For the Three Months EndedJune 30,
2022 |
|
Variance to Comparable Period in the Prior
Year |
|
Single Tenant |
$ |
2,147 |
|
$ |
2,036 |
|
$ |
111 |
|
5.5 |
% |
| Multi-Tenant |
|
8,703 |
|
|
9,097 |
|
|
(394 |
) |
(4.3 |
%) |
| Total |
$ |
10,850 |
|
$ |
11,133 |
|
$ |
(283 |
) |
(2.5 |
%) |
$ in thousands.
Year-to-date, the Company’s Same-Property NOI
totaled $20.2 million, a decrease of 2.4% over the comparable prior
year period, as presented in the following table.
| |
For the Six Months EndedJune 30,
2023 |
|
For the Six Months EndedJune 30,
2022 |
|
Variance to Comparable Period in the Prior
Year |
|
Single Tenant |
$ |
4,048 |
|
$ |
3,892 |
|
$ |
156 |
|
4.0 |
% |
| Multi-Tenant |
|
16,182 |
|
|
16,835 |
|
|
(653 |
) |
(3.9 |
%) |
| Total |
$ |
20,230 |
|
$ |
20,727 |
|
$ |
(497 |
) |
(2.4 |
%) |
$ in thousands.
Leasing Activity
During the quarter ended June 30, 2023, the
Company signed 24 leases totaling 106,938 square feet. On a
comparable basis, which excludes vacancy existing at the time of
acquisition, CTO signed 17 leases totaling 60,528 square feet at an
average cash base rent of $32.10 per square foot compared to a
previous average cash base rent of $29.57 per square foot,
representing 8.6% comparable growth.
A summary of the Company’s overall leasing
activity for the quarter ended June 30, 2023, is as follows:
|
|
|
Square Feet |
|
Weighted Average Lease Term |
|
Cash Rent Per Square Foot |
|
Tenant Improvements |
|
Leasing Commissions |
|
New Leases |
|
59 |
|
9.4 years |
|
$ |
22.68 |
|
$ |
734 |
|
$ |
676 |
| Renewals & Extensions |
|
48 |
|
3.9 years |
|
$ |
31.37 |
|
|
13 |
|
|
6 |
| Total / Weighted Average |
|
107 |
|
6.5 years |
|
$ |
26.58 |
|
$ |
747 |
|
$ |
682 |
In thousands, except for per square foot and
weighted average lease term data.
Comparable leases compare leases signed on a
space for which there was previously a tenant.
Overall leasing activity does not include lease
termination agreements or lease amendments related to tenant
bankruptcy proceedings.
Year-to-date, the Company signed 49 leases
totaling 267,362 square feet. On a comparable basis, which excludes
vacancy existing at the time of acquisition, CTO signed 31 leases
totaling 161,111 square feet at an average cash base rent of $26.38
per square foot compared to a previous average cash base rent of
$24.42 per square foot, representing 8.0% comparable growth.
A summary of the Company’s overall leasing
activity for year-to-date 2023, is as follows:
|
|
|
Square Feet |
|
Weighted Average Lease Term |
|
Cash Rent Per Square Foot |
|
Tenant Improvements |
|
Leasing Commissions |
|
New Leases |
|
125 |
|
9.3 years |
|
$ |
22.24 |
|
$ |
2,930 |
|
$ |
1,307 |
| Renewals & Extensions |
|
142 |
|
4.3 years |
|
$ |
25.62 |
|
|
53 |
|
|
73 |
| Total / Weighted Average |
|
267 |
|
6.4 years |
|
$ |
24.05 |
|
$ |
2,983 |
|
$ |
1,380 |
In thousands, except for per square foot and
weighted average lease term data.
Comparable leases compare leases signed on a
space for which there was previously a tenant.
Overall leasing activity does not include lease
termination agreements or lease amendments related to tenant
bankruptcy proceedings.
Subsurface Interests and Mitigation
Credits
During the three months ended June 30, 2023, the
Company sold approximately 604 acres of subsurface oil, gas, and
mineral rights for $0.1 million, resulting in a gain of $0.1
million.
