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CTO Realty Growth Reports Second Quarter 2022 Operating Results

·31 min read
CTO Realty Growth, Inc.
CTO Realty Growth, Inc.

WINTER PARK, Fla., July 28, 2022 (GLOBE NEWSWIRE) -- CTO Realty Growth, Inc. (NYSE: CTO) (the “Company” or “CTO”) today announced its operating results and earnings for the quarter ended June 30, 2022.

Select Highlights

  • Reported Net Income per diluted share attributable to common stockholders of $0.00 for the quarter ended June 30, 2022, an increase of 100.0% from the comparable prior year period.

  • Reported Core FFO per diluted share attributable to common stockholders of $1.41 for the quarter ended June 30, 2022, an increase of 60.2% from the comparable prior year period.

  • Reported AFFO per diluted share attributable to common stockholders of $1.48 for the quarter ended June 30, 2022, an increase of 38.3% from the comparable prior year period.

  • Entered into a preferred equity agreement to provide $30.0 million of funding towards the acquisition of the Watters Creek at Montgomery Farm in Allen, Texas at an initial investment yield above the range of the Company’s guidance for initial investment cash yields.

  • Entered into a loan agreement to provide $19.0 million of funding towards the development of the retail portion of the WaterStar Orlando mixed-use property in Kissimmee, FL at an initial investment yield above the range of the Company’s guidance for initial investment cash yields.

  • Reported a 23.8% increase in Same-Property NOI during the quarter ended June 30, 2022, as compared to the comparable prior year period.

  • Paid a regular common stock cash dividend during the second quarter of 2022 of $1.12 per share, representing an increase of 12.0% from the comparable prior year period, a payout ratio of 75.7% of the Company’s second quarter 2022 AFFO per diluted share, and an annualized yield of 6.9% based on the closing price of the Company’s common stock on July 27, 2022.

  • Completed a three-for-one stock split and began trading at the post-split price on July 1, 2022. The stock split was effected in the form of a stock dividend of two additional shares of common stock for each outstanding share of common stock held as of the record date for the stock dividend.

  • On July 8, 2022, the Company acquired Madison Yards, a newly built, grocery-anchored retail property located in Atlanta, Georgia for a purchase price of $80.2 million. The purchase price represents a going-in cap rate below the range of the Company’s prior guidance for initial cash yields.

CEO Comments

“I am very encouraged by our second quarter performance as our team continues to make strong operational progress with our leasing and repositioning initiatives and finds attractive opportunities for external growth through our disciplined, retail-focused investment strategy,” said John P. Albright, President and Chief Executive Officer of CTO Realty Growth. “Our recent Madison Yards acquisition was a great opportunity to acquire a newly built grocery-anchored shopping center in one of the strongest markets in the country, further improving our already high-quality, growth market-oriented portfolio. With year-to-date same-store NOI growth of more than 20% and over 200 bps of leased occupancy set to rent commence over the next twelve months, we’re very excited about our prospects to drive double digit same-store NOI growth during the back half of this year and in 2023. This embedded growth should continue to help drive strong earnings for the foreseeable future and further support our attractive and growing dividend.”

Quarterly Financial Results Highlights

The tables below provide a summary of the Company’s operating results for the three months ended June 30, 2022:

(in thousands, except per share data)

For the Three
Months Ended
June 30, 2022

 

For the Three
Months Ended
June 30, 2021

 

Variance to Comparable
Period in the Prior Year

Net Income (Loss) Attributable to the Company

$

1,218

 

$

(3,724

)

 

$

4,942

132.7

%

 

Net Income (Loss) Attributable to Common Stockholders

$

22

 

$

(3,724

)

 

$

3,746

100.6

%

 

Net Income (Loss) per Diluted Share Attributable to Common Stockholders (1)

$

0.00

 

$

(0.63

)

 

$

0.63

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Core FFO Attributable to Common Stockholders (2)

$

8,485

 

$

5,218

 

 

$

3,267

62.6

%

 

Core FFO per Common Share – Diluted (2)

$

1.41

 

$

0.88

 

 

$

0.53

60.2

%

 

 

 

 

 

 

 

 

 

 

 

 

AFFO Attributable to Common Stockholders (2)

$

8,890

 

$

6,294

 

 

$

2,596

41.2

%

 

AFFO per Common Share – Diluted (2)

$

1.48

 

$

1.07

 

 

$

0.41

38.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Dividends Declared and Paid, per Preferred Share

$

0.40

 

$

 

 

$

0.40

100.0

%

 

Dividends Declared and Paid, per Common Share

$

1.12

 

$

1.00

 

 

$

0.12

12.0

%

 

(1) The denominator for this measure in 2022 excludes the impact of 1.0 million shares related to the Company’s adoption of ASU 2020-06, effective January 1, 2022, which requires presentation on an if-converted basis for its 2025 Convertible Senior Notes, as the impact would be anti-dilutive.

