8-K
CTO Realty Growth, Inc. (CTO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 28, 2021
CTO Realty Growth, Inc.
(Exact name of registrant as specified in its charter)
| <br><br> | <br><br> | <br><br> |
|---|---|---|
| Maryland<br><br>(State or other jurisdiction of incorporation) | 001-11350<br><br>(Commission File Number) | 59-0483700<br><br>(IRS Employer Identification No.) |
| 1140 N. Williamson Blvd. ,<br><br>Suite 140<br><br>Daytona Beach , Florida<br><br>(Address of principal executive offices) | 32114<br><br>(Zip Code) |
Registrant’s telephone number, including area code: (386) 274-2202
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| .01 | |||
|---|---|---|---|
| Title of each class: | Trading Symbols | **** | Name of each exchange on which registered: |
| Common Stock, 0.01 par value per share | CTO | NYSE<br><br> | |
| 6.375% Series A Cumulative Redeemable Preferred Stock, 0.01 par value per share | <br><br>CTO PrA | | <br><br>NYSE |
All values are in US Dollars.
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
On October 28, 2021, CTO Realty Growth, Inc., a Maryland corporation (the "Company"), issued an earnings press release, an investor presentation and a supplemental disclosure package relating to the Company’s financial results for the quarter ended September 30, 2021. Copies of the press release, investor presentation and supplemental disclosure package are attached hereto as Exhibits 99.1, 99.2 and 99.3, respectively, and are incorporated herein by reference.
The information in Item 2.02 of this Current Report, including Exhibits 99.1, 99.2 and 99.3, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, unless it is specifically incorporated by reference therein.
Item 7.01. Regulation FD Disclosure
On October 28, 2021, the Company issued an earnings press release, an investor presentation and a supplemental disclosure package relating to the Company’s financial results for the quarter ended September 30, 2021. Copies of the earnings press release, investor presentation and supplemental disclosure package are attached hereto as Exhibits 99.1, 99.2 and 99.3, respectively, and are incorporated herein by reference.
The furnishing of these materials is not intended to constitute a representation that such furnishing is required by Regulation FD or other securities laws, or that the materials include material investor information that is not otherwise publicly available. In addition, the Company does not assume any obligation to update such information in the future.
The information in Item 7.01 of this Current Report, including Exhibits 99.1, 99.2 and 99.3, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act or the Exchange Act, unless it is specifically incorporated by reference therein.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
| |
|---|
| 99.1 Earnings Press Release dated October 28, 2021 |
| 99.2 Investor Presentation dated October 28, 2021 |
| 99.3 Supplemental Disclosure Package |
| 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: October 28, 2021
CTO Realty Growth, Inc.
By: /s/Matthew M. Partridge
Senior Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
Press
Press Release
****
Contact:Matthew M. Partridge
Senior Vice President, Chief Financial Officer and Treasurer
(386) 944-5643
mpartridge@ctoreit.com
| FOR<br><br>IMMEDIATE<br><br>RELEASE | <br><br>CTO REALTY GROWTH REPORTS THIRD QUARTER 2021 OPERATING RESULTS |
|---|
DAYTONA BEACH, FL – October 28, 2021 – CTO Realty Growth, Inc. (NYSE: CTO) (the “Company” or “CTO”) today announced its operating results and earnings for the quarter ended September 30, 2021.
Select Quarterly Highlights
◾Reported Net Income per diluted share attributable to common stockholders of $3.87 for the quarter ended September 30, 2021.
◾Reported FFO and AFFO per diluted share attributable to common stockholders of $1.03 and $1.09, respectively, for the quarter ended September 30, 2021.
◾Sold four single tenant income properties for a total disposition volume of $75.3 million at a weighted average exit cap rate of 5.0%. The sale of the properties generated combined gains of $22.7 million.
◾Purchased the remaining 70% interest in the entity that holds approximately 2,500 acres of land in Daytona Beach, Florida, which is engaged in the operation of a mitigation bank (the “Mitigation Bank”) from the joint venture partner for a net cash payment of $16.1 million.
◾Sold approximately 4,700 acres of subsurface oil, gas and mineral rights for $0.9 million.
◾Issued 3,000,000 shares of 6.375% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred”) stock for $25.00 per share, generating net proceeds of $72.4 million.
◾Paid cash dividends on the Company’s Series A Preferred stock and common stock for the third quarter of 2021 of $0.3763 per share and $1.00 per share, respectively, on September 30, 2021 to stockholders of record as of September 9, 2021.
◾Recognized a non-cash, unrealized loss of $1.3 million on the mark-to-market of the Company’s investment in Alpine Income Property Trust, Inc. (NYSE: PINE).
◾Book value per common share outstanding as of September 30, 2021 increased to $60.42.
CEO Comments
“We had a very active third quarter, signing new leases on more than 10% of our existing vacancies and selling more than $75 million of single tenant properties for a 5.0% weighted average exit cap rate, including our largest single tenant office property,” commented John P. Albright, President and Chief Executive Officer of CTO Realty Growth. “The net investment spreads we have been able to generate to-date on the strategic sale of non-core assets and the redeployment of those proceeds, combined with anticipated strong growth in 2022 same-store net operating income and the ample liquidity on our balance
Page 1
sheet for investment into our pipeline of high-quality, multi-tenanted retail and mixed-use properties, is positioning us for very attractive FFO and AFFO growth in 2022.”
Quarterly Financial Results Highlights
The tables below provide a summary of the Company’s operating results for the three months ended September 30, 2021:
| (in thousands) | For the Three Months Ended September 30, 2021 | For the Three Months Ended September 30, 2020 | | Variance to Comparable Period in the Prior Year | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Income Properties | $ | 13,734 | $ | 12,933 | | $ | 801 | 6.2% | ||
| Management Fee Income | $ | 940 | | $ | 683 | | $ | 257 | 37.6% | |
| Commercial Loan and Master Lease Investments | $ | 726 | $ | 413 | | $ | 313 | 75.8% | ||
| Real Estate Operations | $ | 1,177 | $ | 543 | | $ | 634 | | 116.8% | |
| Total Revenues | $ | 16,577 | $ | 14,572 | | $ | 2,005 | | 13.8% |
The increase in total revenue during the three months ended September 30, 2021 was primarily attributable to income produced by the Company’s recent income property acquisitions as compared to the income from properties sold by the Company during the comparative period. Revenues also increased from the sale of subsurface interests and mitigation credits, which are reflected in real estate operations, as well as from increased income from the Company’s portfolio of commercial loan and master lease investments and increased management fee income from PINE.
| (in thousands, except per share data) | For the Three Months Ended September 30, 2021 | For the Three Months Ended September 30, 2020 | | Variance to Comparable Period in the Prior Year | |||||
|---|---|---|---|---|---|---|---|---|---|
| Net Income (Loss) Attributable to the Company | $ | 23,947 | | $ | (1,522) | | $ | 25,469 | 1,673.4% |
| Net Income (Loss) Attributable to Common Stockholders | $ | 22,818 | | $ | (1,522) | | $ | 24,340 | 1,599.2% |
| Net Income (Loss) per Diluted Share Attributable to Common Stockholders | $ | 3.87 | | $ | (0.33) | | $ | 4.20 | 1,272.7% |
| FFO Attributable to Common Stockholders ^(1)^ | $ | 6,071 | | $ | 5,517 | | $ | 554 | 10.0% |
| FFO per Common Share – Diluted^^^(1)^ | $ | 1.03 | | $ | 1.19 | | $ | (0.16) | (13.4%) |
| AFFO Attributable to Common Stockholders ^(1)^ | $ | 6,422 | | $ | 6,033 | | $ | 389 | 6.4% |
| AFFO per Common Share – Diluted^^^(1)^ | $ | 1.09 | | $ | 1.30 | | $ | (0.21) | (16.2%) |
| Dividends Declared and Paid, per Preferred Share | $ | 0.3763 | $ | — | | $ | 0.3763 | 100.0% | |
| Dividends Declared and Paid, per Common Share | $ | 1.00 | | $ | 0.40 | | $ | 0.60 | 150.0% |
| ^(1)^ | See the “Non-GAAP Financial Measures” section and tables at the end of this press release for a discussion and reconciliation of Net Income (Loss) Attributable to the Company to non-GAAP financial measures, including FFO Attributable to Common Stockholders, FFO per Common Share - Diluted, AFFO Attributable to Common Stockholders and AFFO per Common Share - Diluted. | ||||||||
| --- | --- |
The increase in net income attributable to the Company for the three months ended September 30, 2021 was primarily attributable to gains on dispositions of income properties totaling $22.7 million, or $3.84 per diluted share, most notably from the disposition of the Company’s office property in Raleigh, North Carolina leased to Wells Fargo, which resulted in a gain on disposition of $17.5 million.
Reported per diluted share amounts attributable to common stockholders for the three months ended September 30, 2021 include the dilutive effects of the Company’s previously announced special distribution, which was paid in connection with the Company’s election to be taxable as a REIT commencing with its taxable year ended December 31, 2020. The Special Distribution was paid in the fourth quarter of 2020 through an aggregate of $5.6 million in cash and the issuance of 1,198,963 shares of the Company’s common stock; therefore, there was no dilutive impact for the three months ended September 30, 2020.
Page 2
Year-to-Date Financial Results Highlights
The tables below provide a summary of the Company’s operating results for the nine months ended September 30, 2021:
| (in thousands) | For the Nine<br><br>Months Ended September 30, 2021 | For the Nine<br><br>Months Ended September 30, 2020 | | Variance to Comparable Period in the Prior Year | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Income Properties | $ | 36,757 | $ | 35,409 | | $ | 1,348 | 3.8% | ||
| Management Fee Income | $ | 2,361 | | $ | 2,080 | | $ | 281 | 13.5% | |
| Commercial Loan and Master Lease Investments | $ | 2,136 | $ | 2,300 | | $ | (164) | (7.1%) | ||
| Real Estate Operations | $ | 4,318 | $ | 631 | | $ | 3,687 | | 584.3% | |
| Total Revenues | $ | 45,572 | $ | 40,420 | | $ | 5,152 | | 12.7% |
The increase in total revenue during the nine months ended September 30, 2021 was primarily attributable to increased revenue from real estate operations related to the sale of subsurface interests and mitigation credits, as well as increased income produced by the Company’s recent income property acquisitions as compared to the properties sold by the Company during the comparative period and increased management fee income from PINE. Increased revenues were partially offset by decreased revenues from the Company’s portfolio of commercial loan and master lease investments.
| (in thousands, except per share data) | For the Nine<br><br>Months Ended September 30, 2021 | For the Nine<br><br>Months Ended September 30, 2020 | | Variance to Comparable Period in the Prior Year | |||||
|---|---|---|---|---|---|---|---|---|---|
| Net Income (Loss) Attributable to the Company | $ | 28,008 | | $ | (1,173) | | $ | 29,181 | (2,487.7%) |
| Net Income (Loss) Attributable to Common Stockholders | $ | 26,879 | | $ | (1,173) | | $ | 28,052 | (2,391.5%) |
| Net Income (Loss) per Diluted Share Attributable to Common Stockholders | $ | 4.56 | | $ | (0.25) | | $ | 4.81 | 1,924.0% |
| FFO Attributable to Common Stockholders ^(1)^ | $ | 16,232 | | $ | 17,339 | | $ | (1,107) | (6.4%) |
| FFO per Common Share – Diluted^^^(1)^ | $ | 2.75 | | $ | 3.71 | | $ | (0.96) | (25.9%) |
| AFFO Attributable to Common Stockholders ^(1)^ | $ | 18,403 | | $ | 15,658 | | $ | 2,745 | 17.5% |
| AFFO per Common Share – Diluted^^^(1)^ | $ | 3.12 | | $ | 3.35 | | $ | (0.23) | (6.9%) |
| Dividends Declared and Paid, per Preferred Share | $ | 0.3763 | $ | — | | $ | 0.3763 | 100.0% | |
| Dividends Declared and Paid, per Common Share | $ | 3.00 | | $ | 0.90 | | $ | 2.10 | 233.3% |
| ^(1)^ | See the “Non-GAAP Financial Measures” section and tables at the end of this press release for a discussion and reconciliation of Net Income (Loss) Attributable to the Company to non-GAAP financial measures, including FFO Attributable to Common Stockholders, FFO per Common Share - Diluted, AFFO Attributable to Common Stockholders and AFFO per Common Share - Diluted. | ||||||||
| --- | --- |
Net income attributable to the Company for the nine months ended September 30, 2021 was primarily attributable to gains on dispositions of income properties totaling $28.1 million, or $4.77 per diluted share, most notably from the disposition of the Company’s office property in Raleigh, North Carolina leased to Wells Fargo, which resulted in a gain on disposition of $17.5 million. In addition, the non-cash, unrealized gain on the mark-to-market of the Company’s investment in PINE, as compared to an unrealized loss in the comparable prior year period, totaled $6.9 million, or $1.17 per diluted share. The operating results for the nine months ended September 30, 2021 also include a non-cash impairment charge on the Company’s retained interest in the joint venture that currently holds approximately 1,600 acres of undeveloped land in Daytona Beach, Florida (the “Land JV”) of $16.5 million, or $2.11 per diluted share, net of the related income tax benefit. The non-cash impairment charge is a result of the executed agreement to sell the Land JV’s remaining holdings.
