Good morning, everyone, and welcome to the CTO Realty Growth Q3 Earnings Conference Call. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. We also note today's event is being recorded. At this time, I'd like to turn the conference call over to John Albright. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us today for the CTO Realty Growth third quarter 2020 operating results conference call. I am pleased to have Matt Partridge, our new Chief Financial Officer, joining me this morning. Matt, welcome to the team. Before we begin, I'll turn it over to Matt to provide the customary disclosures regarding today's call. Matt?

Thanks, John. I'd like to remind everyone that many of our comments today are considered forward-looking statements under federal securities law. The company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we undertake no duty to update these statements. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's Form 10-K, Form 10-Q, and other SEC filings. You can find our SEC reports and our earnings release on our website at ctorealtygrowth.com. With that, I'll turn the call back over to John.

Thanks, Matt. We had an extremely productive third quarter as we accomplished a number of key milestones for the company, including making continued progress towards our conversion to a REIT and working with our board to cement our investment strategy that will propel us into the next phase of the company's evolution. In July, we announced that our Board of Directors approved the pursuit of a REIT conversion, which we considered a beneficial next step for the shareholders of CTO, particularly now that the majority of our assets are income producing. As part of this conversion, we are scheduled to have a special shareholder meeting on November 9, to approve a merger with a wholly-owned subsidiary that will allow us to reincorporate in Maryland and ensure the standard REIT ownership limitations and transfer restrictions apply to our stock. Following a positive outcome from this meeting, we will be required to declare and pay a special distribution to shareholders of record to ensure that we have distributed our previously undistributed earnings and profits related to the prior taxable periods. We estimate that the aggregate amount of the one-time special distribution will be between $52 million and $56 million. Matt will explain the mechanics in more detail later in our prepared remarks. But I know I speak for everyone here at CTO when I say we are excited about this transition and look forward to delivering an increased, dependable cash dividend as part of the REIT conversion. As we turn to transactions in the quarter, I am happy to report we were very active on all fronts, including land sales from our land joint venture, income property sales, and income property acquisitions. Within the third quarter, we sold approximately 3,300 acres or two-thirds of the remaining land joint venture portfolio for $46 million. This brings our inception-to-date land sales to a total of $68 million, and it has allowed us to make a number of distributions to our joint venture partner, which now brings their capital account to approximately $42.3 million. We estimate the remaining 1,700 acres of land in the joint venture has a value range between $80 million and $110 million, representing significant long-term upside for our joint venture partner and our shareholders. The monetization of the land once fully complete will give CTO an anticipated $30 million to $60 million of additional liquidity and allows us to reallocate capital from non-income producing assets and reinvest into future income producing properties. Our current pipeline related to the remaining 1,700 acres includes approximately 134 acres of potential land sales that total $16.3 million. The buyers of these assets include in-state and out-of-state developers, all of which are committing meaningful time and resources to the transaction process. In addition to the third quarter land joint venture sales, we also sold three properties for a combined disposition volume of $12.2 million and a weighted average cap rate of 5.5%. These sales include a Wawa in Jacksonville, a Carrabba's Italian Grill in Austin, and a PDQ in Jacksonville. Year-to-date, inclusive of the two properties we identified in our earnings release that we sold in October, we have disposed of $55 million worth of properties at a blended cap rate of 4.3%. With all of our disposition activity to date, we actively pursued reinvestment opportunities that have resulted in our acquisition of two high-quality assets in the third quarter, both in growing Florida markets. These investments were purchased at accretive cap rates and have a very attractive basis relative to estimated replacement cost. The first property purchased is a 120,000-square-foot single-tenant office building in Tampa leased to Ford Motor Credit Company. The lease was recently extended through March of 2026, and the property was purchased at an 8.4% in-place investment yield. The other property purchased in the quarter is a grocery-anchored retail property just outside of Miami in Hialeah. The property is master leased to a national retail developer with the underlying lease income coming from a number of credit-grade tenants, including Aldi, Ross Dress for Less, and DD Discount. With the master lease in place on top of the tenant leases, we feel this is a terrific risk-adjusted investment, given that we effectively have two layers of credit supporting our lease payments. Year-to-date, we have acquired four properties for approximately $185 million at a weighted average going-in cap rate of 7.8%. As of the end of the third quarter, our portfolio consisted of 30 properties comprised of approximately 2.4 million square feet of rentable space located in 11 states. As we've continued to reposition the portfolio with land sales, Alpine IPO, and reinvestment of disposition proceeds, we've been able to acquire some terrific real estate where we believe we have the ability to unlock meaningful value through incremental lease-up, asset repositioning, and future tenant expansion. In Atlanta, where our largest retail asset is located, we have begun laying the groundwork for our rebranding from the existing Perimeter Place name to Ashford Lane. The rebranding is going to allow us to build a stronger brand through more community engagement, redesign public spaces, and a more complementary tenant mix. When we purchased the asset earlier this year, we identified nearly 60,000 square feet of vacancy upside, particularly given that the property is shadow anchored by Target and is within close proximity to State Farm's regional campus and the Mercedes Benz North American headquarters. So with our rebranding plan conceptualized, we are excited to announce we have started to seize on the upside opportunity by signing a new 17,000-square-foot lease with a food hall operator to bring their concept to the center in late 2021, and we have initiated design work on the new public spaces that will support indoor and outdoor dining for the surrounding restaurants and the food hall. We believe the food hall and the overall design enhancement will bring a level of excitement and vibrancy to the property that will make it a premier destination for our tenants and the community they serve. Additionally, we've begun to see incremental leasing activity in our other multi-tenanted properties where we're working to capitalize on some small shop vacancy opportunities. The activity is still in the early stages, but it is encouraging. As we look for creative ways to unlock value within the existing assets, we have entered into a lease amendment with Crabby's on the beach in Daytona Beach, to expand their operations onto an adjacent piece of land. Once completed and rent commences, we anticipate the expansion project will be close to a double-digit yield on cost. While we're encouraged by the progress I've highlighted today, we do recognize uncertainty remains regarding the underlying economy and its impact on the operational performance of our existing prospective tenants. However, I'm very pleased to say we have received 93% of our contractual base rents for October, with a substantial portion of our outstanding rental income for the preceding months being related to our 24-Hour Fitness just outside of Washington, D.C., which we hope to have positively resolved by year-end. Finally, as we look towards 2021 and potential REIT conversion, we believe we are well-positioned to execute on our refined investment strategy. We'll be focused on creating a diversified asset base with initial emphasis on value-add retail and office properties that exhibit strong real estate fundamentals, with leasing or repositioning upside or highly stable assets where we see the capability of bringing long-term risk-adjusted returns. We'll be targeting markets that exhibit above-average job growth and population growth in states with favorable business climates. We believe our targeted markets, when combined with our value-add approach to real estate, will allow us to deliver meaningful cash flow-driven returns. With that, I'll now turn the call over to Matt to discuss our financial results and balance sheet activities.