(2) See the “Non-GAAP Financial Measures” section and tables at the end of this press release for a discussion and reconciliation of Net Income (Loss) Attributable to the Company to non-GAAP financial measures, including FFO Attributable to Common Stockholders, FFO per Common Share - Diluted, Core FFO Attributable to Common Stockholders, Core FFO per Common Share – Diluted, AFFO Attributable to Common Stockholders and AFFO per Common Share - Diluted.

Year-to-Date Financial Results Highlights

The tables below provide a summary of the Company’s operating results for the six months ended June 30, 2022:

(in thousands, except per share data)

For the Six
Months Ended
June 30, 2022

 

For the Six
Months Ended
June 30, 2021

 

Variance to Comparable
Period in the Prior Year

Net Income Attributable to the Company

$

1,420

 

 

$

4,061

 

$

(2,641

)

(65.0

%)

 

Net Income (Loss) Attributable to Common Stockholders

$

(971

)

 

$

4,061

 

$

(5,032

)

(123.9

%)

 

Net Income (Loss) per Diluted Share Attributable to Common Stockholders (1)

$

(0.16

)

 

$

0.69

 

$

(0.85

)

(123.2

%)

 

 

 

 

 

 

 

 

 

 

 

 

Core FFO Attributable to Common Stockholders (2)

$

16,712

 

 

$

10,068

 

$

6,644

 

66.0

%

 

Core FFO per Common Share – Diluted (2)

$

2.81

 

 

$

1.71

 

$

1.10

 

64.3

%

 

 

 

 

 

 

 

 

 

 

 

 

AFFO Attributable to Common Stockholders (2)

$

17,607

 

 

$

11,981

 

$

5,626

 

47.0

%

 

AFFO per Common Share – Diluted (2)

$

2.96

 

 

$

2.03

 

$

0.93

 

45.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Dividends Declared and Paid, per Preferred Share

$

0.80

 

 

$

 

$

0.80

 

100.0

%

 

Dividends Declared and Paid, per Common Share

$

2.20

 

 

$

2.00

 

$

0.20

 

10.0

%

 

(1) The denominator for this measure in 2022 excludes the impact of 1.0 million shares related to the Company’s adoption of ASU 2020-06, effective January 1, 2022, which requires presentation on an if-converted basis for its 2025 Convertible Senior Notes, as the impact would be anti-dilutive.

(2See the “Non-GAAP Financial Measures” section and tables at the end of this press release for a discussion and reconciliation of Net Income Attributable to the Company to non-GAAP financial measures, including FFO Attributable to Common Stockholders, FFO per Common Share - Diluted, Core FFO Attributable to Common Stockholders, Core FFO per Common Share – Diluted, AFFO Attributable to Common Stockholders and AFFO per Common Share - Diluted.

Investments

During the three months ended June 30, 2022, the Company originated two structured investments to provide $49.0 million of funding towards two properties. The Company’s second quarter 2022 investments included the following:

  • Provided $30.0 million of preferred equity for the acquisition of Watters Creek at Montgomery Farm, a grocery-anchored, mixed-use property located in Allen, Texas. Watters Creek at Montgomery Farm is approximately 458,000 square feet of grocery-anchored retail and office, anchored by Market Street, Anthropologie, Mi Cocina, DSW, The Cheesecake Factory, Brio Italian Grille, and Michaels, and includes a variety of national and local retailers and restaurants. The three-year preferred investment for the acquisition was fully funded at closing, is interest-only through maturity, includes an origination fee, and bears a fixed preferred return of 8.50%.

  • Provided a $19.0 million first mortgage for the development of the retail portion of the WaterStar Orlando mixed-use property in Kissimmee, FL. WaterStar Orlando is a mixed-use project at the center of one of the strongest performing retail corridors in Florida, includes 320 onsite residential units, and is in close proximity to the Margaritaville Resort Orlando, Island H20 Water Park, and the western entrance to Walt Disney World. The retail portion of the development is 102,000 square feet and is anchored by Marshalls, Burlington, pOpshelf, Portillo’s and Outback Steakhouse. The loan matures on August 31, 2022, is interest-only through maturity, includes an origination fee, and bears a fixed interest-only rate of 8.00%.

During the six months ended June 30, 2022, the Company acquired one multi-tenant retail property for total income property acquisition volume of $39.1 million and originated three structured investments to provide $57.7 million of funding towards three retail and mixed-use properties. These acquisitions and structured investments represent a blended weighted average going-in yield of 7.9%.

Subsequent to quarter-end, the Company acquired Madison Yards, a 162,500 square foot grocery-anchored property located in the Inman Park/Reynoldstown submarket along the Memorial Drive corridor of Atlanta, Georgia for a purchase price of $80.2 million. The property is 98% occupied, anchored by Publix and AMC Theatres, includes a well-crafted mix of retailers and restaurants, including AT&T, First Watch, and Orangetheory Fitness, and is the Company’s first Publix-anchored center. The purchase price represents a going-in cap rate below the range of the Company’s guidance for initial cash yields.

