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 16, 2019
Consolidated-Tomoka Land Co.
(Exact name of registrant as specified in its charter)
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Florida |
001-11350 |
59-0483700 |
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1140 N Williamson Blvd., |
32114 |
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Registrant’s telephone number, including area code: (386) 274-2202 |
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Not Applicable (Former name or former address, if changed since last report.) |
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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:
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Title of each class: |
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Trading Symbol |
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Name of each exchange on which registered: |
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COMMON STOCK, $1.00 PAR VALUE PER SHARE |
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CTO |
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NYSE American |
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 16, 2019, Consolidated-Tomoka Land Co., a Florida corporation (the "Company"), issued a press release relating to the Company’s earnings for the quarter ended September 30, 2019. A copy of the press release is furnished as an exhibit to this report.
Item 9.01. Financial Statements and Exhibits
The following exhibit is furnished herewith pursuant to Item 2.02 of this Report and shall not be deemed to be “filed” for any purpose, including for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.
(d) Exhibits
99.1 Press Release dated October 16, 2019
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 thereunto duly authorized.
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Company Name |
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Date: October 16, 2019 |
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By: |
/s/ Mark E. Patten |
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Mark E. Patten, |
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Senior Vice President and Chief Financial Officer |
Exhibit 99.1
Press
Release
Contact: Mark E. Patten, Sr. Vice President and CFO
mpatten@ctlc.com
Phone: (386) 944-5643
Facsimile: (386) 274-1223
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FOR IMMEDIATE RELEASE |
CONSOLIDATED-TOMOKA LAND CO. REPORTS EARNINGS OF $0.31 PER SHARE FOR THE THIRD QUARTER OF 2019 |
DAYTONA BEACH, Fla. – October 16, 2019 – Consolidated-Tomoka Land Co. (NYSE American: CTO) (the “Company”) today announced its operating results and earnings for the quarter and nine months ended September 30, 2019.
QUARTER HIGHLIGHTS
Land Holdings
As announced earlier today, the Company closed on the sale of a controlling interest in a wholly-owned entity that holds the Company’s remaining land portfolio of approximately 5,300 acres (the “Land Venture”), including the land parcels the Company currently has under contract, to certain funds managed by Magnetar Capital (“Magnetar”) for total proceeds to the Company of approximately $97.0 million (the “Land Transaction”). The Company may, in the future, receive additional proceeds from the Land Venture in the form of distributions under certain circumstances, based upon the timing and amount realized when the land is ultimately sold by the Land Venture. There can be no assurance as to the likelihood or receiving such distributions, or the amount or timing thereof.
As a result of the Land Venture the Company has not provided an update of the land transaction pipeline in this earnings release.
Income Property Portfolio
In four separate transactions, acquired 4 single-tenant net lease retail properties for a total investment of approximately $49.5 million, reflecting a weighted average investment cap rate of approximately 6.32%. The four properties had a weighted average lease term of approximately 36.7 years.
Sold a 1.56-acre outparcel subject to a ground lease with Wawa, located in Winter Park, Florida, for a sales price of approximately $2.8 million for a gain of approximately $2.1 million, or $0.33 per share, after tax.
Commercial Loan Investment Portfolio
Originated a leasehold mortgage loan on the Carpenter Hotel totaling approximately $8.25 million with an interest rate of approximately 11.5%.
Book Value Per Share
Book value per share totaled $40.38 as of September 30, 2019; an increase of $1.44 per share, or nearly 4%, compared to year-end 2018.