Reported per diluted share amounts attributable to common stockholders for the nine months ended September 30, 2021 include the dilutive effects of the Company’s previously announced special distribution, which was paid in connection with the Company’s election to be taxable as a REIT commencing with its taxable year ended December 31, 2020. The Special Distribution was paid in the fourth quarter of 2020 through an aggregate of $5.6 million in cash and the issuance of 1,198,963
Page 3
shares of the Company’s common stock; therefore, there was no dilutive impact for the nine months ended September 30, 2020.
Acquisitions
During the nine months ended September 30, 2021, the Company acquired three multi-tenant retail-based properties for $111.0 million. These acquisitions represent a weighted average going-in cash cap rate of 8.5%.
On October 18, 2021, the Company entered into a purchase and sale agreement with a partnership for the acquisition of a retail center in the Raleigh, North Carolina metropolitan area for $70.5 million (the “Property”). Certain customary closing conditions must be met before or at the closing and are not currently satisfied. Accordingly, until the closing of the purchase of the Property, there can be no assurance that the Company will acquire the Property.
Dispositions
During the three months ended September 30, 2021, the Company sold four single tenant income properties for a total disposition volume of $75.3 million, at a weighted average exit cap rate of 5.0%. The sale of the properties generated aggregate gains of $22.7 million. The proceeds from each of the third quarter 2021 sales are expected to be part of section 1031 like-kind exchanges.
During the nine months ended September 30, 2021, the Company sold fourteen income properties for a total disposition volume of $140.8 million, at a weighted average exit cap rate of 6.0%. The sale of the properties generated aggregate gains of $28.0 million.
Income Property Portfolio ****
As of September 30, 2021, the Company’s portfolio had economic occupancy of 90.4% and physical occupancy of 89.6%.
The Company’s income property portfolio consisted of the following as of September 30, 2021:
| <br><br>Property Type | # of Properties | **** | Square Feet | Weighted Average Remaining Lease Term | ||
|---|---|---|---|---|---|---|
| Single-Tenant ^(1)^ | 11 | 665 | 24.1 years | |||
| Multi-Tenant | 8 | 1,533 | 6.4 years | |||
| Total / Weighted Average Lease Term | 19 | 2,198 | 12.6 years | |||
| | | | | | | |
| % of Cash Rent attributable to Retail Tenants | 63% | | | |||
| % of Cash Rent attributable to Office Tenants | 35% | | | |||
| % of Cash Rent attributable to Hotel Ground Lease | 2% | | |
Square feet in thousands.
| (1) | The 11 single-tenant properties include (i) a property leased to The Carpenter Hotel which is under a long-term ground lease and includes two tenant repurchase options and (ii) a property in Hialeah leased to a master tenant which includes three tenant repurchase options. Pursuant to FASB ASC Topic 842, Leases, the $16.3 and $21.0 million investments, respectively, have been recorded in the Company’s consolidated balance sheets as Commercial Loan and Master Lease Investments. |
|---|
Page 4
Operational Highlights ****
During the third quarter of 2021, the Company signed leases totaling 50,525 square feet. A summary of the Company’s leasing activity is as follows:
| <br><br>Retail | Square Feet | Weighted Average Lease Term | Cash Rent Per Square Foot | | Tenant Improvements | | Leasing Commissions | |||
|---|---|---|---|---|---|---|---|---|---|---|
| New Leases | | 23.4 | | 5.0 years | | $ 30.20 | | $ 740 | | $ 233 |
| Renewals & Extensions | 27.1 | | 5.5 years | | $ 21.28 | | 319 | | 168 | |
| Total / Weighted Average | 50.5 | | 5.2 years | | $ 25.41 | | $ 1,059 | | $ 401 |
In thousands except for per square foot and lease term data.
Land Joint Venture
During the three months ended June 30, 2021, the Land JV entered into an agreement to sell its remaining land holdings, including any land previously under contract, for $67.0 million. During the three months ended September 30, 2021, the Land JV completed the sale of approximately 8 acres for $0.8 million and as a result, the sales price for the remaining land was reduced to $66.2 million. The sale is anticipated to occur prior to the end of 2021.
Mitigation Bank Joint Venture
On September 30, 2021, the Company purchased the remaining 70% interest in the Mitigation Bank from certain funds and accounts managed by an investment advisor subsidiary of BlackRock, Inc. (“BlackRock”) for a net cash payment by the Company of $16.1 million (the “Interest Purchase”). The Company intends to sell the mitigation credits produced by the Mitigation Bank or may sell the Mitigation Bank in its entirety. During the nine months ended September 30, 2021, the Company sold mitigation credits for total proceeds of $0.2 million. No assurance can be given that the Company will be able to consummate any future sales or regarding the likelihood, timing, or final terms of any such potential sales.
“We purchased our joint venture partner’s interest in the mitigation bank partnership as a way to reduce interim carrying costs on the mitigation credits as we look to find less expensive long-term partnership capital, monetize the mitigation credits as they are released, or sell the mitigation bank in its entirety, as we believe the mitigation bank will have a market-based mitigation credit value of approximately $30 million over the 10-year credit release period,” noted John P. Albright, President and Chief Executive Officer of CTO Realty Growth.
Subsurface Interests
During the three months ended September 30, 2021, the Company sold approximately 4,700 acres of subsurface oil, gas and mineral rights for $0.9 million, resulting in a gain on sale of $0.8 million.
During the nine months ended September 30, 2021, the Company sold approximately 39,000 acres of subsurface oil, gas and mineral rights for $3.5 million, resulting in a gain on sale of $3.3 million. As of September 30, 2021, the Company owns full or fractional subsurface oil, gas, and mineral interests underlying approximately 415,000 “surface” acres of land owned by others in 20 counties in Florida.
Page 5
Capital Markets and Balance Sheet
On June 28, 2021, the Company priced a public offering of 3,000,000 shares of its Series A Preferred stock at a public offering price of $25.00 per share. The offering closed on July 6, 2021 and generated total net proceeds to the Company of $72.4 million, which were utilized to pay down the Company’s revolving credit facility.
The following table provides a summary of the Company’s long-term debt, at face value, as of September 30, 2021:
| Component of Long-Term Debt | Principal | Interest Rate | Maturity Date |
|---|---|---|---|
| Revolving Credit Facility ^(1)^ | $100.0 million | 30-day LIBOR + [1.35% – 1.95%] | May 2023 |
| Revolving Credit Facility | $9.0 million | 30-day LIBOR + [1.35% - 1.95%] | May 2023 |
| 2025 Convertible Senior Notes | $61.7 million | 3.88% | April 2025 |
| 2026 Term Loan ^(2)^ | $65.0 million | 30-day LIBOR + [1.35% – 1.95%] | March 2026 |
| Total Debt / Weighted Average Interest Rate | $235.7 million | 2.53% | |
| ^(1)^ | Effective March 31, 2020, the Company utilized an interest rate swap to fix LIBOR and achieve an interest rate of 0.73% plus the applicable spread on $100.0 million of the outstanding balance on the revolving credit facility. | ||
| --- | --- | ||
| ^(2)^ | The Company utilized interest rate swaps on the $65.0 million 2026 Term Loan balance, including (i) its redesignation of the existing $50.0 million interest rate swap, entered into as of August 31, 2020, and (ii) a $15.0 million interest rate swap effective August 31, 2021, to fix LIBOR and achieve a weighted average fixed interest rate of 0.35% plus the applicable spread. | ||
| --- | --- |
Dividends
The Company paid a cash dividend for the third quarter of 2021 of $1.00 per share, on September 30, 2021 to stockholders of record as of the close of business on September 9, 2021.
The Company paid a pro rata cash dividend for the third quarter of 2021 on its Series A Preferred stock of $0.3763 per share, on September 30, 2021 to preferred stockholders of record as of the close of business on September 9, 2021.
2021 Outlook
For the second consecutive quarter, the Company is increasing its outlook and guidance for 2021, which considers the Company’s various investment activities and capital markets transactions, including the recent Series A preferred equity issuance, excludes any potential tax expense or tax benefit related to the Company’s retained ownership in the Land JV, and assumes continued improvement in economic activity and stable or positive business trends related to each of our tenants.
| **** | 2021 Outlook | |||
|---|---|---|---|---|
| | | | Low | High |
| Acquisition of Income Producing Assets^^ | $225.0 million | $250.0 million | ||
| Target Investment Initial Cash Yield | 7.00% | 7.25% | ||
| Disposition of Assets | $150.0 million | $175.0 million | ||
| Target Disposition Cash Yield | 6.00% | 6.25% | ||
| | | | | |
| FFO per Diluted Share | | | $3.75 | $3.85 |
| AFFO per Diluted Share | | | $4.10 | $4.20 |
| | | | | |
| Weighted Average Diluted Shares Outstanding | | | 6.0 million | 6.0 million |
Page 6
COVID-19 Pandemic
In March 2020, the World Health Organization declared the outbreak of the novel coronavirus as a pandemic (the “COVID-19 Pandemic”), which has spread throughout the United States. The impact of the COVID-19 Pandemic and its variants have evolved rapidly, with many jurisdictions taking drastic measures to limit the spread of the virus by instituting quarantines or lockdowns and imposing travel restrictions. Such actions have created significant disruptions to global supply chains, and adversely impacted several industries, including airlines, hospitality, retail and the broader real estate industry.
As a result of the approval of multiple COVID-19 vaccines for use and the distribution of such vaccines among the general population, a number of jurisdictions have reopened and loosened restrictions. However, wide disparities in vaccination rates and continued vaccine hesitancy, combined with the emergence of COVID-19 variants and surges in COVID-19 cases, could trigger the reinstatement of further restrictions. Such restrictions could include mandatory business shut-downs, travel restrictions, reduced business operations and social distancing requirements.
The future impact of the COVID-19 Pandemic on the real estate industry and the Company’s financial condition and results of operations is uncertain and cannot be predicted currently since it depends on several factors beyond the control of the Company, including, but not limited to: (i) the uncertainty surrounding the severity and duration of the COVID-19 Pandemic, including possible recurrences and differing economic and social impacts of the COVID-19 Pandemic in various regions of the United States; (ii) the effectiveness of the United States public health response; (iii) the COVID-19 Pandemic’s impact on the United States and global economies; (iv) the timing, scope and effectiveness of additional governmental responses to the COVID-19 Pandemic; (v) the availability of a treatment and effectiveness of vaccines approved for COVID-19 and the willingness of individuals to get vaccinated; (vi) changes in how certain types of commercial property are used while maintaining social distancing and other techniques intended to control the impact of COVID-19; (vii) the impact of phase out of economic stimulus measures, the inflationary pressure of economic stimulus, and the eventual halt and reversal by the U.S. Treasury of asset purchases; and (viii) the uneven impact on the Company’s tenants, real estate values and cost of capital.
3rd Quarter Earnings Conference Call & Webcast
The Company will host a conference call to present its operating results for the quarter ended September 30, 2021, on Friday, October 29, 2021, at 9:00 AM ET. Stockholders and interested parties may access the earnings call via teleconference or webcast:
United States:1-844-200-6205
All Other Locations: 1-929-526-1599
Please dial in at least fifteen minutes prior to the scheduled start time and use the code 094458 when prompted.
A webcast of the call can be accessed at: https://www.incommglobalevents.com/registration/q4inc/8800/cto-q3-2021-earnings-call/.
To access the webcast, log on to the web address noted above or go to www.ctoreit.com and log in at the investor relations section. Please log in to the webcast at least ten minutes prior to the scheduled time of the Earnings Call.
About CTO Realty Growth, Inc.
CTO Realty Growth, Inc. is a publicly traded real estate investment trust that owns and operates a portfolio of high-quality, retail-based properties located primarily in higher growth markets in the United States. CTO also owns an approximate 16% interest in Alpine Income Property Trust, Inc. (NYSE: PINE), a publicly traded net lease REIT.
We encourage you to review our most recent investor presentation, which is available on our website at www.ctoreit.com.
Page 7
Safe Harbor
Certain statements contained in this press release (other than statements of historical fact) are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can typically be identified by words such as “believe,” “estimate,” “expect,” “intend,” “anticipate,” “will,” “could,” “may,” “should,” “plan,” “potential,” “predict,” “forecast,” “project,” and similar expressions, as well as variations or negatives of these words.