Dispositions

During the six months ended June 30, 2022, the Company sold two single tenant income properties, one of which was classified as a commercial loan investment due to the tenant’s repurchase option, for $24.0 million at a weighted average exit cap rate of 6.0%.

Income Property Portfolio

The Company’s income property portfolio consisted of the following as of June 30, 2022:



Asset Type

 

# of Properties(1)

 

Square Feet

 

Weighted Average
Remaining Lease Term

Single Tenant

 

7

 

422

 

6.3 years

Multi-Tenant

 

14

 

2,418

 

6.7 years

Total / Weighted Average Lease Term

 

21

 

2,840

 

6.6 years


Property Type

 

# of Properties(1)

 

Square Feet

 

% of Cash Base Rent

Retail

 

14

 

1,905

 

61.5%

Office

 

4

 

532

 

19.5%

Mixed-Use

 

3

 

403

 

19.0%

Total / Weighted Average Lease Term

 

21

 

2,840

 

100.0%


Leased Occupancy

93.5%

 

 

Economic Occupancy

91.3%

 

 

Physical Occupancy

90.2%

 

 

Square feet in thousands.

(1) The properties include a property in Hialeah, Florida leased to a master tenant which includes three tenant repurchase options. Pursuant to FASB ASC Topic 842, Leases, the $21.0 million investment has been recorded in the Company’s consolidated balance sheets as a Commercial Loan Investment.

Operational Highlights

The Company’s Same-Property NOI totaled $7.4 million during the second quarter of 2022, an increase of 23.8% over the comparable prior year period, as presented in the following table.

(in thousands)

 

For the Three
Months Ended
June 30, 2022

 

For the Three
Months Ended
June 30, 2021

 

Variance to Comparable
Period in the Prior Year

Single Tenant

 

$

2,190

 

$

2,055

 

$

135

6.6

%

Multi-Tenant

 

 

5,256

 

 

3,961

 

 

1,295

32.7

%

Total

 

$

7,446

 

$

6,016

 

$

1,430

23.8

%

During the second quarter of 2022, the Company signed leases totaling 41,163 square feet. A summary of the Company’s leasing activity is as follows:



Retail

 

Square
Feet

 

Weighted Average
Lease Term

 

Cash Rent Per
Square Foot

 

Tenant
Improvements

 

Leasing
Commissions

New Leases

 

31.0

 

12.2 years

 

$32.66

 

$

2,721

 

$

298

Renewals & Extensions

 

10.2

 

3.6 years

 

$29.28

 

$

 

$

28

Total / Weighted Average

 

41.2

 

10.3 years

 

$31.82

 

$

2,721

 

$

326

In thousands except for per square foot and lease term data.

Subsurface Interests

During the three months ended June 30, 2022, the Company sold approximately 8,330 acres of subsurface oil, gas, and mineral rights for $0.5 million, resulting in aggregate gains of $0.5 million.

During the six months ended June 30, 2022, the Company sold approximately 13,080 acres of subsurface oil, gas and mineral rights for $0.9 million, resulting in a gain on the sale of $0.8 million. As of June 30, 2022, the Company owns full or fractional subsurface oil, gas, and mineral interests underlying approximately 356,000 “surface” acres of land owned by others in 19 counties in Florida.

Capital Markets and Balance Sheet

During the quarter ended June 30, 2022, the Company completed the following notable capital markets activity:

  • Issued 88,065 common shares under its ATM offering program at a weighted average gross price of $66.03 per share, for total net proceeds of $5.7 million.

  • Repurchased 20,010 shares for approximately $1.1 million at a weighted average gross price of $57.37 per share.

  • Completed a three-for-one stock split and began trading at the post-split price on July 1, 2022. The stock split was effected in the form of a stock dividend of two additional shares of common stock for each outstanding share of common stock held as of the record date for the stock dividend.

The following table provides a summary of the Company’s long-term debt, at face value, as of June 30, 2022:

Component of Long-Term Debt

 

Principal

 

Interest Rate

 

Maturity Date

Revolving Credit Facility

 

$111.0 million

 

30-day LIBOR + [1.35% – 1.95%]

 

May 2023

2025 Convertible Senior Notes

 

$51.0 million

 

3.875%

 

April 2025

2026 Term Loan (1)

 

$65.0 million

 

30-day LIBOR + [1.35% – 1.95%]

 

March 2026

2027 Term Loan (2)

 

$100.0 million

 

30-day LIBOR + [1.35% – 1.95%]

 

January 2027

Mortgage Note (3)

 

$17.8 million

 

4.06%

 

August 2026

Total Debt / Weighted Average Interest Rate

 

$344.8 million

 

2.63%

 

 

(1) 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.