Income Property Update
The following table provides a summary of the Company’s income property portfolio as of September 30, 2019 compared with the portfolio as of September 30, 2018:
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# of Properties |
Total Square Feet |
Average Remaining |
||||
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Property Type |
2019 |
2018 |
2019 |
2018 |
2019 |
2018 |
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Single-Tenant |
48 |
29 |
2,014,490 |
1,561,053 |
11.8 |
9.1 |
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Multi-Tenant |
4 |
7 |
284,441 |
531,915 |
2.9 |
4.4 |
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Total / Wtd. Avg. |
52 |
36 |
2,298,931 |
2,092,968 |
11.0 |
7.8 |
Included in the aggregate investment of approximately $49.5 million, is the purchase of approximately 1.4 acres of land under the Carpenter Hotel in Austin, Texas, for approximately $16.25 million which is leased to the seller pursuant to a new 99-year ground lease (the “Ground Lease”). The Ground Lease includes annual escalations and certain future repurchase rights. Pursuant to FASB ASC Topic 842, Leases, due to the future repurchase rights, the Ground Lease does not qualify for treatment as a property purchase and has been accounted for on the consolidated balance sheets as an increase in commercial loan investments of approximately $16.25 million as of September 30, 2019 (the “Ground Lease Loan”). The Company has imputed interest on the Ground Lease Loan which is being recognized as interest income on commercial loan investments in the Company’s consolidated statements of operations.
Commercial Loan Investments Update
As of September 30, 2019, the Company’s commercial loan investment portfolio consisted of two loans totaling approximately $16.25 million in principal, including an $8.0 million first mortgage bridge loan secured by 72 acres of land in Orlando, Florida, and an $8.25 million leasehold mortgage loan on an upscale hotel property in Austin, Texas. The weighted average interest rate on the two loans was approximately 11.75% as of September 30, 2019 and the remaining term to maturity was 0.74 years, exclusive of the Ground Lease Loan.
Golf Operations Update
The Company is under contract to sell the Golf Operations to a third-party for a projected contract price in excess of the adjusted book value as of September 30, 2019. The transaction is expected to close in the fourth quarter of 2019.
Debt Summary
The following table provides a summary of the Company’s long-term debt as of September 30, 2019:
|
Component of Long-Term Debt |
Principal |
Interest Rate |
Maturity Date |
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Revolving Credit Facility |
$154.85 million |
30-day LIBOR + 1.35% – 1.95% |
May 2023 |
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Mortgage Note Payable (1) |
$24.06 million |
3.17% |
April 2021 |
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Mortgage Note Payable |
$30.00 million |
4.33% |
October 2034 |
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Convertible Senior Notes |
$75.00 million |
4.50% |
March 2020 |
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Total Debt/Weighted-Average Rate |
$283.91 million |
4.00% |
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(1) |
Utilized interest rate swap to achieve fixed interest rate of 3.17% |
OPERATING RESULTS
3rd Quarter ended September 30, 2019 (compared to same period in 2018):
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Increase (Decrease) |
||||
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For the |
vs Same Period |
vs Same |
||
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Net Income Per Share (basic) |
$ 0.31 |
$ 0.26 |
520% | |
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Operating Income ($ millions) |
$ 5.57 |
$ 1.19 |
27% | |
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Increase (Decrease) |
||||
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Operating Segment |
Revenue for |
vs Same Period in |
vs Same |
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Income Properties |
$ 10,261 |
$ 901 |
10% | |
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Interest Income from Commercial Loan Investments |
855 |
814 |
1985% | |
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Real Estate Operations |
632 |
(7,381) |
-92% |
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Total Revenues |
$ 11,748 |
$ (5,666) |
-33% |
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The operating results in the 3rd Quarter ended September 30, 2019 were impacted by a 17% increase in general and administrative expenses as noted in the following summary (compared to the same period in 2018):
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Increase (Decrease) |
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G&A for |
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Vs. Same Period |
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Vs. Same Period |
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the Quarter |
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in 2018 |
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in 2018 |
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General and Administrative Expenses |
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($000's) |
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($000's) |
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(%) |
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Recurring General and Administrative Expenses |
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$ |
1,648 |
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$ |
164 |
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11% |
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Non-Cash Stock Compensation |
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|
613 |
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169 |
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38% |
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Total General and Administrative Expenses |
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$ |
2,261 |
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$ |
333 |
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17% |
For the Nine-Months ended September 30, 2019 (compared to same period in 2018):
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Increase (Decrease) |
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For the Nine |