During the six months ended June 30, 2023, the
Company sold approximately 3,016 acres of subsurface oil, gas, and
mineral rights for $0.4 million, resulting in a gain of $0.4
million.
During the three months ended June 30, 2023, the
Company sold approximately 7.7 mitigation credits for $0.9 million,
resulting in a gain of $0.3 million.
During the six months ended June 30, 2023, the
Company sold approximately 8.4 mitigation credits for $1.0 million,
resulting in a gain of $0.3 million.
Capital Markets and Balance
Sheet
During the quarter ended June 30, 2023, the
Company completed the following capital markets activities:
- Repurchased
3,931 shares of common stock at an average price of $15.73 per
share.
- Repurchased 746 shares of Series A
Preferred stock at an average price of $18.82 per share.
The following table provides a summary of the
Company’s long-term debt, at face value, as of June 30, 2023:
|
Component of Long-Term Debt |
|
Principal |
|
Interest Rate |
|
Maturity Date |
|
2025 Convertible Senior Notes |
|
$ 51.0 million |
|
3.875 |
% |
|
April 2025 |
| 2026 Term Loan (1) |
|
65.0 million |
|
SOFR + 10 bps + [1.25% – 2.20%] |
|
March 2026 |
| Mortgage Note (2) |
|
17.8 million |
|
4.06 |
% |
|
August 2026 |
| Revolving Credit Facility
(3) |
|
209.7 million |
|
SOFR + 10 bps + [1.25% – 2.20%] |
|
January 2027 |
| 2027 Term Loan (4) |
|
100.0 million |
|
SOFR + 10 bps + [1.25% – 2.20%] |
|
January 2027 |
| 2028 Term Loan (5) |
|
100.0 million |
|
SOFR + 10 bps + [1.20% – 2.15%] |
|
January 2028 |
| Total Debt / Weighted Average
Interest Rate |
|
$ 543.5 million |
|
4.35 |
% |
|
|
|
(1) |
The Company utilized interest rate swaps on the $65.0 million 2026
Term Loan balance to fix SOFR and achieve a weighted average fixed
swap rate of 0.26% plus the 10 bps SOFR adjustment plus the
applicable spread. |
|
(2) |
Mortgage note assumed in connection with the acquisition of Price
Plaza Shopping Center located in Katy, Texas. |
|
(3) |
The Company utilized interest rate swaps on $100.0 million of the
Credit Facility balance to fix SOFR and achieve a weighted average
fixed swap rate of 3.28% plus the 10 bps SOFR adjustment plus the
applicable spread. |
|
(4) |
The Company utilized interest rate swaps on the $100.0 million 2027
Term Loan balance to fix SOFR and achieve a fixed swap rate of
0.64% plus the 10 bps SOFR adjustment plus the applicable
spread. |
|
(5) |
The Company utilized interest rate swaps on the $100.0 million 2028
Term Loan balance to fix SOFR and achieve a weighted average fixed
swap rate of 3.78% plus the 10 bps SOFR adjustment plus the
applicable spread. |
|
|
|
As of June 30, 2023, the Company’s net debt to
Pro Forma EBITDA was 7.9 times, and as defined in the Company’s
credit agreement, the Company’s fixed charge coverage ratio was 2.8
times. As of June 30, 2023, the Company’s net debt to total
enterprise value was 53.5%. The Company calculates total enterprise
value as the sum of net debt, par value of its 6.375% Series A
preferred equity, and the market value of the Company's outstanding
common shares.
Dividends
On May 22, 2023, the Company announced cash
dividends on its common stock and Series A Preferred stock for the
second quarter of 2023 of $0.38 per share and $0.40 per share,
respectively, payable on June 30, 2023 to stockholders of record as
of the close of business on June 8, 2023. The second quarter 2023
common stock cash dividend represents a 1.8% increase over the
comparable prior year period quarterly dividend and a payout ratio
of 88.4% and 79.2% of the Company’s second quarter 2023 Core FFO
per diluted share and AFFO per diluted share, respectively.
2023 Outlook
The Company has maintained its Core FFO and AFFO
outlook for 2023 and has revised certain assumptions to take into
account the Company’s year-to-date performance and revised
expectations regarding the Company’s operational and investment
activities and forecasted capital markets transactions. The
Company’s outlook for 2023 assumes continued stability in economic
activity, stable or positive business trends related to each of our
tenants and other significant assumptions.