Thanks, John. The company experienced solid rent collection results during the third quarter, collecting an average of 91% of contractual base rent. These rent collection efforts, combined with the sale of non-income producing assets and subsequent reinvestments into income producing properties, allowed the company to report total revenues of $14.6 million during the third quarter, a more than 28% increase over the third quarter of 2019. Year-to-date through the end of the third quarter, total revenues for the company are up nearly 23% to $40.4 million. I'll remind everyone that the 91% collection rate for the third quarter represents rents that were contractually due in each respective month and includes the effects of rent deferrals or abatements agreed to prior to the rent payment date. For October, as John highlighted, we are encouraged by the progress we are making with our tenants and expect to resolve a large portion of these outstanding balances before year-end. General and administrative expenses in the third quarter totaled $3.3 million, which included $1.1 million of one-time expenses related to the company's REIT conversion. When adjusted to remove these non-recurring expenses, the company's general and administrative expenses were nearly flat year-over-year, which is notable when considering the company is now managing an additional company with its management of Alpine Income Property Trust. To this point, when the general and administrative costs are further reduced for the $631,000 management fee revenue coming from Alpine in the quarter, the company's year-over-year G&A for the quarter declined by more than 27%, representing excellent economies of scale and profitability related to CTO's management fee business. For the third quarter of 2020, CTO reported a net loss of $0.33 per share. Comparatively, the company reported net income of $0.31 per share for the third quarter of 2019, with the largest drivers of change being the non-cash, unrealized loss on the mark-to-market of the company's investment in Alpine and the year-over-year difference in gains on disposition. Please note that the impact from the investment in Alpine is a non-cash item and will fluctuate from quarter to quarter based on the change in Alpine's stock price. While the company does not report funds from operations or FFO and adjusted funds from operations or AFFO the way most REITs do in their respective earnings reporting, we do anticipate reporting more consistently with REIT industry standards beginning with the fourth quarter and year-end earnings release, including providing reconciliations of any reported non-GAAP measures to GAAP net income. As previously announced, the company paid a $0.40 third quarter cash dividend on August 31 to shareholders of record on August 17. The CTO board has taken a forward-looking approach when establishing dividend policy that anticipates our REIT conversion in 2020, which includes providing a reliable and consistent dividend to our shareholders. In consideration of the conversion, our Board of Directors has approved and the company has declared a $1 per share dividend to be paid on November 30, 2020, to shareholders of record as of the close of business on November 16, 2020. This fourth quarter cash dividend represents a 150% increase over the company's previous quarterly dividend and an annualized yield of approximately 9.5% based on CTO's closing stock price on October 27. It should be noted that this is the company's regular quarterly cash dividend and is in addition to any special dividend that will be declared and paid as part of the company's REIT conversion. This is the 44th consecutive year in a row that the company has paid an annual cash dividend. As John mentioned, we will be holding a special shareholder meeting for shareholders to vote on a merger in connection with the REIT conversion. This meeting will be held on November 9 for shareholders of record as of October 13. Immediately following this special meeting, assuming the shareholders elect to move forward with the merger in connection with the REIT conversion, the board will meet to declare the one-time special distribution of its previously undistributed earnings and profits to the taxable period ended on or prior to December 31, 2019. It will also set up the special distribution record date and the special distribution payment date. We anticipate that the special distribution will be paid through a combination of cash and stock, and the cash portion will, in no event, be less than 10% of the total special distribution. Based on the estimated special distribution range John stated of $52 million to $56 million, the special one-time distribution would be between $11.02 and $11.87 per share for shareholders as of the determined record date. When our recently increased regular Q4 2020 cash dividend of $1 per share is combined with the one-time special distribution in connection with the REIT conversion that we anticipate will be declared and paid in Q4 2020, these cash and stock dividends in the aggregate would represent an estimated yield between 28.5% to 30.5% based on CTO's closing stock price on October 27. Finally, when looking to the balance sheet, total long-term debt outstanding as of September 30 was $284.7 million and total cash, cash equivalents and restricted cash was $8.8 million. Net debt to total enterprise value at quarter end was approximately 57%. With that, I'll turn the call back over to John.

