Good day and welcome to the CTO Fourth Quarter and Full Year Earnings Conference Call. All participants will be in a listen-only mode. Please note this event is being recorded. I would like to turn the conference 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 fourth quarter and year-end 2020 operating results conference call. With me is Matt Partridge, our CFO. Before we begin, I will turn it over to Matt to provide the customary disclosures regarding today's call. Matt?

Thanks John. I would 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 duties to update these statements. Factors and risks that can 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 in our earnings release on our website ctorealtygrowth.com. With that, I will now turn the call back over to John.

Thanks, Matt. As many of you are aware, CTO has a long and storied 110-year history. This past year was yet another milestone in our progression and arguably our most active year, which saw us experience many challenges with the COVID-19 pandemic, but was also highlighted by the implementation of our diversified real estate investment strategy, a record year of acquisitions and dispositions excellent rent collections, and culminating with the company's conversion to a real estate investment trust. Our transition to a REIT has been a long and winding process. But we believe that the benefits of the structure for shareholders now and in the future are numerous. With our REIT election, we've instituted a regular quarterly cash dividend that allows us to effectively pass along the income of the company to our shareholders. Additionally, our REIT status now allows us to be more appropriately compared to other companies owning and managing similar real estate investments. And as you saw with our earnings release and supplemental financial report yesterday, it has served as a catalyst for improved financial reporting that we hope will drive a more comparable valuation to our new peers. As we've previously disclosed, 2020 was a record year of acquisitions and dispositions and represented the first year that we've put to work our refined diversified investment strategy, emphasizing investments in states and markets that we believe are experiencing positive business trends and above average population and job growth. For the full year of 2020, we acquired four properties for $185.1 million and a weighted average cap rate of 7.8%. The acquisitions included three retail properties within entering sub-markets of Phoenix, Atlanta and Miami, as well as one office property in Tampa. The acquisitions were funded with proceeds from asset dispositions throughout 2020, with a 1031 proceeds from the company sale of assets from Alpine Income Property Trust, when Alpine did its IPO in late 2019. As part of the 2020 dispositions, we sold four assets in the fourth quarter for total disposition volume of nearly $35 million for a weighted average cap rate of 6.1%. Of the $35 million, $28.5 million was related to our retail property in Aspen, Colorado, which was sold back to the tenant under the terms of the tenant's existing buyback right. For the full year 2020, we sold $86.5 million of properties at a highly attractive blended cap rate of 5.2%. The net spread on investments was approximately 260 basis points, which compares with our weighted average disposition cap rate of 5.2% versus our weighted average acquisition cap rate of 7.8%, representing approximately $2.25 million of annualized NOI accretion on the assets sold in 2020. As we turn to the land sales activities, our land joint venture in 2020, we were able to carry some of the momentum from our record third quarter into the fourth quarter, where we sold 86 acres for $11.5 million. This brings our inception to date land sales total to approximately $80 million, the majority of which occurred in 2020 and has allowed us to continue to distribute proceeds to our joint venture capital partner bringing their 2020 year income capital account to approximately $32.4 million. We currently have 1,600 acres of land remaining in land joint venture, which we estimate has a value range between $70 million and $95 million. This continues to be a long-term source of liquidity for us at CTO and we stand to receive $0.90 of every dollar from land sales once our joint venture partner has been repaid the full balance of their capital account. A few other transactions I would like to highlight as part of our activity in 2021 include, our sale of eight billboard sites for $1.5 million, the recent success we've had in monetizing our subsurface interests of which we sold 345 acres for $600,000 during the full year of 2020. And in January of 2021, we were able to monetize another 25,000 acres for $1.9 million. And finally, we've largely been able to exit our commercial loan portfolio with a recent $2 million repayment of our loan made to the buyer, our former golf operations. While none of these smaller transactions are material, we expect similar transactions to occur throughout 2021 as we continue to make incremental progress towards monetizing non-core assets and locking non-income producing equity for deployment into future income producing