The Company’s maintained outlook for 2023 is as
follows:
| |
2023 Guidance Range |
| |
Low |
|
High |
|
Core FFO Per Diluted Share |
$ |
1.50 |
to |
$ |
1.55 |
| AFFO Per Diluted Share |
$ |
1.64 |
to |
$ |
1.69 |
The Company’s 2023 guidance includes, but is not
limited to the following assumptions:
- Same-Property
NOI growth of 1% to 4%, including the impact of elevated bad debt
expense, occupancy loss and costs associated with tenants in
bankruptcy and/or tenant lease defaults
- General and
administrative expense within a range of $14 million to $15
million
- Weighted average
diluted shares outstanding of approximately 22.5 million
shares
- Year-end 2023
leased occupancy projected to be within a range of 94% to 95%
before any adjustments related to 2023 income property acquisitions
and dispositions
- Investment in
income producing assets, including structured investments, between
$95 million and $150 million at a weighted average initial cash
yield between 8.00% and 8.25%
- Disposition of assets between $15
million and $75 million at a weighted average exit cash yield
between 6.00% and 7.50%
Earnings Conference Call &
Webcast
The Company will host a conference call to
present its operating results for the quarter ended June 30, 2023
on Friday, July 28, 2023, at 9:00 AM ET.
A live webcast of the call will be available on
the Investor Relations page of the Company’s website at
www.ctoreit.com or at the link provided in the event details below.
To access the call by phone, please go to the link provided in the
event details below and you will be provided with dial-in
details.
Webcast:
https://edge.media-server.com/mmc/p/tsys29qf
Dial-In:
https://register.vevent.com/register/BI86da6ac5057b4126a261aa3a647686aa
We encourage participants to dial into the
conference call at least fifteen minutes ahead of the scheduled
start time. A replay of the earnings call will be archived and
available online through the Investor Relations section of the
Company’s website at www.ctoreit.com.
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 externally manages
and owns a meaningful 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
and supplemental financial information, 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; macroeconomic and
geopolitical factors, including but not limited to inflationary
pressures, interest rate volatility, distress in the banking
sector, global supply chain disruptions, and ongoing geopolitical
war; the ultimate geographic spread, severity and duration of
pandemics such as the COVID-19 Pandemic and its variants, 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; 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, 2022 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 accounting principles generally accepted in the United States
of America (“GAAP”). We also disclose Funds From Operations
(“FFO”), Core Funds From Operations (“Core FFO”), Adjusted Funds
From Operations (“AFFO”), Pro Forma Earnings Before Interest,
Taxes, Depreciation and Amortization (“Pro Forma EBITDA”), and
Same-Property Net Operating Income (“Same-Property NOI”), each of
which are non-GAAP financial measures. We believe these 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, Core FFO, AFFO, Pro Forma EBITDA, and
Same-Property NOI 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 land sales, in
addition to the mark-to-market of the Company’s investment
securities and interest related to the 2025 Convertible Senior
Notes, if the effect is dilutive. To derive Core FFO, we modify the
NAREIT computation of FFO to include other adjustments to GAAP net
income related to gains and losses recognized on the extinguishment
of debt, amortization of above- and below-market lease related
intangibles, and other unforecastable market- or transaction-driven
non-cash items. To derive AFFO, we further modify the NAREIT
computation of FFO and Core FFO to include other adjustments to
GAAP net income related to non-cash revenues and expenses such as
straight-line rental revenue, non-cash compensation, and other
non-cash amortization, as well as adding back the interest related
to the 2025 Convertible Senior Notes, if the effect is dilutive.
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.
To derive Pro Forma EBITDA, GAAP net income or
loss attributable to the Company is 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, non-cash
revenues and expenses such as straight-line rental revenue,
amortization of deferred financing costs, above- and below-market
lease related intangibles, non-cash compensation, and other
non-cash income or expense. Cash interest expense is also excluded
from Pro Forma EBITDA, and GAAP net income or loss is adjusted for
the annualized impact of acquisitions, dispositions and other
similar activities.
