Consolidated-Tomoka Land Co. Reports First Quarter 2020 Results of Increased Revenue to $12.8 Million and a Net Loss of $2.60 Per Share, Including a $2.19 Per Share Unrealized Loss on Mark to Market of Pine Shares
DAYTONA BEACH, Fla., April 28, 2020 (GLOBE NEWSWIRE) -- Consolidated-Tomoka Land Co. (NYSE American: CTO) (the “Company”) today announced its operating results and earnings for the quarter ended March 31, 2020.
QUARTER HIGHLIGHTS
- Cash Flow and Liquidity Update
In the first quarter ended March 31, 2020 the Company generated nearly
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| Cash at March 31, 2020 | |||||
| Cash from CVS Property Sale (1) | Net Operating Cash Flows | ≈ | |||
| Total | Net Operating Cash/Share | > |
(1) Includes approximately
(2) Estimated cash flow and per share amounts exclude payment of future dividends and additional impact of COVID-19 Pandemic.
- Income Property Acquisitions
In two separate transactions, the Company acquired two multi-tenant commercial retail properties for an aggregate purchase price of approximately
- Investment in Alpine
During the three months ended March 31, 2020, the closing stock price of Alpine Income Property Trust, Inc. (“PINE”) decreased by
- Share Repurchase Program
From January 1, 2020 through April 27, 2020: Repurchased 88,565 shares for approximately
- Convertible Notes
As more fully described in this press release, the Company completed the exchange or refinancing of the
In March, the Company repurchased
- Covid-19 Update
As a result of the mandated closures of many businesses in the U.S. in response to the COVID-19 pandemic, the Company has been working with certain of its tenants, representing approximately
CEO Comments
Mr. John P. Albright, President and Chief Executive Officer of the Company, stated, “We started 2020 with a robust acquisition pace acquiring two multi-tenant assets with more than a half million rentable square feet, for approximately
Income Property Update
During the three months ended March 31, 2020, the Company acquired two (2) multi-tenant retail income properties with over 500,000 square feet of rentable space for a total of approximately
The Company’s income property portfolio consisted of the following as of March 31, 2020:
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| Single-Tenant (1) | 29 | 1,268,809 | 14.1 | |||
| Multi-Tenant | 7 | 1,019,524 | 5.3 | |||
| Total / Wtd. Avg. | 36 | 2,288,333 | 9.8 |
(1) One of the twenty-nine single-tenant properties is a ground lease with The Carpenter Hotel which includes two tenant repurchase options. Pursuant to FASB ASC Topic 842, Leases, the
Status of April 2020 Rent as a result of COVID-19 Impact
As of April 24, 2020, the Company has received April rent payments from tenants representing approximately
Land JV Update
During the three months ended March 31, 2020, the Land JV has completed approximately
Commercial Loan Investment Update
During the three months ended March 31, 2020, the Company invested approximately
The Company began marketing its commercial loan portfolio in advance of their upcoming maturities to further strengthen the Company’s liquidity. The Company received multiple bids including a bid offering a value that was at a discount to par. Additionally, the Company implemented the guidance regarding current expected credit losses (“CECL”) effective January 1, 2020, which resulted in an allowance reserve of approximately
Debt Update
The following table provides a summary of the Company’s long-term debt, at face value, as of March 31, 2020:
| Component of Long-Term Debt | Principal | Interest Rate | Maturity Date | ||||
| Revolving Credit Facility (1) | May 2023 | ||||||
| Revolving Credit Facility | 30-day LIBOR + | May 2023 | |||||
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| Mortgage Note Payable | 4.33 | % | October 2034 | ||||
| 2025 Convertible Senior Notes | 3.88 | % | April 2025 | ||||
| Total Debt/Weighted-Average Rate | 3.28 | % |
(1) Effective March 19, 2020, the Company utilized an interest rate swap to achieve a fixed interest rate of
(2) Utilized interest rate swap to achieve fixed interest rate of
Convertible Notes Transactions
On February 3, 2020, the Company closed its privately negotiated exchange agreements with certain holders of its outstanding
On March 30, 2020, the Company repurchased
OPERATING RESULTS
1st Quarter ended March 31, 2020 (compared to same period in 2019):
| Increase (Decrease) | |||||||||||
| Operating Segment | Revenue for the Quarter ( | vs Same Period in 2019 ( | vs Same Period in 2019 (%) | ||||||||
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| Management Fee Income | 702 | 702 | 100 | % | |||||||
| Interest Income from Commercial Loan Investments | 1,052 | 1,052 | 100 | % | |||||||
| Real Estate Operations | 81 | (154 | ) | -66 | % | ||||||
| Total Revenue | $ | 12,838 | $ | 1,879 | 17 | % |
The increase in total revenue was primarily attributable to the increase in management fee income and interest income from commercial loan investments which totaled approximately
| Increase (Decrease) | ||||||||||||
| For the Quarter | vs Same Period in 2019 | vs Same Period in 2019 (%) | ||||||||||
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| Operating Income ( | $ | 289 | $ | (9,714 | ) | -97 | % | |||||
| Income (Loss) from Continuing Operations Per Share (basic) | $ | (2.60 | ) | $ | (3.60 | ) | -360 | % | ||||
| Income (Loss) from Discontinued Operations Per Share (basic) | $ | — | $ | (0.21 | ) | -100 | % | |||||
| Net Income (Loss) Per Share (basic) | $ | (2.60 | ) | $ | (3.81 | ) | -315 | % |
Operating income during the first quarter of 2019 included a gain on the sale of the Whole Foods property in Sarasota, Florida of approximately
The net loss of approximately
The operating results in the 1st Quarter ended March 31, 2020 were impacted by a
| (Increase) Decrease | |||||||||||
| General and Administrative Expenses | G&A Expense for the Quarter ( | vs Same Period in 2019 ( | vs Same Period in 2019 (%) | ||||||||
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| Non-Cash Stock Compensation | 819 | (7 | ) | -1 | % | ||||||
| Total General and Administrative Expenses | $ | 3,092 | $ | (590 | ) | -24 | % |
The
2020 Guidance
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| Acquisition of Income-Producing Assets | |||
| Target Investment Yields (Initial Yield – Unlevered) | |||
| Disposition of Income-Producing Assets (Sales Value) (1) | |||
| Target Disposition Yields (1) | |||
| Leverage Target (as % of Total Enterprise Value) |
(1) Represents the sale of the Company’s CVS ground lease subsequent to March 31, 2020, as described below.