investments. As of the end of the year, our portfolio consisted of 27 properties comprising 2.5 million square feet of rentable space located in 10 states, the portfolio was 93% occupied and some of our top tenants include Wells Fargo, Fidelity, Ford Motor Credit and General Dynamics. With our other two top tenants -- the tenants for Carpenter Hotel in our Aldi-Anchored Center in Hialeah, Florida, serving as a ground master lessee for their respective properties. While we've not historically highlighted the advantageous lease structure of some of our assets, we do think it is important to note that over 10% of our rents are related to ground lease or master lease properties. We believe this is especially notable given that the tenant has a significant investment in the underlying improvements of the locations, which includes investments in buildings and fixtures and equipment, and of which these improvements would revert to us in the event we recaptured the asset as a result of a default, or should the tenant choose not to renew the lease. As a result of their direct investment in improvements, the tenant has more of an incentive to properly maintain the asset, and their investment gives us additional comfort regarding our long-term occupancy. I'll also note that nearly 90% of our portfolio rents come from MSAs with over a million people and approximately 84% of the rents come from Urban Land Institute's top 30 markets. As a result, the vast majority of our assets benefit from a significant population base of demand and strong near to intermediate demographic trends. Shifting the focus to the future, we're now more than a month into 2021. And we're excited about our property level initiatives for the upcoming year and early indications of leasing activity at a number of our properties. As we announced in the fourth quarter, we have begun the rebranding process for Ashford Lane, which was previously known as Perimeter Place. The rebranding, when combined with some strategic capital investments and thoughtful retention of certain spaces is going to allow us to meaningfully drive in-place yields over the next few years. The lease-up momentum began in the fourth quarter with a new 17,000 square foot food hall lease, who I am excited to say just announced their First Chef and Food Stall concept. We expect to build on this momentum as we renew some existing tenants and execute leases with some exciting new concepts. In addition to our efforts in Ashford Lane, we anticipate moving forward with building upgrades that result in increased rent at our Wells Fargo occupied property in Raleigh. The previously announced new lease related to the expansion of Crabby's on the beach in Daytona. And we're encouraged by preliminary leasing efforts at our Westcliffe Shopping Center at Fort Worth where Albertsons just exercised their option for an additional five years. All of this activity has the potential to drive meaningful growth over the next few years. And while we are excited by these prospects, it is important to note that uncertainty remains regarding the operational performance of our existing and prospective tenants. As we look forward, we continue to believe we are well positioned to execute on our investment strategy, which is driven in large part by our opportunity to recycle capital out of approximately $150 million of existing single-tenant assets over the next few years and redeploy the proceeds into multi-tenanted retail and office assets that we think have the potential to provide more attractive risk-adjusted returns. This strategy combined with our portfolio, strong underlying real estate fundamentals and our team's ability to execute will drive us forward. And finally, I think it is important to highlight that we did provide comprehensive 2021 guidance, which we took a balanced approach of confidence and conservatism, given the uneven progress towards broader vaccination efforts in the general state of the overall economy. 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 excellent rent collection results during the fourth quarter, collecting an average of 99% of contractual base rent. These rent collection efforts combined with the sale of non-income producing assets and subsequent reinvestment into income producing properties, allowed the company to report total revenues of $16 million during the fourth quarter, representing more than a 33% increase over the fourth quarter of 2019. For the full year of 2020, total revenues increased 25% to $56.4 million. The 99% collection rate for the fourth quarter represents rents that were contractually due in each respective month and includes the effects of rent deferrals agreed to prior to the rent payment date. The acceleration in collections from the third quarter of 2020 was primarily a result of the company resolving outstanding balances due from Harkins Theatres and 24 Hour Fitness, the latter of which had previously filed for bankruptcy and has since reorganized and reemerged. For January, we are excited to announce we have collected 99% of contractual base rents due and payable. In consideration of our reconversion, we will now be reporting funds from operations or FFO and adjusted