To derive Same-Property NOI, GAAP net income or
loss attributable to the Company is adjusted to exclude
extraordinary items (as defined by GAAP), gain or loss on
disposition of assets, gain or loss on extinguishment of debt,
impairment charges, and depreciation and amortization, including
the pro rata share of such adjustments of unconsolidated
subsidiaries, if any, non-cash revenues and expenses such as above-
and below-market lease related intangibles, straight-line rental
revenue, and other non-cash income or expense. Interest expense,
general and administrative expenses, investment and other income or
loss, income tax benefit or expense, real estate operations
revenues and direct cost of revenues, management fee income, and
interest income from commercial loans and investments are also
excluded from Same-Property NOI. GAAP net income or loss is further
adjusted to remove the impact of properties that were not owned for
the full current and prior year reporting periods presented. Cash
rental income received under the leases pertaining to the Company’s
assets that are presented as commercial loans and investments in
accordance with GAAP is also used in lieu of the interest income
equivalent.
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 or losses 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 Core FFO and AFFO are
additional useful supplemental measures for investors to consider
because they will help them to better assess our operating
performance without the distortions created by other non-cash
revenues or expenses. We also believe that Pro Forma EBITDA is an
additional useful supplemental measure for investors to consider as
it allows for a better assessment of our operating performance
without the distortions created by other non-cash revenues,
expenses or certain effects of the Company’s capital structure on
our operating performance. We use Same-Property NOI to compare the
operating performance of our assets between periods. It is an
accepted and important measurement used by management, investors
and analysts because it includes all property-level revenues from
the Company’s properties, less operating and maintenance expenses,
real estate taxes and other property-specific expenses (“Net
Operating Income” or “NOI”) of properties that have been owned and
stabilized for the entire current and prior year reporting periods.
Same-Property NOI attempts to eliminate differences due to the
acquisition or disposition of properties during the particular
period presented, and therefore provides a more comparable and
consistent performance measure for the comparison of the Company's
properties. FFO, Core FFO, AFFO, Pro Forma EBITDA, and
Same-Property NOI 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,
2023 |
|
December 31, 2022 |
|
ASSETS |
|
|
|
|
|
|
Real Estate: |
|
|
|
|
|
|
Land, at Cost |
$ |
249,607 |
|
|
$ |
233,930 |
|
|
Building and Improvements, at Cost |
|
600,249 |
|
|
|
530,029 |
|
|
Other Furnishings and Equipment, at Cost |
|
847 |
|
|
|
748 |
|
|
Construction in Process, at Cost |
|
3,557 |
|
|
|
6,052 |
|
|
Total Real Estate, at Cost |
|
854,260 |
|
|
|
770,759 |