Although forward-looking statements are made based upon management’s present expectations and reasonable beliefs concerning future developments and their potential effect upon the Company, a number of factors could cause the Company’s actual results to differ materially from those set forth in the forward-looking statements. Such factors may include, but are not limited to: the Company’s ability to remain qualified as a REIT; the Company’s exposure to U.S. federal and state income tax law changes, including changes to the REIT requirements; general adverse economic and real estate conditions; the ultimate geographic spread, severity and duration of pandemics such as the recent outbreak of the novel coronavirus, actions that may be taken by governmental authorities to contain or address the impact of such pandemics, and the potential negative impacts of such pandemics on the global economy and the Company’s financial condition and results of operations; the inability of major tenants to continue paying their rent or obligations due to bankruptcy, insolvency or a general downturn in their business; the loss or failure, or decline in the business or assets of PINE or the venture formed when the Company sold its controlling interest in the entity that owned the Company’s remaining land portfolio, of which the Company has a retained interest; the completion of 1031 exchange transactions; the availability of investment properties that meet the Company’s investment goals and criteria; the uncertainties associated with obtaining required governmental permits and satisfying other closing conditions for planned acquisitions and sales; and the uncertainties and risk factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and other risks and uncertainties discussed from time to time in the Company’s filings with the U.S. Securities and Exchange Commission.
There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of future developments on the Company will be those anticipated by management. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation to update the information contained in this press release to reflect subsequently occurring events or circumstances.
Non-GAAP Financial Measures
Our reported results are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We also disclose Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”), both of which are non-GAAP financial measures. We believe these two non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs.
FFO and AFFO do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operating activities as reported on our statement of cash flows as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures.
We compute FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as GAAP net income or loss adjusted to exclude extraordinary items (as defined by GAAP), net gain or loss from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets and real estate related depreciation and amortization, including the pro rata share of such adjustments of unconsolidated subsidiaries. The Company also excludes the gains or losses from sales of assets incidental to the primary business of the REIT which specifically include the sales of mitigation credits, impact fee credits, subsurface sales, and the land sales gains included in discontinued operations. To derive AFFO, we modify the NAREIT computation of FFO to include other adjustments to GAAP net income related to non-cash revenues and expenses such as straight-line
Page 8
rental revenue, amortization of deferred financing costs, amortization of capitalized lease incentives and above- and below-market lease related intangibles, and non-cash compensation. Such items may cause short-term fluctuations in net income but have no impact on operating cash flows or long-term operating performance. We use AFFO as one measure of our performance when we formulate corporate goals.
FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers primarily because it excludes the effect of real estate depreciation and amortization and net gains 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 AFFO is an additional useful supplemental measure for investors to consider because it will help them to better assess our operating performance without the distortions created by other non-cash revenues or expenses. FFO and AFFO may not be comparable to similarly titled measures employed by other companies.
Page 9
CTO Realty Growth, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share data)
| As of | |||||
|---|---|---|---|---|---|
| (Unaudited)September 30, 2021 | **** | December 31, 2020 | |||
| ASSETS | |||||
| Real Estate: | |||||
| Land, at cost | $ | 162,297 | $ | 166,512 | |
| Building and Improvements, at cost | 256,902 | 305,614 | |||
| Other Furnishings and Equipment, at cost | 701 | 672 | |||
| Construction in Process, at cost | 1,675 | 323 | |||
| Total Real Estate, at cost | 421,575 | 473,121 | |||
| Less, Accumulated Depreciation | (22,385) | (30,737) | |||
| Real Estate—Net | 399,190 | 442,384 | |||
| Land and Development Costs | 6,702 | 7,083 | |||
| Intangible Lease Assets—Net | 64,624 | 50,176 | |||
| Assets Held for Sale | 835 | 833 | |||
| Investment in Joint Ventures | 25,575 | 48,677 | |||
| Investment in Alpine Income Property Trust, Inc. | 37,468 | 30,574 | |||
| Mitigation Credits | 3,405 | 2,622 | |||
| Mitigation Credit Rights | | 21,573 | | | — |
| Commercial Loan and Master Lease Investments | 38,993 | 38,320 | |||
| Cash and Cash Equivalents | 7,005 | 4,289 | |||
| Restricted Cash | 68,546 | 29,536 | |||
| Refundable Income Taxes | | 856 | | | 26 |
| Deferred Income Taxes—Net | | 215 | | | — |
| Other Assets | 11,695 | 12,180 | |||
| Total Assets | $ | 686,682 | $ | 666,700 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | ||||
| Liabilities: | | ||||
| Accounts Payable | $ | 1,402 | $ | 1,047 | |
| Accrued and Other Liabilities | 12,716 | 9,090 | |||
| Deferred Revenue | 3,656 | 3,319 | |||
| Intangible Lease Liabilities—Net | 3,036 | 24,163 | |||
| Liabilities Held for Sale | 831 | 831 | |||
| Deferred Income Taxes—Net | — | 3,521 | |||
| Long-Term Debt | 229,894 | 273,830 | |||
| Total Liabilities | 251,535 | 315,801 | |||
| 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, 3,000,000 shares issued and outstanding at September 30, 2021; 50,000 shares authorized; 100.00 par value, no shares issued or outstanding at December 31, 2020 | | 30 | — | ||
| Common Stock – 500,000,000 shares authorized; 0.01 par value, 5,960,912 shares issued and outstanding at September 30, 2021; 25,000,000 shares authorized; 1.00 par value, 7,310,680 shares issued and 5,915,756 shares outstanding at December 31, 2020 | 60 | 7,250 | |||
| Treasury Stock – 0 shares at September 30, 2021 and 1,394,924 shares at December 31, 2020 | — | (77,541) | |||
| Additional Paid-In Capital | 86,899 | 83,183 | |||
| Retained Earnings | 348,681 | 339,917 | |||
| Accumulated Other Comprehensive Loss | (523) | (1,910) | |||
| Total Stockholders’ Equity | 435,147 | 350,899 | |||
| Total Liabilities and Stockholders’ Equity | $ | 686,682 | $ | 666,700 |
All values are in US Dollars.
Page 10
CTO Realty Growth, Inc.
Consolidated Statements of Operations
(Unaudited, in thousands, except share, per share and dividend data)
| **** | Three Months Ended | **** | Nine Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | September 30,<br><br>2021 | **** | September 30,<br><br>2020 | **** | September 30,<br><br>2021 | **** | September 30,<br><br>2020 | ||||
| Revenues | |||||||||||
| Income Properties | $ | 13,734 | | $ | 12,933 | | $ | 36,757 | | $ | 35,409 |
| Management Fee Income | 940 | | 683 | | 2,361 | | 2,080 | ||||
| Interest Income from Commercial Loan and Master Lease Investments | 726 | | 413 | | 2,136 | | 2,300 | ||||
| Real Estate Operations | 1,177 | | 543 | | 4,318 | | 631 | ||||
| Total Revenues | 16,577 | | 14,572 | | 45,572 | | 40,420 | ||||
| Direct Cost of Revenues | | | | | | | | ||||
| Income Properties | (3,984) | | (3,592) | | (9,688) | | (8,273) | ||||
| Real Estate Operations | (252) | | (1,682) | | (867) | | (3,263) | ||||
| Total Direct Cost of Revenues | (4,236) | | (5,274) | | (10,555) | | (11,536) | ||||
| General and Administrative Expenses | (2,680) | | (3,341) | | (8,477) | | (8,604) | ||||
| Impairment Charges | — | | — | | (16,527) | | (1,905) | ||||
| Depreciation and Amortization | (5,567) | | (4,761) | | (15,428) | | (14,334) | ||||
| Total Operating Expenses | (12,483) | | (13,376) | | (50,987) | | (36,379) | ||||
| Gain on Disposition of Assets | 22,666 | | 289 | | 28,106 | | 7,365 | ||||
| Gain (Loss) on Extinguishment of Debt | — | | — | | (641) | | 1,141 | ||||
| Other Gains and Income | 22,666 | | 289 | | 27,465 | | 8,506 | ||||
| Total Operating Income | 26,760 | | 1,485 | | 22,050 | | 12,547 | ||||
| Investment and Other Income (Loss) | (797) | | (1,030) | | 8,438 | | (5,746) | ||||
| Interest Expense | (1,986) | | (2,478) | | (6,851) | | (8,384) | ||||
| Income (Loss) from Operations Before Income Tax Benefit (Expense) | 23,977 | | (2,023) | | 23,637 | | (1,583) | ||||
| Income Tax Benefit (Expense) | (30) | | 501 | | 4,371 | | 410 | ||||
| Net Income (Loss) Attributable to the Company | $ | 23,947 | | $ | (1,522) | | $ | 28,008 | | $ | (1,173) |
| Distributions to Preferred Stockholders | | (1,129) | | | — | | | (1,129) | | | — |
| Net Income (Loss) Attributable to Common Stockholders | $ | 22,818 | | $ | (1,522) | | $ | 26,879 | | $ | (1,173) |
| | | | | | | | | | | | |
| Per Share Information: | | | | | | | | | | | |
| Basic and Diluted Net Income (Loss) Attributable to Common Stockholders | $ | 3.87 | | $ | (0.33) | | $ | 4.56 | | $ | (0.25) |
| | | | | | |||||||
| Weighted Average Number of Common Shares: | | | | | | | | | | | |
| Basic | | 5,901,095 | | | 4,654,329 | | | 5,892,900 | | | 4,673,049 |
| Diluted | | 5,901,095 | | | 4,654,329 | | | 5,892,900 | | | 4,673,049 |
| | | | | | | ||||||
| Dividends Declared and Paid – Preferred Stock | $ | 0.3763 | | $ | — | | $ | 0.3763 | | $ | — |
| Dividends Declared and Paid – Common Stock | $ | 1.00 | | $ | 0.40 | | $ | 3.00 | | $ | 0.90 |
Page 11
CTO Realty Growth, Inc.