vs Same Period |
vs Same |
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Net Income Per Share (basic) |
$ 3.67 |
$ (0.93) |
-27% |
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Operating Income ($ millions) |
$ 34.7 |
$ (8.6) |
-20% |
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Increase (Decrease) |
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Operating Segment |
Revenue for |
vs Same |
vs Same |
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Income Properties |
$ 31,361 |
$ 3,014 |
11% | |
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Interest Income from Commercial Loan Investments |
908 | 292 | 47% | |
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Real Estate Operations |
11,677 | (12,821) |
-52% |
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Total Revenues |
$ 43,946 |
$ (9,515) |
-18% |
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The operating results in the Nine Months ended September 30, 2019 benefited from a 4% reduction in general and administrative expenses as noted in the following summary (compared to the same period in 2018):
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Increase (Decrease) |
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G&A for |
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Vs. Same Period |
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Vs. Same Period |
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the Six Months |
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in 2018 |
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in 2018 |
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General and Administrative Expenses |
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($000's) |
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($000's) |
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(%) |
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Recurring General and Administrative Expenses |
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$ |
4,698 |
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$ |
(82) |
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-2% |
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Non-Cash Stock Compensation |
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2,059 |
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602 |
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41% |
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Shareholder and Proxy Matter Legal and Related Costs |
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125 |
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(819) |
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-87% |
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Total General and Administrative Expenses |
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$ |
6,882 |
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$ |
(299) |
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-4% |
2019 Guidance
The following summary provides the Company’s guidance for the full year ending December 31, 2019:
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YTD Q3 2019 Actual |
Guidance for FY 2019 |
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Earnings Per Share (Basic) (1) |
$ 0.60
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$6.75 - $7.50 |
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Earnings from Dispositions |
$ 3.07
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$2.25 - $2.75 |
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Acquisition of Income-Producing Assets |
$90mm |
$80mm - $120mm |
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Target Investment Yields (Initial Yield – Unlevered) |
6.45% |
5.75% - 7.25% |
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Disposition of Income-Producing Assets (Sales Value) |
$83mm |
$50mm - $100mm |
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Target Disposition Yields |
6.13% |
7.50% - 8.50% |
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Land Transactions (Sales Value) (2) |
$108.1mm |
$50mm - $70mm |
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Leverage Target (as % of Total Enterprise Value) (2) (3) |
30% | 40% |
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(1) |
Excludes EPS from the disposition of the multi-tenant properties completed year-to-date in 2019. |
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(2) |
As of October 16, 2019 |
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(3) |
Leverage as a percentage of Total Enterprise Value net of cash and 1031 restricted cash was approximately 46% as of September 30, 2019. |
Announces Quarterly Dividend of $0.13 per Share
The Company’s Board of Directors declared a quarterly dividend of $0.13 per share payable on November 29, 2019, to shareholders of record on November 12, 2019, an increase of approximately 18% from the dividend paid in the third quarter of 2019.
Laura M. Franklin, Chairman of the Board, stated, “The Board is pleased that the operating results of the Company continue to support our dividend tradition that began in 1976. The Board will continue to review its dividend strategy on a regular basis.”
3rd Quarter Earnings Conference Call & Webcast
The Company will host a conference call to present its operating results for the quarter and nine months ended September 30, 2019 on Thursday, October 17, 2019, at 9:00 a.m. eastern time. Shareholders and interested parties may access the earnings call via teleconference or webcast:
Teleconference: USA (Toll Free) 1-888-317-6003
International: 1-412-317-6061
Canada (Toll Free): 1-866-284-3684
Please dial in at least fifteen minutes prior to the scheduled start time and use the code 7721439 when prompted.
A webcast of the call can be accessed at: http://services.choruscall.com/links/cto191017.html.
To access the webcast, log on to the web address noted above or go to http://www.ctlc.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 Consolidated-Tomoka Land Co.
Consolidated-Tomoka Land Co. is a Florida-based publicly traded real estate company, which owns, as of October 16, 2019, a portfolio of income investments in diversified markets in the United States including approximately 2.3 million square feet of income properties. Visit our website at www.ctlc.com.
We encourage you to review our most recent investor presentation for the quarter and nine months ended September 30, 2019, and other presentations that are available on our website at www.ctlc.com.
