Good day and welcome to the CTO Realty Growth First Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to John Albright, President and CEO. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us today for the CTO Realty Growth first quarter 2021 operating results conference call. With me is Matt Partridge, our Chief Financial Officer. 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 ctoreit.com. With that, I will turn the call back over to John.

Thanks, Matt. We had a nice start to the year as we invested in two new properties in terrific growth markets, sold two properties at attractive cap rates, completed our uplisting to the NYSE, and continued to monetize non-income producing assets while making good progress on a number of operational initiatives across the portfolio. Both of our acquisitions in the first quarter were in new markets for us with strong demographics and great long-term growth trends. Our first acquisition, a 183,000 square foot center, was acquired for $20 million in a densely populated submarket of Salt Lake City, Utah, anchored by At Home and Burlington. Our second acquisition is in the Henderson submarket of Las Vegas and is shadow-anchored by Trader Joe's, with Seafood City and At Home as anchors. We acquired this property for $18.5 million, totaling approximately 147,000 square feet and including a single-tenant outparcel lease to Jollibee. In total, we invested $38.5 million during the first quarter into two high-quality, multi-tenanted retail properties at a weighted average cap rate of 7.9% and an average price per square foot of $117. On the disposition side, we sold our Moe's Southwest Grill in Jacksonville, Florida, and a two-tenant property in Brandon, Florida, for a combined sales price of $4.9 million and a weighted average cap rate of 6.4%. The net spread on our investments, which compares our weighted average cap rate of the dispositions that funded our acquisitions against our weighted average acquisition cap rate, was more than 130 basis points and represents a comparative NOI increase of approximately 20%. Additionally, we've continued the asset sales momentum into the second quarter, where we recently closed on the sale of the Burlington in North Richland Hills, Texas, to Alpine for a sales price of approximately $11.5 million and an exit cap rate of 7.3%. As of the end of the quarter, our income property portfolio consisted of 27 properties, comprising approximately 2.8 million square feet of rentable space located in 12 states. The portfolio was 93% occupied, and some of our top tenants included Wells Fargo, Fidelity, Ford Motor Credit, General Dynamics, and At Home, with At Home moving into our top 10 as a result of our two first quarter acquisitions. From a geographic perspective, more than 30% of our base rent comes from our largest state, Florida, which is benefiting from the accelerating population growth and companies relocating to the state due to tax and business-friendly policies. Nearly 90% of our portfolio rents come from MSAs with over a million people, and approximately 85% of rents come from the Urban Land Institute's top 30 markets. We believe a combination of these data points reflects the quality of the markets we're investing in and the potential for positive supply-demand dynamics over the long term. When combined with supportive demographic trends and the strong positioning of our assets, we are excited about the potential for our portfolio’s long-term success. In terms of non-income producing assets, we successfully monetized more than 25,000 acres of subsurface interest for net proceeds of $1.9 million in the first quarter. While it was a quiet quarter regarding land sales, we're building momentum within our land sale pipeline related to our land joint venture, where we still own approximately 1,600 acres of land. Finally, we continue to focus on our property repositioning programs and leasing initiatives, where we made solid progress during the first quarter. Notably, we are through the design phase of Ashford Lane's rebranding and are starting to see increased leasing activity at the property. To provide some figures for context, we are negotiating LOIs with more than five different tenants. While still in the early stages with some opportunities, there has been a very positive reception to what we're doing with the property. We also anticipate the previously announced expansion of Crabby's Zona Beach and Daytona Beach to finish this design process and begin expansion in the second half of the year. Crabby’s and our other Daytona beachside restaurants have seen extremely strong sales as Florida has continued to see an influx of vacationers and people relocating for various reasons. There are no signs of that trend slowing, so their expansion cannot come soon enough. Overall, within the quarter, we executed new leases, renewals, or extensions on more than 133,000 square feet and are looking forward to announcing additional leasing activity in the coming months. With that, I'll now turn the call over to Matt to discuss our financial results and balance sheet activities.