Non-GAAP Financial Measures
(Unaudited, in thousands, except per share data)
| **** | Three Months Ended | **** | Nine Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | September 30,<br><br>2021 | **** | September 30,<br><br>2020 | **** | September 30,<br><br>2021 | **** | September 30,<br><br>2020 | ||||
| Net Income (Loss) Attributable to the Company | $ | 23,947 | $ | (1,522) | $ | 28,008 | $ | (1,173) | |||
| Depreciation and Amortization | 5,567 | 4,761 | 15,428 | 14,334 | |||||||
| Gains on Disposition of Assets | (22,666) | (289) | (28,106) | (7,365) | |||||||
| Losses (Gains) on the Disposition of Other Assets | (974) | 1,119 | (3,549) | 2,540 | |||||||
| Impairment Charges, Net | — | — | 12,474 | 1,905 | |||||||
| Unrealized (Gain) Loss on Investment Securities | 1,326 | 1,448 | (6,894) | 7,098 | |||||||
| Funds from Operations | $ | 7,200 | | $ | 5,517 | | $ | 17,361 | | $ | 17,339 |
| Distributions to Preferred Stockholders | | (1,129) | | | — | | | (1,129) | | | — |
| Funds from Operations Attributable to Common Stockholders | $ | 6,071 | | $ | 5,517 | | $ | 16,232 | | $ | 17,339 |
| Adjustments: | | | | | | | | | | | |
| Straight-Line Rent Adjustment | (669) | (670) | (1,844) | (1,810) | |||||||
| COVID-19 Rent Repayments (Deferrals), Net | 84 | (217) | 738 | (1,368) | |||||||
| Amortization of Intangibles to Lease Income | (86) | (434) | (820) | (1,352) | |||||||
| Contributed Leased Assets Accretion | (38) | (43) | (197) | (130) | |||||||
| Loss (Gain) on Extinguishment of Debt | — | — | 641 | (1,141) | |||||||
| Amortization of Discount on Convertible Debt | 322 | 307 | 951 | 1,067 | |||||||
| Non-Cash Compensation | 734 | 617 | 2,434 | 2,135 | |||||||
| Non-Recurring G&A | — | 953 | 155 | 1,055 | |||||||
| Amortization of Deferred Financing Costs to Interest Expense | 120 | 115 | 444 | 338 | |||||||
| Accretion of Loan Origination Fees | — | (7) | (1) | (164) | |||||||
| Non-Cash Imputed Interest | (116) | (105) | (330) | (311) | |||||||
| Adjusted Funds from Operations Attributable to Common Stockholders | $ | 6,422 | $ | 6,033 | $ | 18,403 | $ | 15,658 | |||
| | | | | | | | | | | | |
| FFO per Common Share – Diluted | $ | 1.03 | $ | 1.19 | $ | 2.75 | $ | 3.71 | |||
| AFFO per Common Share – Diluted | $ | 1.09 | $ | 1.30 | $ | 3.12 | $ | 3.35 |
Page 12
Exhibit 99.2
| Investor Presentation October 2021<br>REALTY GROWTH<br>NYSE: CTO | |
|---|---|
| © CTO Realty Growth, Inc. | ctoreit.com<br>Company Profile<br>2<br>As of September 30, 2021, or as otherwise noted; any differences a result of rounding.<br>(1) Based on monthly Contractual Base Rent (“CBR”), which represents the amount owed to the Company under the terms of its lease agreements in each respective month.<br>(2) Calculated on 2,039,644 common shares and partnership units CTO owns in PINE and PINE’s September 30, 2021, closing stock price.<br>(3) Calculated on 5,960,912 shares outstanding as of September 30, 2021.<br>(4) Calculated on 3,000,000 Series A Preferred shares outstanding as of September 30, 2021, and a par value of $25.00 per share.<br>(5) Includes the effects of cash, cash equivalents, restricted cash and outstanding borrowings as of September 30, 2021.<br>$37M<br>INVESTMENT IN ALPINE INCOME<br>PROPERTY TRUST(2)<br>$4.10 – $4.20<br>AFFO PER SHARE GUIDANCE RANGE<br>19 2.2M $43M<br>PROPERTIES SQUARE FEET IN-PLACE NET<br>OPERATING INCOME<br>100%<br>Q3 2021 RENT<br>COLLECTION(1)<br>Q3 2021 ANNUALIZED<br>DIVIDEND<br>$4.00/share 7.4%<br>CURRENT ANNUALIZED<br>DIVIDEND YIELD<br>THE STRAND, JACKSONVILLE, FL<br>THE SHOPS AT LEGACY, PLANO, TX<br>$320M $236M $556M<br>EQUITY MARKET CAP(3) OUTSTANDING DEBT TOTAL ENTERPRISE VALUE<br>(Net of Cash)(5)<br>SERIES A PREFERRED(4)<br>$75M |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Key Takeaways<br>3<br>Significant Discount to the Peer Group<br>Meaningful potential upside in valuation as CTO has one of the lowest 2022E FFO multiple of its retail and diversified peer group.<br>Earnings Growth Through Capital Recycling<br>Strong, long-term track record of monetizing assets at favorable net investment spreads to drive accretive earnings growth and attractive risk-adjusted returns.<br>Attractive Dividend and Improving Payout Ratio<br>CTO pays a $1.00 quarterly cash dividend, representing a 7.4% in-place annualized yield and a quickly improving AFFO payout ratio driven by the monetization and<br>reinvestment of low cap rate, single tenant properties and non-income producing assets.<br>Differentiated Investment Strategy<br>Diversified, retail-based investment strategy focused on value-add properties with strong real estate fundamentals in growing markets that can be acquired at meaningful<br>discounts to replacement cost.<br>High-Quality Portfolio in Faster Growing, Business Friendly Locations with Operational Upside<br>Recently constructed real estate portfolio with a durable, stable tenant base located in faster growing, business friendly states such as Florida, Texas and Georgia, and<br>with acquired vacancy that represents notable leasing and/or repositioning upside.<br>Profitable External Investment Management<br>External management of Alpine Income Property Trust, Inc. (NYSE: PINE), a high-growth, publicly traded, single tenant net lease REIT, provides excellent in-place<br>cash flow and significant upside through the CTO’s 16% retained ownership position.<br>Conservative Balance Sheet<br>Balance sheet with ample liquidity, no near-term debt maturities and a demonstrated access to multiple capital sources provides financial stability and flexibility.<br>As of September 30, 2021, or as otherwise noted. |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Year-to-Date 2021 Highlights<br>4<br>Accretive Investment Activity<br>▪ Under contract to sell the remaining land in the Daytona Beach Land Joint Venture for $66.2 million; total net proceeds to CTO expected to be<br>$25.6 million before taxes<br>▪ Acquired 3 properties for $111.0 million at an 8.5% weighted-average going-in cash cap rate in submarkets of Salt Lake City, UT; Las Vegas, NV;<br>and Dallas, TX<br>▪ Sold 14 properties (13 single tenant) for $140.8 million at a 6.0% weighted-average exit cap rate<br>▪ Sold 39,000 acres of subsurface interests for $3.5 million<br>▪ Strategically acquired our joint venture partner’s 70% interest in the Mitigation Bank JV for a payment of $16.1 million, net of available cash<br>▪ Non-cash, unrealized gain of $6.9 million on the mark-to-market of the investment in PINE<br>Attractive and Well-Performing Portfolio<br>▪ Collected an average of 100% of Contractual Base Rents for the first nine months of 2021<br>▪ Signed 370,100 SF of new leases, extensions and renewals<br>▪ 90% occupied portfolio in high-growth, business friendly markets, with increasing occupancy to be driven by recent leasing activity<br>▪ 90% of Annualized Base Rent comes from metropolitan statistical areas with more than one million people<br>Strong Financial Performance<br>▪ Reported Q3 2021 AFFO per share of $1.09 and year-to-date Q3 2021 AFFO per share of $3.12<br>▪ Completed inaugural perpetual preferred 6.375% Series A equity issuance in July 2021, for net proceeds of $72.4 million<br>▪ Originated a new 5-year, $65 million term (Q1 $50 million; Q2 $15 million) loan at an initial interest rate of 1.70%<br>▪ Announced and paid a $1.00 per common share regular quarterly cash dividend for Q1 2021, Q2 2021 and Q3 2021, respectively<br>▪ Announced and paid a pro-rated $0.3763 per share Series A Preferred quarterly cash dividend for Q3 2021<br>As of September 30, 2021, or as otherwise noted; any differences a result of rounding. |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Diversified Investment Strategy<br>5<br>CTO is a diversified real estate investment strategy focused on owning, operating and investing in<br>retail-based real estate, directly and through investment management structures<br>Multi-Tenant Asset Strategy<br>▪ Focused on retail-based multi-tenanted assets that have a lifestyle or community-oriented<br>retail component and a complimentary office component, located in higher growth MSAs<br>within the continental United States<br>▪ Acquisition targets exhibit strong current in-place yields with a future potential for increased<br>returns through a combination of vacancy lease-up, redevelopment or rolling in-place leases<br>to higher market rental rates<br>Monetization of Non-Income Producing Assets<br>▪ CTO has a number of legacy non-income producing assets (developable land, mitigation<br>credits and mineral rights) that when monetized, will unlock meaningful equity to be<br>redeployed into income producing assets that can drive higher cash flow and FFO per share<br>Alpine Income Property Trust and Retained Net Lease Assets<br>▪ CTO seeded and externally manages Alpine Income Property Trust (NYSE: PINE), a pure<br>play net lease REIT, which is a meaningful source of management fee income and dividend<br>income through its direct investment of REIT shares and OP unit holdings<br>▪ CTO intends to monetize its remaining net lease properties at market pricing, creating<br>attractive net investment spreads relative to where it is investing in multi-tenanted assets and<br>resulting in an opportunity to grow PINE through direct asset sales from CTO to PINE<br>REALTY GROWTH<br>Targeting Multi-<br>Tenant, Retail-Based,<br>Value-Add Income<br>Property<br>Acquisitions<br>Monetize Legacy<br>Land, Mitigation<br>Credits, Mineral<br>Rights and Other<br>Assets<br>Monetize the<br>Retained Net<br>Lease Portfolio<br>at Opportunistic<br>Valuations<br>Manage and<br>Retain Ownership in<br>Alpine REIT<br>(NYSE:PINE) |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Real Estate Strategy<br>CTO’s investment strategy is focused on generating relative outsized returns for our shareholders through a<br>combination of accretive acquisitions and dispositions, asset-level value creation, acquiring at meaningful<br>discounts to replacement cost, and sustainably growing organizational level cash flow.<br>Diversified asset investment strategy<br>Markets that project to have above-average job and<br>population growth; states with favorable business climates<br>Large single tenant asset portfolio identified for future<br>disposition to fund new investments<br>Primary focus on value-add retail and mixed-use<br>properties with strong real estate fundamentals<br>Seek properties with leasing or repositioning upside or<br>highly stable assets with an identifiable opportunity to<br>drive long-term, outsized risk-adjusted returns<br>Acquiring at meaningful discounts to replacement cost<br>and below market rents<br>Miami<br>Orlando<br>Jacksonville<br>Tampa<br>Atlanta<br>Nashville Charlotte<br>Raleigh-Durham<br>Washington, DC<br>Dallas<br>Houston<br>Austin<br>Denver Boulder<br>Salt Lake City<br>Las Vegas<br>Reno<br>Phoenix<br>6 |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>56%<br>25%<br>17%<br>2%<br>Retail Office Mixed Use Hotel<br>Portfolio At A Glance<br>7<br>33%<br>67%<br>Single-Tenant Multi-Tenant<br>As of September 30, 2021.<br>Percentages listed based on in-place cash rent as of September 30, 2021.<br>(1) Source: Sites USA; Portfolio average weighted by the annualized base rent of each property.<br>(2) MSA, or metropolitan statistical area, is the formal definition of a region that consists of a city and surrounding communities that are linked by social and economic factors, as established by the U.S. Office of Management and Budget. The names of the MSA have been shortened for ease of reference.<br>(3) As ranked by Urban Land Institute & PWC in the ‘2021 Emerging Trends in Real Estate’ publication.