funds from operations or AFFO, as is standard in the industry. For the fourth quarter of 2020, funds from operations were $10.1 million or $2.11 per diluted share. This represents a 174% year-over-year increase from the fourth quarter of 2019. Adjusted funds from operations for the fourth quarter of 2020 were $10.6 million or $2.20 per diluted share and this represents a 210% year-over-year increase from the fourth quarter of 2019. Both FFO and AFFO per diluted share benefited from the monetization of non-income producing assets and the subsequent reinvestment in 2020 compared to 2019. The results for the fourth quarter of 2020 benefited from a one-time tenant repurchase right extension payment of approximately $300,000 related to the company's Aspen, Colorado retail property. For the full year of 2020, funds from operations were $27.5 million or $5.84 per diluted share and adjusted funds from operations were $26.2 million or $5.57 per diluted share. Those per share values represent a year-over-year increase of 105% and 87%, respectively, as compared to the full year of 2019. It should be noted that AFFO was negatively impacted by approximately $1 million from the net impact of previously agreed to deferrals and repayments of deferred rent related to the COVID-19 pandemic and the company expects to benefit from those deferred repayments over the next few years. As previously announced, the company paid a fourth quarter regular cash dividend of $1 per share on November 30, to shareholders of record on November 16. This represented a quarterly payout ratio of 47% of FFO per share and 45% of AFFO per share. In connection with the company's reconversion, the company paid a special distribution of $55.8 million, or $11.98 per share on December 21 to shareholders of record as of the close of business on November 19. The breakdown of the special distribution included a $5.6 million aggregate cash dividend and the issuance of 1.2 million shares. Company paid regular cash dividends for the full year of 2020 of $1.90 per share and total dividends which includes the effects of the company's special distribution in connection with the reconversion of $13.88 per share. As highlighted in Tuesday's press release, our Board of Directors has approved and the company has declared a first quarter regular cash dividend of $1 per share to be paid on March 31, 2021 to stockholders of record as of the close of business on March 22, 2021. This first quarter cash dividend represents a 400% year-over-year increase over the company's first quarter 2020 cash dividend and an annualized yield of almost 8%. This is the 45th consecutive year in a row that the company has paid a cash dividend and it's consistent with the company's previously announced dividend policy providing a reliable and consistent dividend to our shareholders. I would like to note that we expect our dividend payout ratios relative to AFFO to be in a range of 90% to 100% annually. This is a higher ratio than most other REITs and it's a product of our low taxable depreciation, which increases our overall taxable income and must be paid out in order to maintain our REIT status. Turning to the balance sheet, total long-term debt outstanding as of December 31, was $280.5 million and net debt to total enterprise value at quarter end was approximately 50%. We did opportunistically buy back $12.5 million of our 2025 convertible notes earlier in the year, which resulted in a gain of approximately $1.1 million and we repurchased $4.1 million, or 88,565 shares at an average price of $46.29 per share. The share repurchases were particularly beneficial. Total cash and cash equivalents and restricted cash as of year end 2020 was nearly $34 million with the majority of the cash being restricted cash related to 1031 exchanges that will be reinvested into future acquisition opportunities. And finally, I'll highlight the 2021 guidance we provided in yesterday's press release. As John noted above, we felt it was important to take a pragmatic approach to our assumptions for 2021 given the overall environment. That being said, we do expect to have another very active year on the transaction side of things. As we continue to monetize single-tenant assets and redeploy proceeds through our diversified investment strategy. 2021 guidance anticipates total disposition volume of $75 million to $125 million with exit cap rates falling into the range between 6.35% and 6.75%. We expect similar acquisition volume as we redeploy disposition proceeds with targeted investment yields between 6.75% and 7.25%. 2021 FFO per share is anticipated to be between $3.80 and $4.10 per diluted share and AFFO per share guidance is $3.90 to $4.20 per diluted share. This guidance does not include any additional assumptions for outside equity, which can be heavily influenced by the timing of dispositions and the subsequent redeployment of proceeds in the future performance of our current tenants and prospective tenants and includes the full year dilutive effect of the 1.2 million shares issued as part of the company's special distribution related to the reconversion. With that, I'll now turn the call back over to John for his closing remarks.