Thanks, John. The company continued to experience excellent collection results during the first quarter, collecting 100% of contractual base rent. Total revenues for the first quarter of 2021 were $14.7 million, a 14.6% increase over the first quarter of 2020, largely driven by a 4% increase in revenues associated with our income property portfolio and $1.9 million of revenues from the sale of subsurface interest mentioned earlier. Revenues within the quarter were also impacted by the timing of asset sales in the fourth quarter and the subsequent redeployment of the proceeds late in the first quarter, which will normalize as we move into the second quarter. General and administrative expense in the first quarter was relatively flat, increasing 1.3% compared to the first quarter of 2020. For the first quarter of 2021, funds from operations were $5.2 million or $0.89 per share, and adjusted funds from operations were $5.7 million or $0.97 per share. I'll remind everybody that our year-over-year per share comparisons are materially impacted by the 1.2 million shares issued as part of the special distribution related to the company's reconversion that occurred on December 21, 2020. Our adjusted funds from operations in the first quarter were also positively impacted by approximately $220,000 repayments of deferrals related to the previously mentioned rent deferral agreements. We anticipate a continued positive impact to our adjusted funds from operations in future periods of 2021 from the scheduled repayments of previously deferred rent, with the second quarter of 2021 representing the peak of the repayment obligations. As previously announced, the company paid a first quarter regular cash dividend of $1 per share on March 31 to shareholders of record on March 22. As highlighted in yesterday's press release, our Board of Directors has approved and the company has declared a second quarter cash dividend of $1 per share, to be paid on June 30, 2021, to stockholders of record as of the close of business on June 21, 2021. Our second quarter cash dividend represents a 300% increase year-over-year when compared to the company's second quarter of 2020 cash dividends, with an annualized yield of approximately 7.5%. We ended the quarter with total cash and restricted cash of $5.3 million, and total long-term debt outstanding of $287.3 million. Net debt to total enterprise value at quarter end was approximately 48%. Within the quarter, we originated a new five-year, $50 million unsecured term loan at an initial fixed interest rate of 1.72%. This term loan allowed us to bring in a new banking partner, extend our debt maturity profile, and provide ample liquidity to repay the mortgage secured by our Wells Fargo occupied property in Raleigh, North Carolina, ahead of its scheduled maturity date in April. Looking forward to the rest of 2021, we're reaffirming our guidance, suggesting increasing transaction activity as we progress throughout the year, with dispositions still largely focused on the sales of single-tenant properties. 2021 total disposition volume guidance continues to be $75 million to $125 million, with expected exit cap rates falling in a range between 6.35% and 6.75%. We anticipate corresponding acquisition volumes as we redeploy disposition proceeds, targeting investment yields between 6.5% and 7.25%, although this could move higher as our pipeline continues to firm up. 2021 funds from operations per share are anticipated to be between $3.80 and $4.10 per diluted share, and adjusted funds from operations per share guidance is between $3.90 and $4.20. I'll remind everyone that this guidance does not include any additional assumptions for outside equity, it can be heavily influenced by the timing of dispositions and the subsequent redeployment of proceeds, and it's subject to the future performance of our current and prospective tenants, also including 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 turn the call back over to John.

Thanks, Matt. We're off to a good start to the year and we have some very exciting opportunities to continue positioning ourselves as one of the highest quality diversified REITs in the industry. I want to thank our shareholders for their continued support. And at this time, we'll now open it up for questions. Operator?

The first question comes from Rob Stevenson with Janney. Please go ahead.

Good morning, guys.

Good morning. Sorry about that awkward delay. Not sure what happened to our operator, but they were here.

Rob, are you there?

Yes, we can hear you, Rob.

Okay. So John, can you talk a little bit about the pipeline right now and the timing to offset the sales department, as well as how quickly you expect to be able to backfill that NOI, and what’s the status of some of the land sales? Is that going into the funding as well, that you'll need to replace?

Yes. In general, we have a good pipeline of acquisitions that we're actively pursuing, and we're more in the due diligence phase. We're hopeful about what we have in front of us. Once we know we have something that looks like it’s going to close, we'll accelerate some of the dispositions we want to do. We feel like the timing of acquisitions and dispositions will be quite good for us. On the land side, we're becoming a little more aggressive in moving out the land. A lot of these contracts are taking a long time, but we're getting good activity. However, we are not depending on the land to fund the acquisitions because we have plenty of single-tenant properties we want to monetize. If we get some land sales done, that'll be an added benefit to what we already have planned.

Okay. And then, what's left in the CTO portfolio that might appeal to PINE, from both an asset and pricing standpoint, after this transaction?

Yes. Just to give you broad brush numbers, it might be in the range of $20 million to $50 million as a possibility for PINE down the road.

And given what your pipeline looks like, is there a chance that additional sales would occur in 2021, or is that more likely to be in 2022, as you backfill the pipeline?

It’s probably late 2021.

Okay. Appreciate the time, guys.

Yes. Thank you.

The next question comes from William Olivari, a private investor. Please go ahead.

Hi, John and Matt, good morning.