<br>Income Producing Property<br>Jacksonville, FL 19%<br>Dallas, TX 18%<br>Atlanta, GA 14%<br>Phoenix, AZ 9%<br>Albuquerque, NM 9%<br>Washington, DC 7%<br>Tampa, FL 5%<br>Salt Lake City, UT 4%<br>Miami, FL 4%<br>Las Vegas, NV 4%<br>Austin, TX 2%<br>Daytona Beach, FL 2%<br>New York, NY 1%<br>> 20% 10% - 20% 5% - 10% < 5%<br>Denotes an MSA(2) with over one million people;<br>Bold denotes a Top 30 ULI Market(3)<br>% of Cash Base Rent By State<br>102,050<br>Portfolio Average<br>3-Mile Population(1)<br>$110,010<br>Portfolio Average 3-Mile<br>Household Income(1) |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Repositioning – Ashford Lane, Atlanta, GA<br>8<br>Acquired as Perimeter Place in 2020, with an<br>opportunity to up-tier through targeted lease-up,<br>an improved tenant mix and market repositioning<br>▪ High barrier-to-entry location with new<br>residential projects, increasing density and 24-<br>hour demand<br>▪ Near southeast corporate headquarters for<br>UPS, State Farm, First Data, IHG and<br>Mercedes Benz<br>▪ Daytime population over 126,000 in 3-mile<br>radius; average household income of $125,000<br>ASHFORD LANE, ATLANTA, GA<br>ASHFORD LANE, ATLANTA, GA<br>ASHFORD LANE, ATLANTA, GA<br>T H E H A L L |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Ashford Lane, Atlanta, GA (Repositioning)<br>9<br>Ashford Lane will incorporate outdoor<br>seating and eating areas, along with a<br>number of new green spaces, including<br>The Lawn, that will drive a more<br>community-focused experience<br>Ashford Lane is being repositioned as a higher-end<br>shopping and dining destination within a growing<br>and relatively affluent submarket of Atlanta<br>▪ Signed 5,000 square feet of leases with<br>Sweetgreen and Massage Envy<br>▪ Signed a new 6,200 square foot lease with the<br>acclaimed Superica restaurant<br>▪ Signed 17,000 square foot lease with a food hall<br>operator who will open in late-2021/early-2022<br>▪ Opportunity to deliver increased rental rates with<br>higher-end tenants supported by new multi-family<br>and office development<br>▪ Additional green space, outdoor seating and<br>eating areas will support improved foot traffic<br>and offer restaurant-focused amenities<br>▪ Currently negotiating letters of intent and forms<br>of lease with a number of prospective tenants<br>(Not Owned)<br>T H E H A L L<br>(Not Owned)<br>(Not Owned) |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Crabby’s Oceanside Expansion, Daytona Beach, FL<br>10<br>▪ Organic growth opportunity to expand<br>existing footprint to create a “Tiki Bar”<br>that better engages with the beach<br>▪ CTO to receive up to a double-digit yield<br>on cost through base rent, with upside<br>through percentage rent above a natural<br>sales breakpoint<br>▪ Cost to CTO estimated to be between<br>$1.0 million - $1.5 million<br>▪ Complimentary to the existing<br>restaurant, which is experiencing record<br>sales volume |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Land Joint Venture<br>11<br>Land Joint Venture Summary of Terms<br>▪ Contract value of remaining land held in<br>the joint venture is $66.2 million<br>▪ CTO receives 90% of all proceeds<br>once the JV Partner capital account is<br>$0 and the preferred return is achieved<br>▪ Expected proceeds before taxes to<br>CTO based on its interest in the land<br>JV is approximately $25.6 million<br>▪ Closing anticipated to occur before<br>year-end 2021<br>Under Contract |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Assets & Capital Structure Components<br>12<br>Net Operating Income of Income Property Portfolio(1) $37.0 $37.0 $37.0 $37.0 $37.0<br>÷ Capitalization Rate 6.50% 6.75% 7.00% 7.25% 7.50%<br>Income Portfolio Value $569.2 $548.1 $528.6 $510.3 $493.3<br>Other Assets:<br>+ Estimated Value for Subsurface Interests, Wholly Owned Excess Land,<br>Loan Portfolio, Mitigation Credits and Other Assets $32.0 $32.0 $32.0 $32.0 $32.0<br>+ Cash, Cash Equivalents & Restricted Cash 75.6 75.6 75.6 75.6 75.6<br>+ Anticipated Proceeds from Sale of Land JV Interest 25.6 25.6 25.6 25.6 25.6<br>+ Value of Shares & Units in Alpine Income Property Trust (PINE)(2) 37.5 37.5 37.5 37.5 37.5<br>+ Value of PINE Management Agreement(3) 8.6 8.6 8.6 8.6 8.6<br>Other Assets Value $179.3 $179.3 $179.3 $179.3 $179.3<br>Total Implied Asset Value $748.5 $727.4 $707.9 $689.6 $672.6<br>- Total Debt Outstanding $235.7 $235.7 $235.7 $235.7 $235.7<br>- Series A Preferred Equity(4) $75.0 $75.0 $75.0 $75.0 $75.0<br>As of September 30, 2021, or as otherwise noted; any differences a result of rounding.<br>Note: 5,960,912 shares outstanding as of September 30, 2021.<br>(1) Based on in-place net operating income of the existing income property portfolio assets as of September 30, 2021.<br>(2) Calculated on 2,039,644 common shares and partnership units CTO owns in PINE and PINE’s September 30, 2021, closing stock price.<br>(3) Calculated using the trailing 24-month average management fee paid to CTO by PINE as of September 30, 2021, annualized by multiplying by twelve, and then multiplying by three to account for a termination fee multiple.<br>(4) Calculated on 3,000,000 Series A Preferred shares outstanding as of September 30, 2021, and a par value of $25.00 per share. |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Property Net Operating Income Growth Opportunity<br>13<br>As of September 30, 2021, or as otherwise noted; any differences a result of rounding.<br>Note: 5,960,912 shares outstanding as of September 30, 2021.<br>(1) Based on in-place net operating income as of September 30, 2021.<br>(2) Calculated as $75.6 million cash, cash equivalents, restricted cash and outstanding borrowings, multiplied by an assumed investment yield.<br>(3) Calculated using the Company forecasted value of Estimated Value for Subsurface Interests, Wholly Owned Excess Land, Loan Portfolio, Mitigation Credits and Other Assets plus Anticipated Proceeds from Sale of Land JV Interest on page 12 of this presentation, multiplied by an assumed investment yield.<br>(4) Calculated as the actual management fees received by CTO in Q3 2021, multiplied by four to annualize the income stream.<br>(5) Calculated as the actual dividends received by CTO in Q3 2021 from PINE, multiplied by four to annualize the income stream.<br>(6) Calculated as net operating income generated by Investment of Cash and the Investment of Non-Income Producing Assets, multiplied by a 6.0x multiple, multiplied by an assumed investment yield.<br>$37.0<br>$4.7<br>$4.0<br>$3.8<br>$2.1<br>$3.7<br>25.0<br>30.0<br>35.0<br>40.0<br>45.0<br>50.0<br>55.0<br>60.0<br>In-Place Property NOI Investment of<br>Existing Cash<br>Investment of Non-Income<br>Producing Assets<br>Annualized PINE<br>Management Fee<br>Annualized PINE<br>Dividend Income<br>Incremental Leverage Fully Invested<br>NOI Opportunity<br>$55.9<br>Opportunity to grow in-place income property NOI by more than 30% through the<br>deployment of existing cash, monetization and redeployment of non-income producing<br>assets, and utilization of incremental leverage supported by increased asset-level cash flow.<br>(1)<br>(2) (3) (4) (5)<br>(6) |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>25.7%<br>8.2%<br>2.9%<br>1.5%<br>(1.1%)<br>(7.3%)<br>(10.0%)<br>(13.8%)<br>(20.9%)<br>-26.0%<br>Relative Performance to the Peer Group<br>14<br>(1) Total Return information includes dividends reinvested in the respective security and is from Bloomberg for the period of January 1, 2020 through September 30, 2021.<br>(2) Total Annual Compounded Return over the 10-year period is from Bloomberg and is measured from July 29, 2011 through July 30, 2021.<br>CTO has been the best performing REIT of its peer group since the beginning of 2020 and still trades at a<br>meaningful discount to net asset value and relative to the 2022E FFO multiple peer average.<br>Total Return since January 1, 2020(1)<br>10.6%<br>Total Annual Compounded Return over a 10-<br>year period, ending on July 30, 2021(2)<br>Relative Performance over the same period(2):<br>9.9% The St. Joe Land Company<br>9.8% RMZ; MSCI US REIT IDX<br>8.9% AvalonBay Communities<br>7.7% Regency Centers<br>6.3% Federal Realty Investment Trust<br>6.1% Kimco Realty Corporation<br>5.2% Simon Property Group<br>4.3% Boston Properties<br>(0.6%) Vornado Realty Trust<br>(1.1%) Wynn Resorts |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Peer Comparisons<br>15<br>21.4x<br>16.9x<br>15.3x 15.1x<br>14.5x<br>14.1x<br>12.6x<br>12.4x 12.2x<br>3.6%<br>3.2% 3.3%<br>5.8%<br>3.3%<br>5.0%<br>4.8%<br>7.4%<br>3.8%<br>2.50%<br>3.50%<br>4.50%<br>5.50%<br>6.50%<br>7.50%<br>8.50%<br> 11.0x<br> 12.0x<br> 13.0x<br> 14.0x<br> 15.0x<br> 16.0x<br> 17.0x<br> 18.0x<br> 19.0x<br> 20.0x<br> 21.0x<br> 22.0x<br>(1) All 2022E FFO multiples and dividend yield information are based on the closing stock price on September 30, 2021, using annualized dividends and 2022E FFO per share estimates from the KeyBank The Leaderboard report dated October 22, 2021.<br>CTO has an outsized dividend yield and very attractive valuation relative to its REIT peer group and recent<br>retail-oriented M&A multiples (KRG/RPAI and KIM/WRI), implying significant valuation upside.<br>2022E FFO Multiple and Annualized Dividend Yield(1) |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Balance Sheet<br>16<br>$100.0 $100.0<br>$61.7 $65.0<br>$0.0 $0.0 $0.0<br>$101.0 $101.0<br>2021 2022 2023 2024 2025 2026 2027 2028 2029 230<br>Fixed Floating Total Commitments<br>Component of Long-Term Debt Principal Interest Rate Maturity Date<br>Revolving Credit Facility (Fixed)(2) $100.0 million 30-Day LIBOR + [1.35% – 1.95%] May 2023<br>Revolving Credit Facility (Floating) 9.0 million 30-Day LIBOR + [1.35% – 1.95%] May 2023<br>2025 Convertible Senior Notes 61.7 million 3.88% April 2025<br>2026 Term Loan (Fixed)(3) 65.0 million 30-Day LIBOR + [1.35% – 1.95%] March 2026<br>Total Debt / Weighted-Average Interest Rate $235.7 million<br>All data as of September 30, 2021.<br>Any differences a result of rounding.<br>(1) Estimated liquidity is through a combination of revolving credit facility availability and existing cash and restricted cash.<br>(2) Effective March 31, 2020, the Company utilized an interest rate swap to fix LIBOR and achieve an interest rate of 0.73% plus the applicable spread on $100.0 million of the outstanding balance on the revolving credit facility.<br>(3) The Company utilized interest rate swaps on the $65.0 million 2026 Term Loan balance, including (i) its redesignation of the existing $50.0 million interest rate swap, entered into as of August 31, 2020, and (ii) a $15.0 million interest rate swap effective August 31, 2021, to fix LIBOR and achieve a weighted average fixed interest rate of<br>0.35% plus the applicable spread.<br>Debt Maturities<br>($ in millions) ▪ More than $175 million of<br>existing liquidity(1)<br>▪ No near-term debt maturities<br>▪ 29% net debt to total enterprise<br>value (TEV)<br>▪ Minimal exposure to floating<br>interest rates<br>▪ 100% of CTO’s outstanding debt<br>is unsecured<br>$210 million of<br>Total Revolving<br>Credit Facility<br>Commitments |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>2021 Guidance<br>17<br>$ and shares outstanding in millions, except per share data.<br>Full-Year 2021 Guidance was provided in the Company’s Third Quarter 2021 Operating Results press release filed on October 28, 2021.<br>Full- Year 2021<br>Variance to Prior<br>Guidance<br>Low High Low High<br>Acquisition of Income Producing Assets $225 - $250 $50 - $25<br>Target Investment Initial Cash Yield 7.00% - 7.25% (0.25%) -(0.25%)<br>Disposition of Assets $150 - $175 $25 - $25<br>Target Disposition Cash Yield 6.00% - 6.25% 0.25% -—<br>FFO Per Diluted Share $3.75 - $3.85 $0.10 -—<br>AFFO Per Diluted Share $4.10 - $4.20 $0.10 -—<br>Weighted Average Diluted<br>Shares Outstanding 6.0 - 6.0 —-—<br>The Company has increased its<br>outlook for 2021 to take into<br>account the Company’s third<br>quarter performance and the<br>expected impact of the<br>Company’s various investment<br>activities and capital markets<br>transactions.<br>The Company’s outlook for 2021,<br>which does not include any<br>potential tax expense or tax<br>benefit related to the Company’s<br>retained ownership in the Land JV,<br>assumes continued improvement<br>in economic activity, stable or<br>positive business trends related to<br>each of our tenants, and other<br>significant assumptions. |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Experienced Management Team<br>CTO Realty Growth is led by an experienced management team with meaningful shareholder alignment, deep<br>industry relationships and a strong long-term track record.<br>18<br>John P. Albright<br>President & Chief Executive Officer<br>▪ Former Co-Head and Managing Director of Archon Capital, a Goldman Sachs<br>Company; Executive Director of Merchant Banking – Investment Management at<br>Morgan Stanley; and Managing Director of Crescent Real Estate (NYSE: CEI)<br>Daniel E. Smith<br>Senior Vice President, General Counsel & Corporate Secretary<br>▪ Former Vice President and Associate General Counsel of Goldman Sachs & Co. and<br>Senior Vice President and General Counsel of Crescent Real Estate (NYSE: CEI)<br>Lisa M. Vorakoun<br>Vice President & Chief Accounting Officer<br>▪ Former Assistant Finance Director for the City of DeLand, Florida and Audit Manager<br>for James Moore & Company, an Accounting and Consulting Firm<br>Helal A. Ismail<br>Vice President – Investments<br>▪ Former Associate of Jefferies Real Estate Gaming and Lodging Investment Banking and<br>Manager at B-MAT Homes, Inc.<br>Matthew M. Partridge<br>Senior Vice President, Chief Financial Officer & Treasurer<br>▪ Former Chief Operating Officer and Chief Financial Officer of Hutton; Executive Vice<br>President, Chief Financial Officer and Secretary of Agree Realty Corporation (NYSE:<br>ADC); and Vice President of Finance for Pebblebrook Hotel Trust (NYSE: PEB)<br>Steven R. Greathouse<br>Senior Vice President & Chief Investment Officer<br>▪ Former Director of Finance for N3 Real Estate; Senior Associate of Merchant Banking<br>– Investment Management at Morgan Stanley; and Senior Associate at Crescent Real<br>Estate (NYSE: CEI)<br>E. Scott Bullock<br>Vice President – Real Estate<br>▪ Former Managing Director of Corporate Development for International Speedway<br>Corporation; Senior Development Manager of Crescent Resources LLC; Development<br>Manager of Pritzker Realty Group, L.P.; and Project Engineer for Walt Disney<br>Imagineering |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Corporate Responsibility<br>CTO Realty Growth is committed to sustainability, strong corporate governance,<br>and meaningful corporate social responsibility programs.