|
|
Less, Accumulated Depreciation |
|
(48,198 |
) |
|
|
(36,038 |
) |
|
Real Estate—Net |
|
806,062 |
|
|
|
734,721 |
|
|
Land and Development Costs |
|
682 |
|
|
|
685 |
|
|
Intangible Lease Assets—Net |
|
113,083 |
|
|
|
115,984 |
|
|
Assets Held for Sale |
|
1,115 |
|
|
|
— |
|
|
Investment in Alpine Income Property Trust, Inc. |
|
37,906 |
|
|
|
42,041 |
|
|
Mitigation Credits |
|
1,950 |
|
|
|
1,856 |
|
|
Mitigation Credit Rights |
|
— |
|
|
|
725 |
|
|
Commercial Loans and Investments |
|
46,483 |
|
|
|
31,908 |
|
|
Cash and Cash Equivalents |
|
7,312 |
|
|
|
19,333 |
|
|
Restricted Cash |
|
2,755 |
|
|
|
1,861 |
|
|
Refundable Income Taxes |
|
145 |
|
|
|
448 |
|
|
Deferred Income Taxes—Net |
|
2,423 |
|
|
|
2,530 |
|
|
Other Assets |
|
41,596 |
|
|
|
34,453 |
|
|
Total Assets |
$ |
1,061,512 |
|
|
$ |
986,545 |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
Accounts Payable |
$ |
3,980 |
|
|
$ |
2,544 |
|
|
Accrued and Other Liabilities |
|
18,347 |
|
|
|
18,028 |
|
|
Deferred Revenue |
|
6,890 |
|
|
|
5,735 |
|
|
Intangible Lease Liabilities—Net |
|
11,960 |
|
|
|
9,885 |
|
|
Long-Term Debt |
|
541,768 |
|
|
|
445,583 |
|
|
Total Liabilities |
|
582,945 |
|
|
|
481,775 |
|
|
Commitments and Contingencies |
|
|
|
|
|
|
Stockholders’ Equity: |
|
|
|
|
|
|
Preferred Stock – 100,000,000 shares authorized; $0.01 par value,
6.375% Series A Cumulative Redeemable Preferred Stock, $25.00 Per
Share Liquidation Preference, 2,999,254 shares issued and
outstanding at June 30, 2023 and 3,000,000 shares issued and
outstanding at December 31, 2022 |
|
30 |
|
|
|
30 |
|
|
Common Stock – 500,000,000 shares authorized; $0.01 par value,
22,691,598 shares issued and outstanding at June 30, 2023; and
22,854,775 shares issued and outstanding at December 31,
2022 |
|
227 |
|
|
|
229 |
|
|
Additional Paid-In Capital |
|
168,103 |
|
|
|
172,471 |
|
|
Retained Earnings |
|
291,958 |
|
|
|
316,279 |
|
|
Accumulated Other Comprehensive Income |
|
18,249 |
|
|
|
15,761 |
|
|
Total Stockholders’ Equity |
|
478,567 |
|
|
|
504,770 |
|
|
Total Liabilities and Stockholders’ Equity |
$ |
1,061,512 |
|
|
$ |
986,545 |
|
| |
|
|
|
|
|
|
|
|
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, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
| Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Income Properties |
$ |
22,758 |
|
|
$ |
16,367 |
|
|
$ |
45,190 |
|
|
$ |
31,535 |
|
|
Management Fee Income |
|
1,102 |
|
|
|
948 |
|
|
|
2,200 |
|
|
|
1,884 |
|
|
Interest Income From Commercial Loans and Investments |
|
1,056 |
|
|
|
1,290 |
|
|
|
1,851 |
|
|
|
2,008 |
|
|
Real Estate Operations |
|
1,131 |
|
|
|
858 |
|
|
|
1,523 |
|
|
|
1,246 |
|
|
Total Revenues |
|
26,047 |
|
|
|
19,463 |
|
|
|
50,764 |
|
|
|
36,673 |
|
| Direct Cost of Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Income Properties |
|
(6,670 |
) |
|
|
(4,812 |
) |
|
|
(13,823 |
) |
|
|
(8,828 |
) |
|
Real Estate Operations |
|
(639 |
) |
|
|
(228 |
) |
|
|
(724 |
) |
|
|
(279 |
) |
|
Total Direct Cost of Revenues |
|
(7,309 |
) |
|
|
(5,040 |
) |
|
|
(14,547 |
) |
|
|
(9,107 |
) |
| General and Administrative
Expenses |
|
(3,327 |
) |
|
|
(2,676 |