(2) The Company utilized interest rate swaps on the $100.0 million 2027 Term Loan balance, including (i) its redesignation of the existing $100.0 million interest rate swap, entered into as of March 31, 2020, and (ii) an additional interest rate swap, effective March 29, 2024, to extend the fixed interest rate through maturity on January 31, 2027, to fix LIBOR and achieve a fixed interest rate of 0.73% plus the applicable spread.

(3) Mortgage note assumed in connection with the acquisition of Price Plaza Shopping Center located in Katy, Texas.

As of June 30, 2022, the Company’s net debt to Pro Forma EBITDA was 6.6 times, and as defined in the Company’s credit agreement, the Company’s fixed charge coverage ratio was 3.4 times. As of June 30, 2022, the Company’s net debt to total enterprise value was 41.0%. The Company calculates total enterprise value as the sum of net debt, par value of its 6.375% Series A preferred equity, and the market value of the Company's outstanding common shares.

Dividends

On May 24, 2022, the Company announced a cash dividend on its common stock and Series A Preferred stock for the second quarter of 2022 of $1.12 per share and $0.40 per share, respectively, payable on June 30, 2022 to stockholders of record as of the close of business on June 9, 2022. The second quarter 2022 common stock cash dividend represents a 12.0% increase over the comparable prior year period quarterly dividend and a payout ratio of 79.4% and 75.7% of the Company’s second quarter 2022 Core FFO per diluted share and AFFO per diluted share, respectively.

2022 Outlook

The Company has increased its outlook for 2022 to take into account the Company’s year-to-date performance and revised expectations regarding the Company’s investment activities, forecasted capital markets transactions, and other significant assumptions. The revised per share estimates take into account the Company’s recently completed three-for-one stock split

The Company’s increased outlook for 2022 is as follows:

 

2022 Revised Outlook Range

 

Change from Prior Outlook

 

Low

 

High

 

Low

 

High

Acquisition of Income Producing Assets

$250.0 million

to

$275.0 million

 

$50 million

to

$25 million

Target Investment Initial Cash Yield

7.00%

to

7.25%

 

50 bps

to

25 bps

Disposition of Assets

$50.0 million

to

$80.0 million

 

$10 million

to

$10 million

Target Disposition Cash Yield


6.25%

to


6.75%

 

100 bps

to

25 bps

 

 

 

 

 

 

 

 

Core FFO Per Diluted Share

$1.58

to

$1.64

 

$0.06

to

$0.04

AFFO Per Diluted Share

$1.70

to

$1.76

 

$0.05

to

$0.03

 

 

 

 

 

 

 

 

Weighted Average Diluted
Shares Outstanding

18.3 million

to

18.5 million

 

0 million

to

0.3 million

2nd Quarter Earnings Conference Call & Webcast

The Company will host a conference call to present its operating results for the quarter ended June 30, 2022 on Friday, July 29, 2022, at 9:00 AM ET.

A live webcast of the call will be available on the Investor Relations page of the Company’s website at www.ctoreit.com or at the link provided in the event details below. To access the call by phone, please go to the link provided in the event details below and you will be provided with dial-in details.

Webcast: https://edge.media-server.com/mmc/p/uh9ig8iu

Dial-In: https://register.vevent.com/register/BI03c8d5540d254fb798fffd5daa427848

We encourage participants to dial into the conference call at least fifteen minutes ahead of the scheduled start time. A replay of the earnings call will be archived and available online through the Investor Relations section of the Company’s website at www.ctoreit.com.

About CTO Realty Growth, Inc.

CTO Realty Growth, Inc. is a publicly traded real estate investment trust that owns and operates a portfolio of high-quality, retail-based properties located primarily in higher growth markets in the United States. CTO also externally manages and owns a meaningful interest in Alpine Income Property Trust, Inc. (NYSE: PINE), a publicly traded net lease REIT.

We encourage you to review our most recent investor presentation and supplemental financial information, which is available on our website at www.ctoreit.com.

Safe Harbor

Certain statements contained in this press release (other than statements of historical fact) are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can typically be identified by words such as “believe,” “estimate,” “expect,” “intend,” “anticipate,” “will,” “could,” “may,” “should,” “plan,” “potential,” “predict,” “forecast,” “project,” and similar expressions, as well as variations or negatives of these words.

Although forward-looking statements are made based upon management’s present expectations and reasonable beliefs concerning future developments and their potential effect upon the Company, a number of factors could cause the Company’s actual results to differ materially from those set forth in the forward-looking statements. Such factors may include, but are not limited to: the Company’s ability to remain qualified as a REIT; the Company’s exposure to U.S. federal and state income tax law changes, including changes to the REIT requirements; general adverse economic and real estate conditions; macroeconomic and geopolitical factors, including but not limited to inflationary pressures, interest rate volatility, global supply chain disruptions, and ongoing geopolitical war; the ultimate geographic spread, severity and duration of pandemics such as the COVID-19 Pandemic and its variants, actions that may be taken by governmental authorities to contain or address the impact of such pandemics, and the potential negative impacts of such pandemics on the global economy and the Company’s financial condition and results of operations; the inability of major tenants to continue paying their rent or obligations due to bankruptcy, insolvency or a general downturn in their business; the loss or failure, or decline in the business or assets of PINE; the completion of 1031 exchange transactions; the availability of investment properties that meet the Company’s investment goals and criteria; the uncertainties associated with obtaining required governmental permits and satisfying other closing conditions for planned acquisitions and sales; and the uncertainties and risk factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and other risks and uncertainties discussed from time to time in the Company’s filings with the U.S. Securities and Exchange Commission.