SAFE HARBOR
Certain statements contained in this press release (other than statements of historical fact) are forward-looking statements. Words such as “believe,” “estimate,” “expect,” “intend,” “anticipate,” “will,” “could,” “may,” “should,” “plan,” “potential,” “predict,” “forecast,” “project,” and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. Although forward-looking statements are made based upon management’s expectations and 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 the completion of 1031 exchange transactions, the modification of terms of certain land sales agreements, uncertainties associated with obtaining required governmental permits and satisfying other closing conditions, as well as the uncertainties and risk factors discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the 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.
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED BALANCE SHEETS
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(Unaudited) |
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September 30, |
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December 31, |
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ASSETS |
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Property, Plant, and Equipment: |
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Income Properties, Land, Buildings, and Improvements |
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$ |
472,444,875 |
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$ |
392,520,783 |
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Other Furnishings and Equipment |
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|
730,878 |
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|
728,817 |
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Construction in Progress |
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412,543 |
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|
19,384 |
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Total Property, Plant, and Equipment |
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473,588,296 |
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393,268,984 |
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Less, Accumulated Depreciation and Amortization |
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(32,696,922) |
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(24,518,215) |
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Property, Plant, and Equipment—Net |
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440,891,374 |
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368,750,769 |
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Land and Development Costs |
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23,520,982 |
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25,764,633 |
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Intangible Lease Assets—Net |
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49,195,221 |
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|
43,555,445 |
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Assets Held for Sale |
|
|
4,502,635 |
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|
75,866,510 |
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Investment in Joint Venture |
|
|
6,850,594 |
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|
6,788,034 |
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Impact Fee and Mitigation Credits |
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|
447,596 |
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|
462,040 |
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Commercial Loan Investments |
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|
32,419,693 |
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|
|
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Cash and Cash Equivalents |
|
|
5,411,727 |
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|
2,310,489 |
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Restricted Cash |
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|
6,213,295 |
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|
19,721,475 |
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Refundable Income Taxes |
|
|
— |
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|
225,024 |
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Other Assets |
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|
14,008,249 |
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|
12,885,453 |
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Total Assets |
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$ |
583,461,366 |
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$ |
556,329,872 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Liabilities: |
|
|
|
|
|
|
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Accounts Payable |
|
$ |
2,624,096 |
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$ |
1,036,547 |
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Accrued and Other Liabilities |
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|
5,627,474 |
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|
5,197,884 |
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Deferred Revenue |
|
|
7,457,665 |
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|
7,201,604 |
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Intangible Lease Liabilities—Net |
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|
26,059,614 |
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|
27,390,350 |
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Liabilities Held for Sale |
|
|