Thanks, Matt. 2020 was a transformative year for us at CTO and I'm so proud of our team and all that they accomplished. I want to thank all of our investors and partners for their continued support, especially for their patience during our reconversion. At this time, we'll now open it up for questions, operator?

We will now begin the question-and-answer session. The first question comes from Rob Stevenson with Janney.

John, what does the acquisition pipeline look like today? And what types of assets are in there? I mean, you guys have a pretty well-defined sort of sources of cash, but help us understand the current thinking on uses of cash, at least in the first half of the year?

Sure. Yes. So as you know, Rob, we have $28 million sitting in the bank. And so we've been on the hunt for acquisitions very actively in the last 60 days, and we have found some good candidates. I would say that all of them are multi-tenanted retail properties in areas that markets that we really like a lot. So we're pretty happy with kind of the candidates that we have, as we're undergoing due diligence right now. But it's all retail and all multi-tenanted in strong markets.

And is that, I mean, the way that you guys are thinking about the business today is that, the focus, I mean, would we see something along the lines of Carpenter or some office stuff? Or is that really as you're thinking about it these days, not really where the best opportunities lie for you?

We're actively looking at those types of mixed-use opportunities, because the capital for those types of acquisitions has somewhat evaporated. And so there's actually some good opportunity in that sector. And it's really about getting the right price of course. So you're having sellers that are coming off their pre-COVID valuations, but slowly getting there. So we've been actively looking at what we think are opportunistic type of purchases, where the property might have a combination of office and retail, but more on the retail side and they may have some vacancy, kind of like how we picked up Perimeter had a lot of -- they could see opportunity and so we are seeing some good opportunities just a matter of trying to get up the right deal.

Okay. And then, the 2021 guidance, Matt, does that include the $1.8 million land sale gain in the first quarter?

It does. And I would say, when you think about the guidance, obviously, there's a lot of transaction activity baked into that. And so there's some drag on redeployment assumed, as well as a fairly conservative approach on the renewals and lease assumptions.

Okay. And so the dispositions numbers include land sales, either outright or subsurface sales during the year as well?

Yes. Those are purely existing income assets.

Okay. And is there anything else in the 2021 guidance that would be considered sort of non-core? Are you guys anticipating any additional subsurface sales or additional land sales out of the joint venture, et cetera?

From a subsurface sales, I'll let John talk about it. I think on the land JV side, we still got some heavy lifting to do to get to where we're in the money on the land JV, but I'll let John talk about the subsurface expectations.

Yes. So Rob, we expect to have more subsurface activity this year. We're having some good dialogue with people on the surface land and we own the minerals, and it's actually through a new mapping service that we came about that can actually find out who owns the properties in a more efficient way than we had in the past. So having 450,000 acres around a bunch of counties in Florida, we're able to find farms and ranches that have 2,000, 3,000 acres or something like that. So we think there'll be more activity definitely in the subsurface side this year. And then, again, on the land side and land JV, we're having good progress on traditional land sales, but it's just going to take two years or so until we start seeing economics coming to CTO.

Okay, So is there anything other than the $1.8 million gain in the first quarter that's implied in that $3.80 to $4.10 guidance number?

There is not.

Okay. And then, I guess the last one for me, Matt, just from sort of figuring everything out, what was the recurring FFO per share in the fourth quarter sort of stripping out the land sale and all the other noise? I mean, from the sort of recurring stuff, whether or not you want to call recurring or core? How should we be thinking about sort of the build throughout, as we're looking at that $3.80 to $4.10, obviously, there's $1.8 million of land sales in there. But what are we basing the fourth quarter sort of run rate from a recurring basis off of?

Yes. So existing NOI, today is a little over $35 million on the income portfolio. With mitigation credits and some other extraneous stuff that runs through the P&L, there'll be some noise that will get adjusted out in AFFO, which is why I would say focus on the AFFO number, because of the way some of the non-core assets get treated on certain transactions. But a little over $35 million to existing NOI number, but obviously that's going to move around based on what assets are sold and when proceeds are redeployed.