There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of future developments on the Company will be those anticipated by management. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation to update the information contained in this press release to reflect subsequently occurring events or circumstances.

Non-GAAP Financial Measures

Our reported results are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We also disclose Funds From Operations (“FFO”), Core Funds From Operations (“Core FFO”), Adjusted Funds From Operations (“AFFO”), Pro Forma Earnings Before Interest, Taxes, Depreciation and Amortization (“Pro Forma EBITDA”), and Same-Property Net Operating Income (“Same-Property NOI”), each of which are non-GAAP financial measures. We believe these non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs.

FFO, Core FFO, AFFO, Pro Forma EBITDA, and Same-Property NOI do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operating activities as reported on our statement of cash flows as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures.

We compute FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as GAAP net income or loss adjusted to exclude extraordinary items (as defined by GAAP), net gain or loss from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets and real estate related depreciation and amortization, including the pro rata share of such adjustments of unconsolidated subsidiaries. The Company also excludes the gains or losses from sales of assets incidental to the primary business of the REIT which specifically include the sales of mitigation credits, impact fee credits, subsurface sales, and land sales, in addition to the mark-to-market of the Company’s investment securities and interest related to the 2025 Convertible Senior Notes, if the effect is dilutive. To derive Core FFO, we modify the NAREIT computation of FFO to include other adjustments to GAAP net income related to gains and losses recognized on the extinguishment of debt, amortization of above- and below-market lease related intangibles, and other unforecastable market- or transaction-driven non-cash items. To derive AFFO, we further modify the NAREIT computation of FFO and Core FFO to include other adjustments to GAAP net income related to non-cash revenues and expenses such as straight-line rental revenue, non-cash compensation, and other non-cash amortization, as well as adding back the interest related to the 2025 Convertible Senior Notes, if the effect is dilutive. Such items may cause short-term fluctuations in net income but have no impact on operating cash flows or long-term operating performance. We use AFFO as one measure of our performance when we formulate corporate goals.

To derive Pro Forma EBITDA, GAAP net income or loss attributable to the Company is adjusted to exclude extraordinary items (as defined by GAAP), net gain or loss from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets and real estate related depreciation and amortization, including the pro rata share of such adjustments of unconsolidated subsidiaries, non-cash revenues and expenses such as straight-line rental revenue, amortization of deferred financing costs, above- and below-market lease related intangibles, non-cash compensation, and other non-cash income or expense. Cash interest expense is also excluded from Pro Forma EBITDA, and GAAP net income or loss is adjusted for the annualized impact of acquisitions, dispositions and other similar activities.

To derive Same-Property NOI, GAAP net income or loss attributable to the Company is adjusted to exclude extraordinary items (as defined by GAAP), gain or loss on disposition of assets, gain or loss on extinguishment of debt, impairment charges, and depreciation and amortization, including the pro rata share of such adjustments of unconsolidated subsidiaries, if any, non-cash revenues and expenses such as above- and below-market lease related intangibles, straight-line rental revenue, and other non-cash income or expense. Interest expense, general and administrative expenses, investment and other income or loss, income tax benefit or expense, real estate operations revenues and direct cost of revenues, management fee income, and interest income from commercial loans and investments are also excluded from Same-Property NOI. GAAP net income or loss is further adjusted to remove the impact of properties that were not owned for the full current and prior year reporting periods presented. Cash rental income received under the leases pertaining to the Company’s assets that are presented as commercial loans and investments in accordance with GAAP is also used in lieu of the interest income equivalent.

FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers primarily because it excludes the effect of real estate depreciation and amortization and net gains or losses on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. We believe that Core FFO and AFFO are additional useful supplemental measures for investors to consider because they will help them to better assess our operating performance without the distortions created by other non-cash revenues or expenses. We also believe that Pro Forma EBITDA is an additional useful supplemental measure for investors to consider as it allows for a better assessment of our operating performance without the distortions created by other non-cash revenues, expenses or certain effects of the Company’s capital structure on our operating performance. We use Same-Property NOI to compare the operating performance of our assets between periods. It is an accepted and important measurement used by management, investors and analysts because it includes all property-level revenues from the Company’s properties, less operating and maintenance expenses, real estate taxes and other property-specific expenses (“Net Operating Income” or “NOI”) of properties that have been owned and stabilized for the entire current and prior year reporting periods. Same-Property NOI attempts to eliminate differences due to the acquisition or disposition of properties during the particular period presented, and therefore provides a more comparable and consistent performance measure for the comparison of the Company's properties. FFO, Core FFO, AFFO, Pro Forma EBITDA, and Same-Property NOI may not be comparable to similarly titled measures employed by other companies.