1,729,049 |
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|
1,347,296 |
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Income Taxes Payable |
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|
112,896 |
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|
— |
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Deferred Income Taxes—Net |
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|
58,761,619 |
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54,769,907 |
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Long-Term Debt |
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|
282,087,031 |
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247,624,811 |
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Total Liabilities |
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384,459,444 |
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|
344,568,399 |
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Commitments and Contingencies |
|
|
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Shareholders’ Equity: |
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|
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Common Stock – 25,000,000 shares authorized; $1 par value, 6,075,462 shares issued and 4,927,728 shares outstanding at September 30, 2019; 6,052,209 shares issued and 5,436,952 shares outstanding at December 31, 2018 |
|
|
6,015,867 |
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|
5,995,257 |
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Treasury Stock – 1,147,734 shares at September 30, 2019; 615,257 shares at December 31, 2018 |
|
|
(63,441,664) |
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|
(32,345,002) |
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Additional Paid-In Capital |
|
|
26,062,021 |
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|
24,326,778 |
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Retained Earnings |
|
|
230,284,293 |
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|
213,297,897 |
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Accumulated Other Comprehensive Income |
|
|
81,405 |
|
|
486,543 |
|
Total Shareholders’ Equity |
|
|
199,001,922 |
|
|
211,761,473 |
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Total Liabilities and Shareholders’ Equity |
|
$ |
583,461,366 |
|
$ |
556,329,872 |
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
Three Months Ended |
Nine Months Ended |
||||||
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|
September 30, |
September 30, |
September 30, |
September 30, |
||||
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2019 |
2018 |
2019 |
2018 |
||||
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Revenues |
|
|
|
|
|
|
|
|
|
Income Properties |
$ |
10,260,831 |
$ |
9,360,155 |
$ |
31,360,544 |
$ |
28,347,181 |
|
Interest Income from Commercial Loan Investments |
|
855,559 |
|
41,262 |
|
908,324 |
|
615,728 |
|
Real Estate Operations |
|
631,741 |
|
8,012,509 |
|
11,677,413 |
|
24,498,527 |
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Total Revenues |
|
11,748,131 |
|
17,413,926 |
|
43,946,281 |
|
53,461,436 |
|
Direct Cost of Revenues |
|
|
|
|
|
|
|
|
|
Income Properties |
|
(1,476,288) |
|
(1,773,840) |
|
(5,043,496) |
|
(5,677,758) |
|
Real Estate Operations |
|
(342,148) |
|
(5,577,491) |
|
(6,448,016) |
|
(7,993,767) |
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Total Direct Cost of Revenues |
|
(1,818,436) |
|
(7,351,331) |
|
(11,491,512) |
|
(13,671,525) |
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General and Administrative Expenses |
|
(2,260,728) |
|
(1,928,008) |
|
(6,881,524) |
|
(7,180,737) |
|
Depreciation and Amortization |
|
(4,286,836) |
|
(3,756,507) |
|
(11,707,710) |
|
(11,308,876) |
|
Total Operating Expenses |
|
(8,366,000) |
|
(13,035,846) |
|
(30,080,746) |
|
(32,161,138) |
|
Gain on Disposition of Assets |
|
2,187,332 |
|
— |
|
20,869,196 |
|
22,035,666 |
|
Total Operating Income |
|
5,569,463 |
|
4,378,080 |
|
34,734,731 |
|
43,335,964 |
|
Investment and Other Income |
|
33,048 |
|
14,179 |
|
86,363 |
|
38,383 |
|
Interest Expense |
|
(3,253,908) |
|
(2,345,156) |
|
(9,219,195) |
|
(7,443,922) |
|
Income from Continuing Operations Before Income Tax Expense |
|
2,348,603 |
|
2,047,103 |
|
25,601,899 |
|
35,930,425 |
|
Income Tax Expense from Continuing Operations |
|
(595,144) |
|
(561,223) |
|
(6,459,234) |
|
(9,016,556) |
|
Net Income from Continuing Operations |
|
1,753,459 |
|
1,485,880 |
|
19,142,665 |
|
26,913,869 |
|
Loss from Discontinued Operations (Net of Income Tax) |
|
(267,437) |
|
(1,189,708) |
|
(591,746) |
|
(1,542,490) |
|
Net Income |
$ |
1,486,022 |
$ |
296,172 |
$ |
18,550,919 |
$ |
25,371,379 |
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
4,868,133 |
|
5,491,181 |
|
5,053,407 |
|
5,516,989 |
|
Diluted |
|
4,868,133 |
|
5,493,367 |
|
5,054,218 |
|
5,548,425 |
|
|
|
|
|
|
|
|
|
|
|
Per Share Information: |
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
|
Net Income from Continuing Operations |
$ |
0.36 |
$ |
0.27 |
$ |
3.79 |
$ |
4.88 |
|
Net Loss from Discontinued Operations (Net of Income Tax) |
|
(0.05) |
|
(0.22) |
|
(0.12) |
|
(0.28) |
|
Basic Net Income Per Share |
$ |
0.31 |
$ |
0.05 |
$ |
3.67 |
$ |
4.60 |
|
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
|
Net Income from Continuing Operations |
$ |
0.36 |
$ |
0.27 |
$ |
3.79 |
$ |
4.85 |
|
Net Loss from Discontinued Operations (Net of Income Tax) |
|
(0.05) |
|
(0.22) |
|
(0.12) |
|
(0.28) |
|
Diluted Net Income Per Share |
$ |
0.31 |
$ |
0.05 |
$ |
3.67 |
$ |
4.57 |
|
|
|
|
|
|
|
|
|
|
|
Dividends Declared and Paid |
$ |
0.11 |
$ |
0.07 |
$ |
0.31 |
$ |
0.19 |