<br>19<br>Social Responsibility<br>Inclusive and Supportive Company Culture<br>▪ Dedicated to an inclusive and supportive office environment filled<br>with diverse backgrounds and perspectives, with a demonstrated<br>commitment to financial, mental and physical wellness<br>Notable Community Outreach<br>▪ Numerous and diverse community outreach programs, supporting<br>environmental, artistic, civil and social organizations in the community<br>Corporate Governance<br>▪ Independent Chairman of the Board and 5 of<br>6 Directors classified as independent<br>▪ Annual election of all Directors<br>▪ Annual Board of Director evaluations<br>▪ Board oversees risk assessment/management,<br>with oversight for specific areas of risk<br>delegated to Board committees<br>▪ Stock ownership requirements for all<br>Executive Management and Directors<br>▪ Prohibition against hedging and pledging<br>CTO Realty Growth stock<br>▪ Robust policies and procedures for approval<br>of related party transactions<br>▪ All team members adhere to a comprehensive<br>Code of Business Conduct and Ethics policy<br>Environmental Responsibility<br>Committed Focus & Targeted Investment<br>▪ Committed to maintaining an environmentally conscious culture, the utilization of environmentally friendly &<br>renewable products, and the promotion of sustainable business practices. Notable achievements:<br>• Formed a conservation mitigation bank on approximately 2,500 acres of land, resulting in the land being<br>barred from development permanently preserved<br>• Invested in LED lighting, recycling and waste reduction strategies, programmable thermostats, energy<br>management systems in our office and/or at our owned properties<br>• Conveyed over 11,000 acres of land to the State of Florida to significantly enlarge the neighboring Tiger Bay<br>State Forest<br>Tenant Alignment<br>▪ Alignment with environmentally aware tenants who have strong sustainability programs and initiatives embedded<br>into their corporate culture and business practices |
| --- | |
| REALTY GROWTH<br>NYSE: CTO<br>Appendix | |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Schedule of Properties<br>21<br>Property Market Asset Type Property<br>Type Square Feet Occupancy % of ABR<br>The Shops at Legacy – Plano, TX Dallas, TX Multi-Tenant Mixed Use 236,867 85% 16%<br>Ashford Lane – Atlanta, GA Atlanta, GA Multi-Tenant Retail 269,682 76% 14%<br>The Strand – Jacksonville, FL Jacksonville, FL Multi-Tenant Retail 204,552 93% 11%<br>Crossroads Towne Center – Chandler, AZ Phoenix, AZ Multi-Tenant Retail 244,711 98% 10%<br>Fidelity – Albuquerque, NM Albuquerque, NM Single Tenant Office 210,067 100% 8%<br>245 Riverside – Jacksonville, FL Jacksonville, FL Multi-Tenant Office 136,855 77% 6%<br>The Carpenter Hotel – Austin, TX Austin, TX Single Tenant Hospitality 73,508 100% 6%<br>Sabal Pavilion – Tampa, FL Tampa, FL Single Tenant Office 120,500 100% 5%<br>Jordan Landing – West Jordan, UT Salt Lake City, UT Multi-Tenant Retail 170,996 100% 4%<br>Westland Gateway Plaza – Hialeah, FL Miami, FL Single Tenant Retail 108,029 100% 4%<br>As of September 30, 2021 or as otherwise noted; any differences a result of rounding.<br>Blue shading denotes a ground lease property or a property that has parcels that are ground leased, where the Company owns the land, and the tenant owns the building and the improvements and leases the land from the Company. |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Schedule of Properties<br>22<br>Property Market Asset Type Property<br>Type Square Feet Occupancy % of ABR<br>General Dynamics – Reston, VA Washington, DC Single Tenant Office 64,319 100% 4%<br>24 Hour Fitness – Falls Church, VA Washington, DC Single Tenant Retail 46,000 100% 4%<br>Eastern Commons SC – Henderson, NV Las Vegas, NV Multi-Tenant Retail 133,304 96% 3%<br>Landshark Bar & Grill – Daytona Beach, FL Daytona Beach, FL Single Tenant Retail 6,264 100% 2%<br>Westcliff Center – Fort Worth, TX Dallas, TX Multi-Tenant Retail 136,185 60% 1%<br>Party City – Oceanside, NY New York, NY Single Tenant Retail 15,500 100% 1%<br>Chuy’s – Jacksonville, FL Jacksonville, FL Single Tenant Retail 7,950 100% < 1%<br>Firebirds – Jacksonville, FL Jacksonville, FL Single Tenant Retail 6,948 100% < 1%<br>Crabby’s Oceanside – Daytona Beach, FL Daytona Beach, FL Single Tenant Retail 5,780 100% < 1%<br>As of September 30, 2021 or as otherwise noted; any differences a result of rounding.<br>Blue shading denotes a ground lease property or a property that has parcels that are ground leased, where the Company owns the land, and the tenant owns the building and the improvements and leases the land from the Company. |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>The Shops at Legacy, Plano, TX<br>23 |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Ashford Lane, Atlanta, GA<br>24 |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Crossroads Town Center, Chandler, AZ<br>25 |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>The Strand, Jacksonville, FL<br>26 |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Fidelity Office Complex, Albuquerque, NM<br>27 |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>245 Riverside Office Building, Jacksonville, FL<br>28 |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>The Carpenter Hotel, Austin, TX (Ground Lease)<br>29 |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Sabal Pavilion (Ford Motor Credit), Tampa, FL<br>30 |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Jordan Landing, West Jordan, UT<br>31 |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Eastern Commons, Henderson, NV<br>32 |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Forward Looking Statements<br>33<br>Certain statements contained in this presentation (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<br>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.<br>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<br>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<br>real estate conditions; the ultimate geographic spread, severity and duration of pandemics such as the recent outbreak of the novel coronavirus, actions that may be taken by governmental authorities to contain or address the impact of such pandemics, and the potential negative impacts of such<br>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<br>assets of PINE or the venture formed when the Company sold its controlling interest in the entity that owned the Company’s remaining land portfolio, of which the Company has a retained interest; the completion of 1031 exchange transactions; the availability of investment properties that meet<br>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<br>the fiscal year ended December 31, 2020 and other risks and uncertainties discussed from time to time in the Company’s filings with the U.S. Securities and Exchange Commission.<br>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,<br>which speak only as of the date of this press release. The Company undertakes no obligation to update the information contained in this presentation to reflect subsequently occurring events or circumstances.<br>References in this presentation:<br>▪ All information is as of September 30, 2021, unless otherwise noted.<br>▪ Annualized straight-line Base Rent (“ABR” or “Rent”) and the statistics based on ABR are calculated based on our current portfolio as of September 30, 2021 and represent straight-line rent calculated in accordance with GAAP.<br>▪ Dividends, subject to the required dividends to maintain our qualification as a REIT, are set by the Board of Directors and declared on a quarterly basis and there can be no assurances as to the likelihood or amount of dividends in the future.<br>▪ A credit rated, or investment grade rated tenant (rating of BBB-, Baa3 or NAIC-2 or higher) is a tenant or the parent of a tenant with a credit rating from S&P Global Ratings, Moody’s Investors Service, Fitch Ratings or the National Associated of Insurance Commissioners (NAIC).<br>▪ Contractual Base Rent (“CBR”) represents the amount owed to the Company under the terms of its lease agreements at the time referenced.<br>Non-GAAP Financial Measures<br>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”) and Adjusted Funds From Operations (“AFFO”), both of which are non-GAAP financial measures. We<br>believe these two non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs.<br>FFO and AFFO do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operating activities as<br>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.<br>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<br>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<br>from sales of assets incidental to the primary business of the REIT which specifically include the sales of mitigation credits, impact fee credits, subsurface sales, and the land sales gains included in discontinued operations. To derive AFFO, we modify the NAREIT computation of FFO to include<br>other adjustments to GAAP net income related to non-cash revenues and expenses such as straight-line rental revenue, amortization of deferred financing costs, amortization of capitalized lease incentives and above- and below-market lease related intangibles, and non-cash compensation. Such<br>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.<br>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<br>historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. We believe that AFFO is an additional useful supplemental measure for investors to consider because it will help them to better assess<br>our operating performance without the distortions created by other non-cash revenues or expenses. FFO and AFFO may not be comparable to similarly titled measures employed by other companies.<br>Investor Inquiries: Matthew M. Partridge<br>Senior Vice President, Chief Financial Officer and Treasurer<br>(386) 944-5643<br>mpartridge@ctoreit.com |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Non-GAAP Financial Measures Reconciliation<br>34<br>Three Months Ended Nine Months Ended<br>September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020<br>Revenues<br>Income Properties $ 13,734 $ 12,933 $ 36,757 $ 35,409<br>Management Fee Income 940 683 2,361 2,080<br>Interest Income from Commercial Loan and Master Lease Investments 726 413 2,136 2,300<br>Real Estate Operations 1,177 543 4,318 631<br>Total Revenues 16,577 14,572 45,572 40,420<br>Direct Cost of Revenues<br>Income Properties (3,984) (3,592) (9,688) (8,273)<br>Real Estate Operations (252) (1,682) (867) (3,263)<br>Total Direct Cost of Revenues (4,236) (5,274) (10,555) (11,536)<br>General and Administrative Expenses (2,680) (3,341) (8,477) (8,604)<br>Impairment Charges ——(16,527) (1,905)<br>Depreciation and Amortization (5,567) (4,761) (15,428) (14,334)<br>Total Operating Expenses (12,483) (13,376) (50,987) (36,379)<br>Gain on Disposition of Assets 22,666 289 28,106 7,365<br>Gain (Loss) on Extinguishment of Debt ——(641) 1,141<br>Other Gains and Income 22,666 289 27,465 8,506<br>Total Operating Income 26,760 1,485 22,050 12,547<br>Investment and Other Income (Loss) (797) (1,030) 8,438 (5,746)<br>Interest Expense (1,986) (2,478) (6,851) (8,384)<br>Income (Loss) from Operations Before Income Tax Benefit (Expense) 23,977 (2,023) 23,637 (1,583)<br>Income Tax Benefit (Expense) (30) 501 4,371 410<br>Net Income (Loss) Attributable to the Company $ (23,947) $ (1,522) $ 28,008 $ (1,173)<br>Distributions to Preferred Stockholders (1,129) —(1,129) —<br>Net Income (Loss) Attributable to Common Stockholders $ 22,818 $ (1,522) $ 26,879 $ (1,173)<br>Per Share Information:<br>Basic and Diluted Net Income (Loss) Attributable to Common Stockholders $ 3.87 $ (0.33) $ 4.56 $ (0.25)<br>Weighted Average Number of Common Shares:<br>Basic 5,901,095 4,654,329 5,892,900 4,673,049<br>Diluted 5,901,095 4,654,329 5,892,900 4,673,049<br>Dividends Declared and Paid – Common Stock $ 1.00 $ 0.40 $ 3.00 $ 0.90<br>Dividends Declared and Paid – Preferred Stock $ 0.3763 $ — $ — $ —<br>CTO Realty Growth, Inc.<br>Consolidated Statements of Operations<br>(Unaudited, in thousands, except share, per share and dividend data) |
| --- | |