CTO Realty Growth, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share data)

 

 

As of

 

 

(Unaudited)
June 30, 2022

 

December 31,
2021

ASSETS

 

 

 

 

 

 

Real Estate:

 

 

 

 

 

 

Land, at Cost

 

$

205,245

 

 

$

189,589

 

Building and Improvements, at Cost

 

 

344,205

 

 

 

325,418

 

Other Furnishings and Equipment, at Cost

 

 

741

 

 

 

707

 

Construction in Process, at Cost

 

 

10,419

 

 

 

3,150

 

Total Real Estate, at Cost

 

 

560,610

 

 

 

518,864

 

Less, Accumulated Depreciation

 

 

(31,735

)

 

 

(24,169

)

Real Estate—Net

 

 

528,875

 

 

 

494,695

 

Land and Development Costs

 

 

686

 

 

 

692

 

Intangible Lease Assets—Net

 

 

78,328

 

 

 

79,492

 

Assets Held for Sale

 

 

 

 

 

6,720

 

Investment in Alpine Income Property Trust, Inc.

 

 

38,483

 

 

 

41,037

 

Mitigation Credits

 

 

3,436

 

 

 

3,702

 

Mitigation Credit Rights

 

 

21,018

 

 

 

21,018

 

Commercial Loans and Investments

 

 

68,783

 

 

 

39,095

 

Cash and Cash Equivalents

 

 

7,137

 

 

 

8,615

 

Restricted Cash

 

 

27,189

 

 

 

22,734

 

Refundable Income Taxes

 

 

286

 

 

 

442

 

Deferred Income Taxes—Net

 

 

105

 

 

 

 

Other Assets

 

 

28,029

 

 

 

14,897

 

Total Assets

 

$

802,355

 

 

$

733,139

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Accounts Payable

 

$

1,325

 

 

$

676

 

Accrued and Other Liabilities

 

 

15,705

 

 

 

13,121

 

Deferred Revenue

 

 

5,358

 

 

 

4,505

 

Intangible Lease Liabilities—Net

 

 

5,277

 

 

 

5,601

 

Deferred Income Taxes—Net

 

 

 

 

 

483

 

Long-Term Debt

 

 

343,196

 

 

 

278,273

 

Total Liabilities

 

 

370,861

 

 

 

302,659

 

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 June 30, 2022 and December 31, 2021

 

 

30

 

 

 

30

 

Common Stock – 500,000,000 shares authorized; $0.01 par value, 6,082,626 shares issued and outstanding at June 30, 2022 and 5,916,226 shares issued and outstanding at December 31, 2021

 

 

61

 

 

 

60

 

Additional Paid-In Capital

 

 

86,347

 

 

 

85,414

 

Retained Earnings

 

 

332,916

 

 

 

343,459

 

Accumulated Other Comprehensive Income

 

 

12,140

 

 

 

1,517

 

Total Stockholders’ Equity

 

 

431,494

 

 

 

430,480

 

Total Liabilities and Stockholders’ Equity

 

$

802,355

 

 

$

733,139

 

 

 

CTO Realty Growth, Inc.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except share, per share and dividend data)

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

June 30,

 

June 30,

 

 

2022

 

2021

 

2022

 

2021

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Income Properties

 

$

16,367

 

 

$

11,574

 

 

$

31,535

 

 

$

23,023

 

Management Fee Income

 

 

948

 

 

 

752

 

 

 

1,884

 

 

 

1,421

 

Interest Income From Commercial Loans and Investments

 

 

1,290

 

 

 

709

 

 

 

2,008

 

 

 

1,410

 

Real Estate Operations

 

 

858

 

 

 

1,248

 

 

 

1,246

 

 

 

3,141

 

Total Revenues

 

 

19,463

 

 

 

14,283

 

 

 

36,673

 

 

 

28,995

 

Direct Cost of Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Income Properties

 

 

(4,812

)

 

 

(2,787

)

 

 

(8,828

)

 

 

(5,704

)

Real Estate Operations

 

 

(228

)

 

 

(533

)

 

 

(279

)

 

 

(615

)

Total Direct Cost of Revenues

 

 

(5,040

)

 

 

(3,320

)

 

 

(9,107

)

 

 

(6,319

)

General and Administrative Expenses

 

 

(2,676

)

 

 

(2,665

)

 

 

(5,719

)

 

 

(5,797

)

Impairment Charges

 

 

 

 

 

(16,527

)

 

 

 

 

 

(16,527

)

Depreciation and Amortization

 

 

(6,727

)

 

 

(5,031

)

 

 

(13,096

)

 

 

(9,861

)

Total Operating Expenses

 

 

(14,443

)

 

 

(27,543

)

 

 

(27,922

)