) |
|
|
(7,054 |
) |
|
|
(5,719 |
) |
| Provision for Impairment |
|
— |
|
|
|
— |
|
|
|
(479 |
) |
|
|
— |
|
| Depreciation and
Amortization |
|
(10,829 |
) |
|
|
(6,727 |
) |
|
|
(21,145 |
) |
|
|
(13,096 |
) |
|
Total Operating Expenses |
|
(21,465 |
) |
|
|
(14,443 |
) |
|
|
(43,225 |
) |
|
|
(27,922 |
) |
| Gain (Loss) on Disposition of
Assets |
|
1,101 |
|
|
|
— |
|
|
|
1,101 |
|
|
|
(245 |
) |
|
Other Gains and Income (Loss) |
|
1,101 |
|
|
|
— |
|
|
|
1,101 |
|
|
|
(245 |
) |
|
Total Operating Income |
|
5,683 |
|
|
|
5,020 |
|
|
|
8,640 |
|
|
|
8,506 |
|
| Investment and Other Income
(Loss) |
|
1,811 |
|
|
|
(1,311 |
) |
|
|
(2,480 |
) |
|
|
(3,205 |
) |
| Interest Expense |
|
(5,211 |
) |
|
|
(2,277 |
) |
|
|
(9,843 |
) |
|
|
(4,179 |
) |
|
Income (Loss) Before Income Tax Benefit (Expense) |
|
2,283 |
|
|
|
1,432 |
|
|
|
(3,683 |
) |
|
|
1,122 |
|
| Income Tax Benefit (Expense) |
|
(483 |
) |
|
|
(214 |
) |
|
|
(510 |
) |
|
|
298 |
|
|
Net Income (Loss) Attributable to the Company |
|
1,800 |
|
|
|
1,218 |
|
|
|
(4,193 |
) |
|
|
1,420 |
|
| Distributions to Preferred
Stockholders |
|
(1,195 |
) |
|
|
(1,196 |
) |
|
|
(2,390 |
) |
|
|
(2,391 |
) |
|
Net Income (Loss) Attributable to Common Stockholders |
$ |
605 |
|
|
$ |
22 |
|
|
$ |
(6,583 |
) |
|
$ |
(971 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Per Share Information: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Net Income (Loss) Attributable to Common
Stockholders |
$ |
0.03 |
|
|
$ |
0.00 |
|
|
$ |
(0.29 |
) |
|
$ |
(0.05 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted Average Number of Common
Shares |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted |
|
22,482,957 |
|
|
|
18,012,534 |
|
|
|
22,593,280 |
|
|
|
17,870,394 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends Declared and Paid – Preferred Stock |
$ |
0.40 |
|
|
$ |
0.40 |
|
|
$ |
0.80 |
|
|
$ |
0.80 |
|
|
Dividends Declared and Paid – Common Stock |
$ |
0.38 |
|
|
$ |
0.37 |
|
|
$ |
0.76 |
|
|
$ |
0.73 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CTO Realty Growth, Inc. |
|
Non-GAAP Financial Measures |
|
Same-Property NOI Reconciliation |
|
(Unaudited) |
|
(In thousands) |
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, 2023 |
|
June 30, 2022 |
|
June 30, 2023 |
|
|
June 30, 2022 |
|
Net Income (Loss) Attributable to the Company |
$ |
1,800 |
|
|
$ |
1,218 |
|
|
$ |
(4,193 |
) |
|
$ |
1,420 |
|
|
Loss (Gain) on Disposition of Assets |
|
(1,101 |
) |
|
|
— |
|
|
|
(1,101 |
) |
|
|
245 |
|
|
Provision for Impairment |
|
— |
|
|
|
— |
|
|
|
479 |
|
|
|
— |
|
|
Depreciation and Amortization |
|
10,829 |
|
|
|
6,727 |
|
|
|
21,145 |
|
|
|
13,096 |
|
|
Amortization of Intangibles to Lease Income |
|
(627 |
) |
|
|
(497 |
) |
|
|
(1,306 |
) |
|
|
(978 |
) |
|
Straight-Line Rent Adjustment |
|
(122 |
) |
|
|
507 |
|
|
|
129 |
|
|
|
1,045 |
|
|
COVID-19 Rent Repayments |
|
(17 |
) |
|
|
(26 |
) |
|
|
(43 |
) |
|
|
(53 |
) |
|
Accretion of Tenant Contribution |
|
38 |
|
|
|
38 |
|
|
|
76 |
|
|
|
76 |
|
|
Interest Expense |
|
5,211 |
|
|
|
2,277 |
|
|
|
9,843 |
|
|
|
4,179 |
|
|
General and Administrative Expenses |
|
3,327 |