| © CTO Realty Growth, Inc. | ctoreit.com<br>Non-GAAP Financial Measures Reconciliation<br>35<br>Three Months Ended Nine Months Ended<br>September 30,<br>2021<br>September 30,<br>2020<br>September 30,<br>2021<br>September 30,<br>2020<br>Net Income (Loss) Attributable to the Company $ 23,947 $ (1,522) $ 28,008 $ (1,173)<br>Depreciation and Amortization 5,567 4,761 15,428 14,334<br>Gains on Disposition of Assets (22,666) (289) (28,106) (7,365)<br>Losses (Gains) on the Disposition of Other Assets (974) 1,119 (3,549) 2,540<br>Impairment Charges, Net —— 12,474 1,905<br>Unrealized (Gain) Loss on Investment Securities 1,326 1,448 (6,894) 7,098<br>Funds from Operations $ 7,200 $ 5,517 $ 17,361 $ 17,339<br>Distributions to Preferred Stockholders (1,129) —(1,129) —<br>Funds from Operations Attributable to Common Stockholders $ 6,071 $ 5,517 $ 16,232 $ 17,339<br>Adjustments:<br>Straight-Line Rent Adjustment (669) (670) (1,844) (1,810)<br>COVID-19 Rent Repayments (Deferrals), Net 84 (217) 738 (1,368)<br>Amortization of Intangibles to Lease Income (86) (434) (820) (1,352)<br>Contributed Leased Assets Accretion (38) (43) (197) (130)<br>Loss (Gain) on Extinguishment of Debt —— 641 (1,141)<br>Amortization of Discount on Convertible Debt 322 307 951 1,067<br>Non-Cash Compensation 734 617 2,434 2,135<br>Non-Recurring G&A — 953 155 1,055<br>Amortization of Deferred Financing Costs to Interest Expense 120 115 444 338<br>Accretion of Loan Origination Fees —(7) (1) (164)<br>Non-Cash Imputed Interest (116) (105) (330) (311)<br>Adjusted Funds from Operations Attributable to Common Stockholders $ 6,422 $ 6,033 $ 18,403 $ 15,658<br>FFO per common share – diluted $ 1.03 $ 1.19 $ 2.75 $ 3.71<br>AFFO per common share – diluted $ 1.09 $ 1.30 $ 3.12 $ 3.35<br>CTO Realty Growth, Inc.<br>Non-GAAP Financial Measures<br>(Unaudited, in thousands, except per share data) |
| --- | |
| REALTY GROWTH<br>NYSE: CTO<br>CRABBY’S OCEANSIDE & LANDSHARK BAR & GRILL, DAYTONA BEACH, FL | |
| --- |
Exhibit 99.3
| Supplemental<br>Disclosure<br>Quarter Ended September 30, 2021 |
|---|
| Table of Contents<br>1. Third Quarter 2021 Earnings Release ………........................……………… 4<br>2. Key Financial Information<br>▪ Consolidated Balance Sheets ……….……………...........................… 13<br>▪ Consolidated Statements of Operations .…………………………...… 14<br>▪ Non-GAAP Financial Measures .……………………..................…... 15<br>3. Summary of Debt …..............………….................………………………… 16<br>4. Notable Acquisitions & Dispositions …………...…………………......…… 17<br>5. Summary of Joint Ventures ………………………………………………… 18<br>6. Schedule of Other Assets ....……...…………...….……………….…..…… 19<br>7. Leasing Summary ………………...…………...….……………….…..…… 20<br>8. Portfolio Diversification ………………………........................…....……… 21<br>9. Lease Expirations ………………………….…........................…………..… 24<br>10. Schedule of Properties ………………………...........................…………… 25<br>11. Research Coverage …….....………………………............................……… 26<br>12. Definitions and Terms ……………………………............................……… 27<br>2<br>Corporate Headquarters<br>1140 N. Williamson Blvd., Suite 140<br>Daytona Beach, FL 32114<br>www.ctoreit.com<br>Transfer Agent<br>Computershare Trust Company, N.A.<br>(800) 368-5948<br>www.computershare.com<br>For the Quarter Ended September 30, 2021 |
| --- |
| Safe Harbor<br>Certain statements contained in this press release (other than statements of historical fact) are forward-looking statements within the meaning of<br>Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking<br>statements can typically be identified by words such as “believe,” “estimate,” “expect,” “intend,” “anticipate,” “will,” “could,” “may,” “should,”<br>“plan,” “potential,” “predict,” “forecast,” “project,” and similar expressions, as well as variations or negatives of these words.<br>Although forward-looking statements are made based upon management’s present expectations and reasonable beliefs concerning future<br>developments and their potential effect upon the Company, a number of factors could cause the Company’s actual results to differ materially from<br>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<br>REIT; the Company’s exposure to U.S. federal and state income tax law changes, including changes to the REIT requirements; general adverse<br>economic and real estate conditions; the ultimate geographic spread, severity and duration of pandemics such as the recent outbreak of the novel<br>coronavirus, actions that may be taken by governmental authorities to contain or address the impact of such pandemics, and the potential negative<br>impacts of such pandemics on the global economy and the Company’s financial condition and results of operations; the inability of major tenants to<br>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<br>business or assets of PINE or the venture formed when the Company sold its controlling interest in the entity that owned the Company’s remaining<br>land portfolio, of which the Company has a retained interest; the completion of 1031 exchange transactions; the availability of investment properties<br>that meet the Company’s investment goals and criteria; the uncertainties associated with obtaining required governmental permits and satisfying<br>other closing conditions for planned acquisitions and sales; and the uncertainties and risk factors discussed in the Company’s Annual Report on<br>Form 10-K for the fiscal year ended December 31, 2020 and other risks and uncertainties discussed from time to time in the Company’s filings with<br>the U.S. Securities and Exchange Commission.<br>There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of future developments<br>on the Company will be those anticipated by management. Readers are cautioned not to place undue reliance on these forward-looking statements,<br>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<br>to reflect subsequently occurring events or circumstances.<br>Non-GAAP Financial Measures<br>Our reported results are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We also<br>disclose Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”), both of which are non-GAAP financial measures. We<br>believe these two non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and<br>investors to compare the operating performance of REITs.<br>FFO and AFFO do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash<br>requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operating<br>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<br>financial measures.<br>We compute FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts,<br>or NAREIT. NAREIT defines FFO as GAAP net income or loss adjusted to exclude extraordinary items (as defined by GAAP), net gain or loss<br>from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets and real estate related depreciation<br>and amortization, including the pro rata share of such adjustments of unconsolidated subsidiaries. The Company also excludes the gains or losses<br>from sales of assets incidental to the primary business of the REIT which specifically include the sales of mitigation credits, impact fee credits,<br>subsurface sales, and the land sales gains included in discontinued operations. To derive AFFO, we modify the NAREIT computation of FFO to<br>include other adjustments to GAAP net income related to non-cash revenues and expenses such as straight-line rental revenue, amortization of<br>deferred financing costs, amortization of capitalized lease incentives and above- and below-market lease related intangibles, and non-cash<br>compensation. Such items may cause short-term fluctuations in net income but have no impact on operating cash flows or long-term operating<br>performance. We use AFFO as one measure of our performance when we formulate corporate goals.<br>FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our<br>peers primarily because it excludes the effect of real estate depreciation and amortization and net gains or losses on sales, which are based on<br>historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market<br>conditions. We believe that AFFO is an additional useful supplemental measure for investors to consider because it will help them to better assess<br>our operating performance without the distortions created by other non-cash revenues or expenses. FFO and AFFO may not be comparable to<br>similarly titled measures employed by other companies.<br>3 For the Quarter Ended September 30, 2021 |
| --- |
| Earnings Release<br>4 For the Quarter Ended September 30, 2021 |
| --- |
| Earnings Release<br>5 For the Quarter Ended September 30, 2021 |
| --- |
| Earnings Release<br>6 For the Quarter Ended September 30, 2021 |
| --- |
| Earnings Release<br>7 For the Quarter Ended September 30, 2021 |
| --- |
| Earnings Release<br>8 For the Quarter Ended September 30, 2021 |
| --- |
| Earnings Release<br>9 For the Quarter Ended September 30, 2021 |
| --- |
| Earnings Release<br>10 For the Quarter Ended September 30, 2021 |
| --- |
| Earnings Release<br>11 For the Quarter Ended September 30, 2021 |
| --- |
| Earnings Release<br>12 For the Quarter Ended September 30, 2021 |
| --- |
| Consolidated Balance Sheets<br>13 For the Quarter Ended September 30, 2021 |
| --- |
| Consolidated Statements of Operations<br>14 For the Quarter Ended September 30, 2021 |
| --- |
| Non-GAAP Financial Measures<br>15 For the Quarter Ended September 30, 2021 |
| --- |
| Summary of Debt<br>16<br>Notes Payable Principal Interest Rate Maturity Date<br>Revolving Credit Facility – Fixed (1) $100.0 million 30-Day LIBOR + [1.35% – 1.95%] May 2023<br>Revolving Credit Facility – Variable 9.0 million 30-day LIBOR + [1.35% – 1.95%] May 2023<br>2025 Convertible Senior Notes 61.7 million 3.88% April 2025<br>2026 Term Loan – Fixed (2) 65.0 million 30-Day LIBOR + [1.35% – 1.95%] March 2026<br>Total Notes / Weighted-<br>Average Interest Rate $235.7 million 2.53%<br>Fixed vs. Variable Principal Interest Rate % of Total<br>Total Fixed Rate Debt $226.7 million 2.57% 96%<br>Total Variable Rate Debt 9.0 million 30-day LIBOR + [1.35% – 1.95%] 4%<br>Total Debt $235.7 million 2.53% 100%<br>Net Debt to Total Enterprise Value 29%<br>Any differences a result of rounding.<br>(1) Effective March 31, 2020, the Company utilized an interest rate swap to fix LIBOR and achieve an interest rate of 0.73% plus the applicable spread on $100.0 million of the<br>outstanding balance on the revolving credit facility.<br>(2) The Company utilized interest rate swaps on the $65.0 million 2026 Term Loan balance, including (i) its redesignation of the existing $50.0 million interest rate swap, entered<br>into as of August 31, 2020, and (ii) a $15.0 million interest rate swap effective August 31, 2021, to fix LIBOR and achieve a weighted average fixed interest rate of 0.35% plus<br>the applicable spread.<br>For the Quarter Ended September 30, 2021 |
| --- |
| Notable Acquisitions & Dispositions<br>17<br>Property Property Type Date Square Feet Price Gain<br>World of Beer & Fuzzy’s Taco Shop - Brandon, FL Multi-Tenant Retail 1/20/2021 6,715 $2.3 $0.6<br>Moe’s Southwest Grill - Jacksonville, FL Single Tenant Retail 2/23/2021 3,111 2.5 0.1<br>Burlington - North Richland Hills, TX Single Tenant Retail 4/23/2021 70,891 11.5 0.1<br>Staples - Sarasota, FL Single Tenant Retail 5/7/2021 18,120 4.7 0.7<br>Walgreens - Clermont, FL Single Tenant Retail 6/30/2021 13,650<br>Sold as a<br>Portfolio for<br>$44.5<br>Gain on Sale of<br>the Portfolio<br>$3.9<br>Harris Teeter - Charlotte, NC Single Tenant Retail 6/30/2021 45,089<br>Lowe's - Katy, TX Single Tenant Retail 6/30/2021 131,644<br>Big Lots - Glendale, AZ Single Tenant Retail 6/30/2021 34,512<br>Rite Aid - Renton, WA Single Tenant Retail 6/30/2021 16,280<br>Big Lots - Germantown, MD Single Tenant Retail 6/30/2021 25,589<br>Chick-fil-A - Chandler, AZ Single Tenant Retail 7/14/2021 4,766 2.9 1.5<br>JPMorgan Chase Bank - Chandler, AZ Single Tenant Retail 7/27/2021 4,500 4.7 2.7<br>Fogo de Chão - Jacksonville, FL Single Tenant Retail 9/2/2021 8,995 4.7 0.9<br>Wells Fargo - Raleigh, NC Single Tenant Office 9/16/2021 450,393 63.0 17.5<br>Total Dispositions 14 properties 834,255 $140.8 $28.0<br>Property Property Type Date Price Square Feet % Leased<br>at Acquisition<br>Jordan Landing – West Jordan, UT (Salt Lake City, UT) Multi-Tenant Retail 3/2/2021 $20.0 170,996 100%<br>Eastern Commons – Henderson, NV (Las Vegas, NV) Multi-Tenant Retail 3/10/2021 18.5 133,304 96%<br>The Shops at Legacy – Plano, TX (Dallas, TX) Multi-Tenant Retail 6/23/2021 72.5 236,432 83%<br>Total Acquisitions 3 Properties $111.0 540,732<br>$ in millions.<br>Any differences a result of rounding<br>For the Quarter Ended September 30, 2021 |
| --- |