 

 

(38,504

)

Gain (Loss) on Disposition of Assets

 

 

 

 

 

4,732

 

 

 

(245

)

 

 

5,440

 

Gain (Loss) on Extinguishment of Debt

 

 

 

 

 

(641

)

 

 

 

 

 

(641

)

Other Gains and Income (Loss)

 

 

 

 

 

4,091

 

 

 

(245

)

 

 

4,799

 

Total Operating Income (Loss)

 

 

5,020

 

 

 

(9,169

)

 

 

8,506

 

 

 

(4,710

)

Investment and Other Income (Loss)

 

 

(1,311

)

 

 

3,903

 

 

 

(3,205

)

 

 

9,235

 

Interest Expense

 

 

(2,277

)

 

 

(2,421

)

 

 

(4,179

)

 

 

(4,865

)

Income (Loss) Before Income Tax Benefit (Expense)

 

 

1,432

 

 

 

(7,687

)

 

 

1,122

 

 

 

(340

)

Income Tax Benefit (Expense)

 

 

(214

)

 

 

3,963

 

 

 

298

 

 

 

4,401

 

Net Income (Loss) Attributable to the Company

 

 

1,218

 

 

 

(3,724

)

 

 

1,420

 

 

 

4,061

 

Distributions to Preferred Stockholders

 

 

(1,196

)

 

 

 

 

 

(2,391

)

 

 

 

Net Income (Loss) Attributable to Common Stockholders

 

$

22

 

 

$

(3,724

)

 

$

(971

)

 

$

4,061

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Information:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted Net Income (Loss) Attributable to Common Stockholders

 

$

0.00

 

 

$

(0.63

)

 

$

(0.16

)

 

$

0.69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Number of Common Shares

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

 

6,004,178

 

 

 

5,898,280

 

 

 

5,956,798

 

 

 

5,888,735

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends Declared and Paid – Preferred Stock

 

$

0.40

 

 

$

 

 

$

0.80

 

 

$

 

Dividends Declared and Paid – Common Stock

 

$

1.12

 

 

$

1.00

 

 

$

2.20

 

 

$

2.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CTO Realty Growth, Inc.
Non-GAAP Financial Measures
Same-Property NOI Reconciliation
(Unaudited)
(In thousands)

 

 

Three Months Ended

 

 

June 30,
2022

 

June 30,
2021

Net Income (Loss) Attributable to the Company

 

$

1,218

 

 

$

(3,724

)

Gain on Disposition of Assets

 

 

 

 

 

(4,732

)

Loss on Extinguishment of Debt

 

 

 

 

 

641

 

Impairment Charges

 

 

 

 

 

16,527

 

Depreciation and Amortization

 

 

6,727

 

 

 

5,031

 

Amortization of Intangibles to Lease Income

 

 

(497

)

 

 

338

 

Straight-Line Rent Adjustment

 

 

507

 

 

 

490

 

COVID-19 Rent Repayments

 

 

(26

)

 

 

(434

)

Other Income Property Related Non-Cash Amortization

 

 

38

 

 

 

38

 

Interest Expense

 

 

2,277

 

 

 

2,421

 

General and Administrative Expenses

 

 

2,676

 

 

 

2,665

 

Investment and Other Loss (Income)

 

 

1,311

 

 

 

(3,903

)

Income Tax Expense (Benefit)

 

 

214

 

 

 

(3,963

)

Real Estate Operations Revenues

 

 

(858

)

 

 

(1,248

)

Real Estate Operations Direct Cost of Revenues

 

 

228

 

 

 

533

 

Management Fee Income

 

 

(948

)

 

 

(752

)

Interest Income from Commercial Loans and Investments

 

 

(1,290

)

 

 

(709

)

Less: Impact of Properties Not Owned for the Full Reporting Period

 

 

(4,494

)

 

 

(3,557

)

Cash Rental Income Received from Properties Presented as
Commercial Loans and Investments

 

 

363

 

 

 

354

 

Same-Property NOI

 

$

7,446

 

 

$

6,016

 

 

 

CTO Realty Growth, Inc.
Non-GAAP Financial Measures
(Unaudited)
(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

Net Income (Loss) Attributable to the Company

 

$

1,218

 

 

$

(3,724

)

 

$

1,420

 

 

$

4,061

 

Add Back: Effect of Dilutive Interest Related to 2025 Notes (1)

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) Attributable to the Company, If-Converted

 

$

1,218

 

 

$

(3,724

)

 

 

1,420

 

 

 

4,061

 

Depreciation and Amortization of Real Estate

 

 

6,707

 

 

 

5,031

 

 

 

13,076

 

 

 

9,861

 

(Gains) Losses on Disposition of Assets

 

 

 

 

 

(4,732

)

 

 

245

 

 

 

(5,440

)

Gains on Disposition of Other Assets

 

 

(632

)

 

 

(748

)

 

 

(964

)

 

 

(2,575

)