Thanks, Matt. I want to thank all of our investors and partners for their continued support. And I want to say congratulations to our team on a great quarter. At this time, we'll now open it up for questions. Operator?

Our first question today comes from Rob Stevenson from Janney. Please go ahead with your question.

Good morning, guys. John, with the stock in the low 40s, how are you thinking about funding the next batch of acquisitions? Is it just via dispositions in the near term, thinking about maybe doing preferred post-REIT conversion? Other options? Can you give us some insight as to how you guys are thinking about that?

Yes. Sure. Thanks, Rob. So I mean, look, we did almost the same amount of acquisitions this year as our market cap. So I feel like we basically front-loaded a lot of acquisitions. But there'll be, as you can see on our lineup of single-tenant properties, they'll be properties that we will recirculate into multi-tenanted properties over time. And so I would say that that would more morph in kind of the first quarter, second quarter, where we'd be active again, where we do expect to see a lot more opportunities actually in the first quarter, second quarter. After talking to investment sales brokers around the country, they're doing a lot of broker opinions of value and people are deciding to hold off until next year to sell property. So should be good timing for us. So most of it will be just recirculating the capital base.

Okay. And then with some of the single-tenant assets, how are the negotiations with Alpine there? I mean, how has pricing been in the market versus what essentially Alpine would have been willing to pay? And did any of them come close to going into Alpine?

Yes. So the ones like Wawa and CVS and things like that were way too low of a cap rate for Alpine, given Alpine's guidance. There are some assets that we have at CTO that there'll be enough time that passes by that Alpine most likely will want to purchase at the first quarter of next year. So and the time had passed by for our 1031 needs at CTO. So the ones that we've sold at CTO this last year were way below the target cap rates for Pine, but there are some that will fit very nicely, we think, in Alpine.

Okay. And then assuming the shareholder vote goes as you expect on November 9, what does the timeframe look like for the disgorgement payment, the actual REIT conversion and any other sort of major benchmarks as you go forward to sort of completing the REIT conversion?

Hey Rob, it’s Matt. The vote will be on the 9, and then the Board of Directors will meet directly after that, assuming it goes through to set the earnings and profits payment as well as the timing associated with that, for both the shareholder record date and the payment date. So it'll be set following the vote.

And is there any benefits, drawbacks, to doing that sooner rather than later? Or does it just basically need to be done by December 31?

I can't speak to whether there are benefits or drawbacks, and we're somewhat limited on what we can say. Obviously, everything that we can say and want to say is in the S4 that we filed. But right now we're following the procedural timeline that we've outlined.