|
|
|
2,676 |
|
|
|
7,054 |
|
|
|
5,719 |
|
|
Investment and Other Income (Loss) |
|
(1,811 |
) |
|
|
1,311 |
|
|
|
2,480 |
|
|
|
3,205 |
|
|
Income Tax (Benefit) Expense |
|
483 |
|
|
|
214 |
|
|
|
510 |
|
|
|
(298 |
) |
|
Real Estate Operations Revenues |
|
(1,131 |
) |
|
|
(858 |
) |
|
|
(1,523 |
) |
|
|
(1,246 |
) |
|
Real Estate Operations Direct Cost of Revenues |
|
639 |
|
|
|
228 |
|
|
|
724 |
|
|
|
279 |
|
|
Management Fee Income |
|
(1,102 |
) |
|
|
(948 |
) |
|
|
(2,200 |
) |
|
|
(1,884 |
) |
|
Interest Income from Commercial Loans and Investments |
|
(1,056 |
) |
|
|
(1,290 |
) |
|
|
(1,851 |
) |
|
|
(2,008 |
) |
|
Less: Impact of Properties Not Owned for the Full Reporting
Period |
|
(4,510 |
) |
|
|
(808 |
) |
|
|
(9,993 |
) |
|
|
(2,070 |
) |
|
Cash Rental Income Received from Properties Presented as Commercial
Loans and Investments |
|
— |
|
|
|
364 |
|
|
|
— |
|
|
|
— |
|
| Same-Property NOI |
$ |
10,850 |
|
|
$ |
11,133 |
|
|
$ |
20,230 |
|
|
$ |
20,727 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CTO Realty Growth, Inc. |
|
Non-GAAP Financial Measures |
|
(Unaudited) |
|
(In thousands, except per share data) |
|
|
| |
Three Months Ended |
|
Six Months Ended |
|
|
June 30, 2023 |
|
June 30, 2022 |
|
June 30, 2023 |
|
June 30, 2022 |
|
Net Income (Loss) Attributable to the Company |
$ |
1,800 |
|
|
$ |
1,218 |
|
|
$ |
(4,193 |
) |
|
$ |
1,420 |
|
|
Add Back: Effect of Dilutive Interest Related to 2025 Notes
(1) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Net Income (Loss) Attributable to
the Company, If-Converted |
$ |
1,800 |
|
|
$ |
1,218 |
|
|
$ |
(4,193 |
) |
|
$ |
1,420 |
|
|
Depreciation and Amortization of Real Estate |
|
10,816 |
|
|
|
6,707 |
|
|
|
21,118 |
|
|
|
13,076 |
|
|
Losses (Gains) on Disposition of Assets, Net of Tax |
|
(824 |
) |
|
|
— |
|
|
|
(824 |
) |
|
|
245 |
|
|
Gains on Disposition of Other Assets |
|
(490 |
) |
|
|
(632 |
) |
|
|
(813 |
) |
|
|
(964 |
) |
|
Provision for Impairment |
|
— |
|
|
|
— |
|
|
|
479 |
|
|
|
— |
|
|
Unrealized Loss on Investment Securities |
|
1,174 |
|
|
|
1,891 |
|
|
|
6,092 |
|
|
|
4,348 |
|
|
Extinguishment of Contingent Obligation |
|
(2,300 |
) |
|
|
— |
|
|
|
(2,300 |
) |
|
|
— |
|
| Funds from Operations |
$ |
10,176 |
|
|
$ |
9,184 |
|
|
$ |
19,559 |
|
|
$ |
18,125 |
|
|
Distributions to Preferred Stockholders |
|
(1,195 |
) |
|
|
(1,196 |
) |
|
|
(2,390 |
) |
|
|
(2,391 |
) |
| Funds From Operations
Attributable to Common Stockholders |
$ |
8,981 |
|
|
$ |
7,988 |
|
|
$ |
17,169 |
|
|
$ |
15,734 |
|
|
Amortization of Intangibles to Lease Income |
|
627 |
|
|
|
497 |
|
|
|
1,306 |
|
|
|
978 |
|
|
Less: Effect of Dilutive Interest Related to 2025 Notes (1) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Core Funds From Operations
Attributable to Common Stockholders |
$ |
9,608 |
|
|
$ |
8,485 |
|
|
$ |
18,475 |
|
|
$ |
16,712 |
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Straight-Line Rent Adjustment |
|
122 |
|
|
|
(507 |
) |
|
|
(129 |
) |
|
|
(1,045 |
) |
|
COVID-19 Rent Repayments |
|
17 |
|
|
|
26 |
|
|
|
43 |
|
|
|
53 |
|
|
Other Depreciation and Amortization |
|
(57 |
) |
|
|
(31 |
) |