Impairment Charges, Net

 

 

 

 

 

12,474

 

 

 

 

 

 

12,474

 

Unrealized Loss (Gain) on Investment Securities

 

 

1,891

 

 

 

(3,386

)

 

 

4,348

 

 

 

(8,220

)

Funds from Operations

 

$

9,184

 

 

$

4,915

 

 

$

18,125

 

 

$

10,161

 

Distributions to Preferred Stockholders

 

 

(1,196

)

 

 

 

 

 

(2,391

)

 

 

 

Funds From Operations Attributable to Common Stockholders

 

$

7,988

 

 

$

4,915

 

 

$

15,734

 

 

$

10,161

 

Loss on Extinguishment of Debt

 

 

 

 

 

641

 

 

 

 

 

 

641

 

Amortization of Intangibles to Lease Income

 

 

497

 

 

 

(338

)

 

 

978

 

 

 

(734

)

Less: Effect of Dilutive Interest Related to 2025 Notes (1)

 

 

 

 

 

 

 

 

 

 

 

 

Core Funds From Operations Attributable to Common Stockholders

 

$

8,485

 

 

$

5,218

 

 

$

16,712

 

 

$

10,068

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Straight-Line Rent Adjustment

 

 

(507

)

 

 

(490

)

 

 

(1,045

)

 

 

(1,175

)

COVID-19 Rent Repayments

 

 

26

 

 

 

434

 

 

 

53

 

 

 

654

 

Other Depreciation and Amortization

 

 

(31

)

 

 

(150

)

 

 

(170

)

 

 

(374

)

Amortization of Loan Costs and Discount on Convertible Debt

 

 

212

 

 

 

478

 

 

 

446

 

 

 

953

 

Non-Cash Compensation

 

 

705

 

 

 

742

 

 

 

1,611

 

 

 

1,700

 

Non-Recurring G&A

 

 

 

 

 

62

 

 

 

 

 

 

155

 

Adjusted Funds From Operations Attributable to Common Stockholders

 

$

8,890

 

 

$

6,294

 

 

$

17,607

 

 

$

11,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO Attributable to Common Stockholders per Common Share – Diluted

 

$

1.33

 

 

$

0.83

 

 

$

2.64

 

 

$

1.73

 

Core FFO Attributable to Common Stockholders per Common Share – Diluted

 

$

1.41

 

 

$

0.88

 

 

$

2.81

 

 

$

1.71

 

AFFO Attributable to Common Stockholders per Common Share – Diluted

 

$

1.48

 

 

$

1.07

 

 

$

2.96

 

 

$

2.03

 

(1) Interest related to the 2025 Convertible Senior Notes excluded from net income attributable to the Company to derive FFO effective January 1, 2022 due to the implementation of ASU 2020-06 which requires presentation on an if-converted basis, as the impact to net income attributable to common stockholders would be anti-dilutive.

        

CTO Realty Growth, Inc.
Non-GAAP Financial Measures
Reconciliation of Net Debt to Pro Forma EBITDA
(Unaudited)
(In thousands)

 

 

 

 

 

 

Three Months Ended
June 30, 2022

Net Income Attributable to the Company

 

$

1,218

 

Depreciation and Amortization of Real Estate

 

 

6,707

 

Gains on Disposition of Other Assets

 

 

(632

)

Unrealized Loss on Investment Securities

 

 

1,891

 

Distributions to Preferred Stockholders

 

 

(1,196

)

Straight-Line Rent Adjustment

 

 

(507

)

Amortization of Intangibles to Lease Income

 

 

497

 

Other Depreciation and Amortization

 

 

(31

)

Amortization of Loan Costs and Discount on Convertible Debt

 

 

212

 

Non-Cash Compensation

 

 

705

 

Interest Expense, Net of Amortization of Loan Costs and Discount on Convertible Debt

 

 

2,065

 

EBITDA

 

$

10,929

 

 

 

 

 

Annualized EBITDA

 

$

43,716

 

Pro Forma Annualized Impact of Current Quarter Acquisitions and Dispositions, Net (1)

 

 

3,050

 

Pro Forma EBITDA

 

$

46,766

 

 

 

 

 

Total Long-Term Debt

 

 

343,196

 

Financing Costs, Net of Accumulated Amortization

 

 

1,194

 

Unamortized Convertible Debt Discount

 

 

444

 

Cash & Cash Equivalents

 

 

(7,137

)

Restricted Cash

 

 

(27,189

)

Net Debt

 

$

310,508

 

 

 

 

 

Net Debt to Pro Forma EBITDA

 

 

6.6x

 

(1) Reflects the pro forma annualized impact on Annualized EBITDA of the Company’s acquisition and disposition activity during the three months ended June 30, 2022.

 

 

 

 

 

 

Contact:

 

Matthew M. Partridge

 

 

Senior Vice President, Chief Financial Officer and Treasurer

 

 

(407) 904-3324

 

 

mpartridge@ctoreit.com