Okay. And then one last one for me, Matt. The dividend increase here, is this what you think you would need to pay out as a REIT or is this just like a best guess and that there's likely to be another upward adjustment at some point in 2021, assuming REIT conversion? Like how much of a triangulation and sort of ratcheting down is this versus basically just what CTO can afford to pay and what your best guess is at this point as to what they'll need to pay?

Yes. So the $4 annualized dividend, the $1 that we declared for Q4 is more in line with what we expect to pay as a REIT. The dividend and providing shareholder returns via the dividend is a big part of our mission as a company. And so as the company grows and recycles capital, as John talked about, the board will evaluate the dividend quarter-by-quarter, and if we need to grow into it further, we will.

Okay. All right, thanks guys. Appreciate it.

Thank you.

Thanks.

Our next question comes from Craig Kucera from Riley Securities. Please go ahead with your question.

Thanks, good morning guys. I want to talk about your real estate operations line item for the quarter. I think in the first quarter you had some mitigation credits that were sold that had to be expensed that led to a fairly large loss in that quarter. Can you give us some color on what's happened this quarter?

Yes. So, Craig, the mitigation joint venture that we have, our joint venture partner has the ability to put some of those credits back to us each quarter. And so we did expense some of those credits put back to us this quarter, and they're held on the balance sheet as an asset.

Okay. So is that, I guess when we think about sort of the recurring nature of that, it doesn't sound like that's a recurring event for you, that's going to be more sort of on a one-off basis going forward?

It's kind of a one-off basis, most likely going forward when we have these credits on our balance sheet, we'll actually be selling them for cash to real estate developers. But in some cases, we basically contributed like we did earlier in the year, as you mentioned, on some land and basically have a higher land sale and it's just because of the complications of the land parcels. Most of the transactions we have on the land side, though, the developers will be buying from us the credits for cash.

Okay. Got it. And I know you said that you're not going to be active, certainly in the acquisition side for the rest of the year, guidance was unchanged. But are you tilting towards retail or office at this point? I know you did buy the Tampa office building here in the third quarter, but also have mostly done retail year-to-date. I guess kind of your latest thoughts on mix going forward.

Yes. I mean, we obviously keep an open lens to both segments and see where the best risk-adjusted opportunities are. I would say that we're seeing equal opportunity on both sides. But I think retail has been more interesting to us as far as what we've seen. Also, the last acquisition in Miami, we really liked it a lot because we have a grocery-anchored, credit grocery-anchored center plus a developer paying us rent. So we love those kinds of situations. So we're keeping the lens open, but I'd say, in general, we're seeing more on the retail side than office.

Got it. And just circling back to 24-Hour Fitness, I know that's been out there for a couple of quarters. Do you expect that at this point to be reaffirmed or are you thinking that it's going to be a new tenant? I know it's fairly low rent relative to market, correct?

Yes. We expect them to retain that site for sure. It's very important for them. It's one of their top-performing gyms in the nation. So we fully expect them to retain that.

Got it. And just circling back to some of the repositioning and rebranding in Atlanta. At Perimeter Place, for example, do you expect you're going to need to do any additional sort of recycling of tenants there or are the tenants that you have in place there performing pretty well?

Yes. I mean, some of the smaller tenants are kind of recycling out, and we thought that even pre-pandemic that over time we'll be able to upgrade some of the tenancy there. I will say that one of the key locations in the center is a tenant we thought would be transitioning out because of the struggles of the pandemic, but, to our satisfaction, they basically have shown all the strength and willingness to stay in the center and keep operating because it's very important to them. So to answer your question, there are going to be some opportunities for us to retenant and bring in more current type of tenants that should add to the vibrancy. And with the food hall lease being executed, that's going to drive a lot of energy to the center and really will help fill in some of the spots there.

Got it. And just one more for me. As far as the special dividend goes, I know you've come out and said that it's going to be at least 10% cash, I think it can range from maybe 10% to 20%. Do you have a sense of where the board is thinking in that regard? Or is that still TBD?

It's still TBD, and we really can't comment on it until after the special vote.

Okay. Thanks guys.

Thank you.

Thanks, Craig.

Ladies and gentlemen, with that, we'll conclude today's question-and-answer session. I'd like to turn the conference call back over to John Albright for any closing remarks.

Thank you for attending the call, and we look forward to talking with you soon.

Ladies and gentlemen, with that, we'll conclude today's conference call. We do thank you for attending today's presentation. You may now disconnect your lines.