|
|
(116 |
) |
|
|
(170 |
) |
|
Amortization of Loan Costs and Discount on Convertible Debt |
|
229 |
|
|
|
212 |
|
|
|
437 |
|
|
|
446 |
|
|
Non-Cash Compensation |
|
862 |
|
|
|
705 |
|
|
|
1,934 |
|
|
|
1,611 |
|
| Adjusted Funds From Operations
Attributable to Common Stockholders |
$ |
10,781 |
|
|
$ |
8,890 |
|
|
$ |
20,644 |
|
|
$ |
17,607 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| FFO Attributable to Common
Stockholders per Common Share – Diluted |
$ |
0.40 |
|
|
$ |
0.44 |
|
|
$ |
0.76 |
|
|
$ |
0.88 |
|
| Core FFO Attributable to
Common Stockholders per Common Share – Diluted |
$ |
0.43 |
|
|
$ |
0.47 |
|
|
$ |
0.82 |
|
|
$ |
0.94 |
|
| AFFO Attributable to Common
Stockholders per Common Share – Diluted |
$ |
0.48 |
|
|
$ |
0.49 |
|
|
$ |
0.91 |
|
|
$ |
0.99 |
|
|
(1) |
Interest related to the 2025 Convertible Senior Notes excluded from
net income (loss) attributable to the Company to derive FFO
effective January 1, 2022 due to the implementation of ASU 2020-06
which requires presentation on an if-converted basis, as the impact
to net income (loss) attributable to common stockholders would be
anti-dilutive. |
|
|
|
|
CTO Realty Growth, Inc. |
|
Non-GAAP Financial Measures |
|
Reconciliation of Net Debt to Pro Forma
EBITDA |
|
(Unaudited) |
|
(In thousands) |
|
|
|
|
|
|
Three Months Ended June 30, 2023 |
|
Net Income Attributable to the Company |
$ |
1,800 |
|
|
Depreciation and Amortization of Real Estate |
|
10,816 |
|
|
Gain on Disposition of Assets, Net of Tax |
|
(824 |
) |
|
Gains on the Disposition of Other Assets |
|
(490 |
) |
|
Unrealized Loss on Investment Securities |
|
1,174 |
|
|
Extinguishment of Contingent Obligation |
|
(2,300 |
) |
|
Distributions to Preferred Stockholders |
|
(1,195 |
) |
|
Straight-Line Rent Adjustment |
|
122 |
|
|
Amortization of Intangibles to Lease Income |
|
627 |
|
|
Other Non-Cash Amortization |
|
(57 |
) |
|
Amortization of Loan Costs and Discount on Convertible Debt |
|
229 |
|
|
Non-Cash Compensation |
|
862 |
|
|
Interest Expense, Net of Amortization of Loan Costs and Discount on
Convertible Debt |
|
4,982 |
|
| EBITDA |
$ |
15,746 |
|
|
|
|
|
| Annualized EBITDA |
$ |
62,984 |
|
|
Pro Forma Annualized Impact of Current Quarter Investments and
Dispositions, Net (1) |
|
4,136 |
|
| Pro Forma EBITDA |
$ |
67,120 |
|
| |
|
|
| Total Long-Term Debt |
$ |
541,768 |
|
|
Financing Costs, Net of Accumulated Amortization |
|
1,431 |
|
|
Unamortized Convertible Debt Discount |
|
285 |
|
|
Cash & Cash Equivalents |
|
(7,312 |
) |
|
Restricted Cash |
|
(2,755 |
) |
| Net Debt |
$ |
533,417 |
|
| |
|
|
| Net Debt to Pro Forma
EBITDA |
|
7.9x |
|
(1) |
Reflects the pro forma annualized impact on Annualized EBITDA of
the Company’s investments and disposition activity during the three
months ended June 30, 2023. |
|
Contact: |
Matthew M. Partridge |
|
|
Senior Vice President, Chief Financial Officer, and
Treasurer |
|
|
(407) 904-3324 |
|
|
mpartridge@ctoreit.com |
CTO Realty Growth (NYSE:CTO)
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From Dec 2024 to Jan 2025
CTO Realty Growth (NYSE:CTO)
Historical Stock Chart
From Jan 2024 to Jan 2025