| Summary of Joint Ventures<br>18<br>Land Joint Venture Q3 2021 Since Inception<br>Land Sales<br>Acres Sold 8 acres 3,800 acres<br>Sales Price $ 0.8 million $80.6 million<br>Distributions to Joint Venture Partner $ 0.9 million $77.2 million<br>Partner Capital Balance as of September 30, 2021 $34.7 million<br>* The Company executed an agreement to sell the Land Joint Venture’s remaining holdings, of which<br>the Company has a retained interest, for $66.2 million. Closing is expected to occur prior to year-end.<br>There can be no assurances regarding the likelihood, timing, or final terms of such potential sale.<br>Acres of Land Remaining to be Sold 1,600 acres<br>Estimated Value $66.2 million<br>Mitigation Bank Joint Venture<br>On September 30, 2021, the Company purchased the remaining 70% interest in the Mitigation Bank<br>from certain funds and accounts managed by an investment advisor subsidiary of BlackRock, Inc.<br>(“BlackRock”) for a net cash payment by the Company of $16.1 million (the “Interest Purchase”).<br>The Company intends to sell the mitigation credits produced by the Mitigation Bank or may sell the<br>Mitigation Bank in its entirety. During the nine months ended September 30, 2021, the Company sold<br>mitigation credits for total proceeds of $0.2 million.<br>No assurance can be given that the Company will be able to consummate any future sales or regarding<br>the likelihood, timing, or final terms of any such potential sales.<br>For the Quarter Ended September 30, 2021 |
| --- |
| Schedule of Other Assets<br>19<br>Subsurface Interests Acreage Estimated Value<br>Acres Available for Sale (1) 415,000 acres $7.0 million<br>Land & Development Acreage Estimated Value<br>Downtown Daytona Land – Combined Parcels 6.0 acres<br>Total Land & Development 6.0 acres $6.3 million<br>All numbers in thousands except for acres and unless otherwise noted.<br>(1) Includes royalty, half interest and full interest acreage, with and without entry rights.<br>Commercial Loans Origination<br>Date<br>Maturity<br>Date<br>Original Loan<br>Amount<br>Carrying<br>Value<br>Interest<br>Rate<br>Mortgage Note – 4311 Maple<br>Avenue, Dallas, TX October 2020 April 2023 $400 $394 7.50%<br>Mortgage Note – 110 N.<br>Beach St., Daytona Beach, FL June 2021 December<br>2022 $364 $364 10.00%<br>Investment Securities Shares and Operating<br>Partnership Units Owned<br>Value Per Share at<br>September 30, 2021 Estimated Value<br>Alpine Income Property Trust 2,040 $18.37 per share $37.5 million<br>For the Quarter Ended September 30, 2021<br>Mitigation Credits and Rights State Credits Federal Credits Book Value<br>Mitigation Credits 42.7 19.2 $3.4 million<br>Mitigation Credit Rights 266.5 156.5 $21.6 million |
| --- |
| Leasing Summary<br>20<br>Renewals & Extensions (1) Q1 2021 Q2 2021 Q3 2021 2021 YTD<br>Leases 11 3 5 19<br>Square Feet 130.0 164.0 27.1 321.1<br>New Cash Rent PSF $12.19 $8.98 $21.28 $11.32<br>Tenant Improvements $97 $633 $319 $1,049<br>Leasing Commissions $88 $23 $168 $279<br>Weighted Average Term 5.2 years 5.3 years 5.5 years 5.3 years<br>All numbers in thousands except per square foot data and unless otherwise noted.<br>Any differences a result of rounding.<br>(1) Renewal and extension leases represent the same tenant in the same location, with renewal leases representing expiring leases rolling over and extensions representing existing<br>leases being extended for additional term and/or additional rent.<br>New Leases Q1 2021 Q2 2021 Q3 2021 2021 YTD<br>Leases 3 6 4 13<br>Square Feet 3.5 22.1 23.4 49.0<br>New Cash Rent PSF $46.95 $21.08 $30.20 $27.32<br>Tenant Improvements $56 $2,734 $740 $3,530<br>Leasing Commissions $99 $146 $233 $478<br>Weighted Average Term 9.1 years 9.9 years 5.0 years 7.2 years<br>All Leases Summary Q1 2021 Q2 2021 Q3 2021 2021 YTD<br>Leases 14 9 9 32<br>Square Feet 133.5 186.1 50.5 370.1<br>New Cash Rent PSF $13.12 $10.42 $25.41 $13.44<br>Tenant Improvements $153 $3,367 $1,059 $4,579<br>Leasing Commissions $187 $169 $401 $757<br>Weighted Average Term 5.5 years 6.4 years 5.2 years 5.8 years<br>For the Quarter Ended September 30, 2021 |
| --- |
| Portfolio Diversification<br>21<br>Tenant or Concept Credit<br>Rating (1) Square Feet Annualized Base<br>Rent<br>Percent of Annualized<br>Base Rent<br>BBB 210 $ 3,646 8.2%<br>Not Rated 74 2,464 5.6%<br>BB+ 121 2,284 5.2%<br>CCC+ 59 2,191 4.9%<br>Master Lease Tenant of<br>Westland Gateway Plaza Not Rated 108 1,730 3.9%<br>B 192 1,600 3.6%<br>A 64 1,564 3.5%<br>CCC+ 46 1,560 3.5%<br>Not Rated 17 1,055 2.4%<br>Not Rated 55 747 1.7%<br>BB+ 47 716 1.6%<br>Not Rated 6 705 1.6%<br>A 10 691 1.6%<br>CCC+ 28 683 1.5%<br>BBB+ 36 630 1.4%<br>Other - 970 22,035 49.7%<br>Vacant - 156 --<br>Total Portfolio 2,198 $ 44,301 100.0%<br>All numbers in thousands unless otherwise noted.<br>Any differences a result of rounding.<br>(1) A credit rated, or investment grade rated tenant (rating of BBB-, NAIC-2 or Baa3 or higher) is a tenant or the parent of a tenant with a credit rating from S&P Global Ratings,<br>Moody’s Investors Service, Fitch Ratings or the National Associated of Insurance Commissioners (NAIC).<br>For the Quarter Ended September 30, 2021<br>THE HALL |
| --- |
| Portfolio Diversification<br>22<br>Square Feet and Annualized Base Rent in thousands.<br>Any differences a result of rounding.<br>Geographic Concentration # of<br>Properties Square Feet Annualized<br>Base Rent<br>Percent of Annualized<br>Base Rent<br>Florida 8 597 $ 13,091 29.6%<br>Texas 3 447 10,016 22.6%<br>Georgia 1 270 6,297 14.2%<br>Arizona 1 245 4,415 10.0%<br>New Mexico 1 210 3,646 8.2%<br>Virginia 2 110 3,123 7.1%<br>Utah 1 171 1,731 3.9%<br>Nevada 1 133 1,495 3.4%<br>New York 1 16 486 1.1%<br>Total Portfolio 19 2,198 $ 44,301 100.0%<br>For the Quarter Ended September 30, 2021 |
| --- |
| Metropolitan Statistical Area # of<br>Properties<br>Square<br>Feet<br>Annualized<br>Base Rent<br>Percent of<br>Annualized<br>Base Rent<br>Jacksonville, FL 4 356 $ 8,086 18.3%<br>Dallas-Fort Worth-Arlington, TX 2 373 7,552 17.0%<br>Atlanta–Sandy Springs–Alpharetta, GA 1 270 6,297 14.2%<br>Phoenix-Mesa-Scottsdale, AZ 1 245 4,415 10.0%<br>Albuquerque, NM 1 210 3,646 8.2%<br>Washington-Arlington-Alexandria, DC-VA-MD-WV 2 110 3,123 7.1%<br>Austin-Round Rock, TX 1 74 2,464 5.6%<br>Tampa-St. Petersburg-Clearwater, FL 1 121 2,284 5.2%<br>Salt Lake City, UT 1 171 1,731 3.9%<br>Miami-Fort Lauderdale-Pompano Beach, FL 1 108 1,730 3.9%<br>Las Vegas-Henderson-Paradise, NV 1 133 1,495 3.4%<br>Deltona–Daytona Beach–Ormond Beach, FL 2 12 992 2.2%<br>New York-Newark-Jersey City, NY-NJ 1 16 486 1.1%<br>Total Portfolio 19 2,681 $ 44,301 100.0%<br>Bold Indicates Markets with > 1 Million in Population 16 1,976 $ 39,663 89.5%<br>Portfolio Diversification<br>23<br>Square Feet and Annualized Base Rent in thousands.<br>Any differences a result of rounding.<br>For the Quarter Ended September 30, 2021 |
| --- |
| Lease Expirations<br>24<br>Year # of Leases Expiring<br>Square Feet<br>Annualized<br>Base Rent<br>Percent of Annualized<br>Base Rent<br>2021(1) 8 19 $ 596 1.3%<br>2022 17 62 1,760 4.0%<br>2023 15 122 2,326 5.3%<br>2024 9 43 1,117 2.5%<br>2025 15 110 2,777 6.3%<br>2026 23 234 4,726 10.7%<br>2027 12 188 2,615 5.9%<br>2028 18 458 9,293 21.0%<br>2029 13 220 4,115 9.3%<br>2030 10 93 1,880 4.2%<br>2031 10 56 1,110 2.5%<br>2032 8 59 1,078 2.4%<br>2033 2 65 2,896 6.5%<br>2034 3 67 1,204 2.7%<br>2035 2 46 1,560 3.5%<br>Thereafter 4 199 5,249 11.8%<br>Vacant - 156 --<br>Total Portfolio 166 2,198 $ 44,301 100.0%<br>Physical Occupancy 90.4%<br>Economic Occupancy 89.6%<br>Square Feet and Annualized Base Rent in thousands.<br>Any differences a result of rounding.<br>(1) Includes leases that are month-to-month or in process of renewal.<br>For the Quarter Ended September 30, 2021 |
| --- |
| Schedule of Properties<br>25<br>Property Asset Type Property<br>Type Acreage Square<br>Feet Occupancy<br>Ashford Lane – Atlanta, GA Multi-Tenant Retail 43.7 270 76%<br>Crossroads Towne Center – Chandler, AZ Multi-Tenant Retail 31.1 245 98%<br>The Shops at Legacy – Plano, TX Multi-Tenant Mixed-Use 12.7 237 85%<br>Fidelity – Albuquerque, NM Single Tenant Office 25.3 210 100%<br>The Strand – Jacksonville, FL Multi-Tenant Retail 52.0 205 93%<br>Jordan Landing – West Jordan, UT Multi-Tenant Retail 16.1 171 100%<br>245 Riverside – Jacksonville, FL Multi-Tenant Office 3.4 137 77%<br>Westcliff Center – Fort Worth, TX Multi-Tenant Retail 10.3 136 60%<br>Eastern Commons SC – Henderson, NV Multi-Tenant Retail 11.9 133 96%<br>Sabal Pavilion – Tampa, FL Single Tenant Office 11.5 121 100%<br>Westland Gateway Plaza – Hialeah, FL Single Tenant Retail 8.5 108 100%<br>The Carpenter Hotel – Austin, TX Single Tenant Hospitality 1.4 74 100%<br>General Dynamics – Reston, VA Single Tenant Office 3.0 64 100%<br>24 Hour Fitness – Falls Church, VA Single Tenant Retail 3.1 46 100%<br>Party City – Oceanside, NY Single Tenant Retail 1.2 16 100%<br>Chuy’s – Jacksonville, FL Single Tenant Retail 1.2 8 100%<br>Firebirds – Jacksonville, FL Single Tenant Retail 1.0 7 100%<br>Landshark – Daytona Beach, FL Single Tenant Retail 3.0 6 100%<br>Crabby’s – Daytona Beach, FL Single Tenant Retail 3.0 6 100%<br>Total Portfolio 19 243.4 2,198 90%<br>Square Feet in thousands.<br>Any differences a result of rounding.<br>For the Quarter Ended September 30, 2021 |
| --- |
| Research Coverage<br>26<br>Institution Coverage Analyst Email Phone<br>B. Riley Craig Kucera craigkucera@brileyfin.com (703) 312-1635<br>BTIG Michael Gorman mgorman@btig.com (212) 738-6138<br>Sarah Barcomb sbarcomb@btig.com (212) 882-2336<br>Compass Point Merrill Ross mross@compasspointllc.com (202) 534-1392<br>Janney Rob Stevenson robstevenson@janney.com (646) 840-3217<br>Steve Dumanski sdumanski@janney.com (646) 840-3213<br>For the Quarter Ended September 30, 2021 |
| --- |
| Definitions and Terms<br>27<br>Annualized Base Rent (ABR) is the annual straight-line recognition of a lease’s minimum base rent as calculated based<br>on the leases in-place within the Company’s portfolio as of the end of the reporting period.<br>Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO) are both non-GAAP financial<br>measures. We believe these two non-GAAP financial measures are useful to investors because they are widely accepted<br>industry measures used by analysts and investors to compare the operating performance of REITs.<br>FFO and AFFO do not represent cash generated from operating activities and are not necessarily indicative of cash<br>available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a<br>performance measure or cash flows from operating activities as reported on our statement of cash flows as a liquidity<br>measure and should be considered in addition to, and not in lieu of, GAAP financial measures.<br>We compute FFO in accordance with the definition adopted by the Board of Governors of the National Association of<br>Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as GAAP net income or loss adjusted to exclude<br>extraordinary items (as defined by GAAP), net gain or loss from sales of depreciable real estate assets, impairment write-<br>downs associated with depreciable real estate assets and real estate related depreciation and amortization, including the<br>pro rata share of such adjustments of unconsolidated subsidiaries. The Company also excludes the gains or losses from<br>sales of assets incidental to the primary business of the REIT which specifically include the sales of mitigation credits,<br>impact fee credits, subsurface sales, and the land sales gains included in discontinued operations. To derive AFFO, we<br>modify the NAREIT computation of FFO to include other adjustments to GAAP net income related to non-cash revenues<br>and expenses such as straight-line rental revenue, amortization of deferred financing costs, amortization of capitalized<br>lease incentives and above- and below-market lease related intangibles, and non-cash compensation. Such items may<br>cause short-term fluctuations in net income but have no impact on operating cash flows or long-term operating<br>performance. We use AFFO as one measure of our performance when we formulate corporate goals.<br>FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance<br>between periods and among our peers primarily because it excludes the effect of real estate depreciation and amortization<br>and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes<br>predictably over time, rather than fluctuating based on existing market conditions. We believe that AFFO is an additional<br>useful supplemental measure for investors to consider because it will help them to better assess our operating<br>performance without the distortions created by other non-cash revenues or expenses. FFO and AFFO may not be<br>comparable to similarly titled measures employed by other companies.<br>Net Debt is calculated as our gross debt at face value and before the effects of net deferred financing costs, less cash,<br>cash equivalents and restricted cash. We believe it is appropriate to exclude cash, cash equivalents and restricted cash<br>from gross debt because the cash, cash equivalents and restricted cash could be used to repay debt. We believe net debt is<br>a beneficial disclosure because it represents the contractual obligations of the company that would potentially need to be<br>repaid in the future.<br>New Cash Rent PSF is the in-place minimum cash rent of the newly signed lease, divided by the square feet of the unit<br>for which the tenant is occupying.<br>Weighted Average Term is the term of a set of leases, weighted by the amount of in-place annual minimum base rent.<br>For the Quarter Ended September 30, 2021 |
| --- |