[Operator Instructions] The next question comes from Craig Kucera with B. Riley Securities.

I want to start out talking about your expectations for 2021 baked into the guidance as well, the cap rate expectations are quite a bit different than what you either bought last year or sold. And I guess I'm curious, is that just a function of what you're seeing in the market? Are you just being maybe a little bit more conservative on where you're buying assets and selling assets in 2021?

Yes. So I would say it's a little bit of combination on the acquisition side, remember, we're trying to give you guidance on the initial cap rate that we're buying, but that may imply that a property has some vacancy. So the total return obviously is going to be higher than that, but just the initial cash cap rate. We're being kind of conservative there in case we have some properties that have some lease-up opportunity. And then on the disposition side, just we are trying to be conservative there, hopefully, we do better. But just want to lay that out there.

Okay, fair enough. Certainly to the impairment on the land joint venture you took, was that at any particular parcel in Daytona Beach? Or was that sort of across the market? Any color there would be great.

Yes. So we bought, I would call for lack of better term, a spike piece, that a developer that's near our assemblage that we're talking with apartment developers and that was really kind of a blocking tactic, if you will. And so we're going to go ahead and sell that asset. And so there's a small asset, small impairment.

Yes. And then, on the actual land joint venture, Craig, part of that is just due to timing related to expectations of sales. So we're accruing a preferred return on the land joint venture and so the farther out sales go, the more that preferred return accrues and the less we get close to our basis that's on the balance sheet. So that was the driver of the impairment on the land joint venture.

Okay, I appreciate that. I want to talk about leverage, you closed the fourth quarter at about 35% net debt, you're sitting on a lot of restricted cash. And it looks like you're match funding acquisitions in 2021, understanding that there's probably going to be a timing difference. But I guess, just going forward, should we consider leverage to be relatively constant or with any movement there?

Yes. I think from a leverage standpoint, will naturally delever over time as we unlock the equity that's in subsurface rights, the land joint venture, the land that John talks about just a minute ago. So naturally, delever as we unlock that equity and redeploy in income-producing assets, but from a total debt outstanding perspective, I think you can expect that to stay relatively constant, it'll move around a little bit based on timing of acquisitions and dispositions. But I don't at this point, we don't have any intention to materially move leverage up.

Okay, got it. In your opening comments, John, you kind of went through some renewals, some other leasing activity? I think, entering '21, you have about 5% of your rent expiring this year. Can you talk about sort of where you are specifically in regards to sort of those discussions? And are there any known move-outs in 2021?

Yes, there's only really one that's any kind of size, there's a tenant at 245, Riverside, which is kind of a full floor type of tenant, 20,000 square feet or so. But we're having actually decent tenant activity on the office side, which would be surprising, I think, for all of us, given what's going on with COVID. So, that property has held up over the years into the high 90s because it's just somewhat of a boutique asset that's not downtown on the river. So that would be the only thing that's a known move out. On Perimeter, there are tenants that we're trying to get out, because we can do better on the lease rate. So, there, hopefully, there will be some moves out in Perimeter because we have, better kind of paying tenants to backfill it.

Got it. And in regard to your debt side of things, I think you've got a mortgage coming due here in a couple of months on the Wells Fargo property in Raleigh. What's the expectation there? Is that just to refinance that and kind of what are we looking at as far as financing options there?

Yes. So we're going to look to term out a portion of the revolver currently, which will free up some capacity to refinance that mortgage onto the revolver.

Okay. And you mentioned there was about $1 million on deferred rent impact to AFFO in 2020. What's the expectation for recovering that in 2021?

Yes. So 2021 we're looking at about $400,000 for the full year and it's pretty smooth throughout the year. It's not too lumpy and the deferral collections will go out through 2023. So we've got a little bit of a longer timeline on the recollection side of things, but that's the impact for 2021.

This concludes our Q&A session. I would like to turn the conference back over to John Albright for any closing remarks.

Thank you for attending the earnings call and look forward to talking to you this quarter.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.