Good morning, Bill.

I wanted to ask regarding the new administration in Washington. What kind of activity are we looking at for the opportunity zone properties that we still have? Is anything coming up that could provide future investment?

Yes. We've been in discussions regarding the opportunity zone structure. Initially, we thought there would be significant activity and capital chasing opportunity zone investments. However, the funds raised have not been as substantial as expected, and many opportunity zones are in larger MSAs, which tend to attract more funds. To answer your question, there hasn't been as much activity as we anticipated, but there are a couple that have expressed interest in some of our land holdings.

Yes, there seems to be a growing focus on low-income housing. I was wondering if you are seeing increased activity in that direction, allowing us to move more of that land. Additionally, how does our book value compare to market value? Are we in the mid-range?

Yes, we’re closer to book value than we have been in a long time, and converting to a REIT has narrowed that gap. Currently, we look at FFO multiple, particularly being only in our second quarter as a REIT. We believe we're undervalued compared to other REITs, and we want to get our story out there for people to start looking at us based on FFO multiples.

Thank you.

Thank you, Bill.

The next question comes from Craig Kucera with B. Riley Securities. Please go ahead.

Hey, good morning, guys. Matt, I think you were expecting about $400,000 in deferrals for 2021 last quarter. You brought in a little over $200,000 this quarter. The second quarter looks higher. Can you provide an update on your expectations for the whole year?

Yes. It's actually going to be a little higher than that, Craig. For the full year, I think it will be closer to $700,000 to $750,000. The next quarter is expected to be around $400,000.

Okay, understood.

The good thing is we're moving beyond the deferrals, and all of our tenants are back to their regular rents. There was no impact from deferrals in this quarter, other than repayments which we expect will wrap up in the second quarter.

Got it. So that should leave a stub of about $300,000 post-2021; is that correct?

Yes, it'll be a little less than that. Some of it was pulled forward into 2021. In 2022, we expect about $100,000 and then closer to $35,000 in 2023 to resolve all of the deferral repayments. The bulk of it should come in the second quarter, along with a decent amount in the first quarter of this year.

Okay, that’s helpful. Regarding your leasing activity this quarter, while there weren't many leases, you did execute reasonably well. Can you give us a sense of how those leases were executed compared to prior rents on either a cash or GAAP basis?

A lot of it was tenants who are doing early renewals. Regarding new leases, they were significantly above our acquisition underwriting. I would estimate them to be about 10% to 20% above our expectations for leasing vacant space we bought through acquisitions.

That's helpful, thanks. With housing booming, can you provide an overview of how much land in the JV is zoned for residential? I know there's the large industrial piece remaining, but are there any residential properties left?

Unfortunately, no. If we had residential land, it would be selling rapidly. As for the industrial piece, that's a larger part of our portfolio, and the good news is there are some industrial land trades happening nearby at high per-acre prices. We're seeing activity from developers who were unable to purchase that site and have discovered the value proposition of ours. There has been significant interest with property tours occurring lately, which is encouraging. Additionally, the large piece of 177 acres around Bucky's has been very popular. Bucky's is a destination now, attracting visitors from far away.

Got it. You’ve made a strategic shift at PINE, possibly exiting or at least reducing your exposure to single-tenant office. Are you considering recycling capital out of the remaining single-tenant office at CTO?

Eventually, yes. If we find strong acquisition opportunities at CTO, we won't hesitate to monetize some of that. We will evaluate those opportunities as they arise.

Understood. I realize you don’t have many leases rolling over in 2021, but are any of those single-tenant office or predominantly in retail?

Mostly retail, not particularly the single-tenant office.

Great. I know you mentioned some progress at Ashford Lane. Are you undergoing any strategic redevelopment at Westcliff Center? Or are you mostly looking to lease up the existing space as is?

We’re mostly working with the existing conditions. However, we’ve been approached by several large developers interested in a redevelopment play. We are open to selling it for a good price, but we’re also looking to lease up as is, as there’s a decent yield on the investment.

I have one last question, Matt. When you turned out the $50 million of debt and amended the credit facility, what is your total debt capacity beyond the line of credit as of the end of the first quarter?

So we have about $65 million remaining on the revolver, and we also have $5 million in cash on the balance sheet. We have a decent amount of liquidity to work with over the next couple of months.

Thank you, that’s all for me.

Thanks, Craig.

Thank you.

As we have no further questions, this concludes our question-and-answer session. I would now like to turn the conference back over to John Albright for any closing remarks.

Thank you for joining us.

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