Significant Events Subsequent to March 31, 2020
- On April 24, 2020, the Company sold its CVS ground lease located in downtown Dallas, Texas, for a sales price of
$15.2 million , reflecting an exit cap rate of4.50% . The Company’s estimated gain on the sale is approximately$0.8 million , or$0.13 per share after tax.
Dividend and Buyback Program
Dividend
- Paid First Quarter 2020 Dividend of
$0.25 per share to stockholders of record on February 24, 2020.
Buyback Program
- As of April 27, 2020, the Company repurchased 88,565 shares for approximately
$4.1 million with an average purchase price of$46.29 per share, under the new$10 million buyback program.
COVID-19 Update
In March 2020, the agency of the United Nations responsible for international public health declared the outbreak of the novel coronavirus as a pandemic (the “COVID-19 Pandemic”), which has spread throughout the United States. The spread of the COVID-19 Pandemic has caused significant volatility in the U.S. and international markets and in many industries business activity has virtually shut-down entirely. There is significant uncertainty around the duration and severity of business disruptions related to the COVID-19 Pandemic, as well as its impact on the U.S. economy and international economies. As such, the Company is not yet able to determine the full impact of the COVID-19 Pandemic on its operations and therefore the potential that such impact will be material.
The actions taken by federal, state and local governments to mitigate the spread of the COVID-19 Pandemic by ordering closure of non-essential businesses and ordering residents to generally stay at home has resulted in many of our tenants temporarily closing their businesses, and/or expressing concerns about their ability to pay rent. These economic hardships have adversely impacted our business, and we expect them to have a negative effect on our financial results. We expect such negative effects to be higher during the quarter ending June 30, 2020 than they were during the quarter ended March 31, 2020.
An assessment of the current or identifiable potential financial and operational impact on the Company as a result of the COVID-19 Pandemic is as follows:
- Based on April 2020 contractual base rent, of the Company’s portfolio,
62% have remained open since the onset, of the COVID-19 Pandemic, with27% operating on a limited basis.
- The Company was contacted by certain of its tenants who are seeking rent relief through possible deferrals or other potential modifications of lease terms, beginning with the April 2020 rent. The rent payable for April 2020 from the Company’s tenants seeking rent relief represents approximately
37% of April 2020 contractual base rent. We expect that our rent collections will be below our tenants’ contractual rent obligations for so long as governmental orders require non-essential businesses to remain closed and residents to stay at home, which will adversely impact our results of operations. The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted. April collections and rent relief requests to-date may not be indicative of collections or requests in any future period. Depending upon the duration of tenant closures and the overall economic downturn resulting from the COVID-19 Pandemic, we may find deferred rents difficult to collect.
- The Company believes certain of the programs available under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) may provide tenants with the ability to obtain proceeds from loans provided by the Federal government which could provide liquidity that would allow the tenant to pay its near-term rent. However, no assurances can be given that the tenants will seek to access or will receive funds from these programs or will be able to use the proceeds to pay their rent in the near-term or otherwise.
- Given uncertainty surrounding the depth, duration, and geographic impact of the COVID-19 Pandemic, as a precautionary measure intended to support the Company’s liquidity, the Company, in March 2020, drew
$20 million of available capacity on its$200 million credit facility. As a result, the Company, as of March 31, 2020, has approximately$19 million in cash on hand with approximately$199 million outstanding on the credit facility.
- The total borrowing capacity on the Credit Facility, based on the assets currently in the borrowing base, is approximately
$200 million , and as such the Company has$1 million of capacity from which to draw. Pursuant to the terms of the Credit Facility, any property in the borrowing base with a tenant that is more than 60 days past due on its contractual rent obligations would be automatically removed from the borrowing base and the Company’s borrowing capacity would be reduced. The Company believes that certain modifications, including a deferral of current rent that is paid later in 2020, do not meet with the past due terms of the Credit Facility and thus any of the Company’s applicable properties would not be required to be removed from the borrowing base.
- As a result of the outbreak of the COVID-19 Pandemic, the federal government and the state of Florida issued orders encouraging everyone to remain in their residence and not go into work. In response to these orders and in the best interest of our employees and directors, we have implemented significant preventative measures to ensure the health and safety of our employees and Board of Directors (the “Board”), including: i) conducting all meetings of our Board and Committees of the Board telephonically or via a visual conferencing service, permitting our employees to work from home at their election, enforcement of appropriate social distancing practices in our office, encouraging our employees to wash their hands often and providing hand sanitizer throughout our office, requiring employees who do not feel well in any capacity to stay at home, and requiring all third-party delivery services (e.g. mail, food delivery, etc.) to complete their service outside the front door of our offices. These preventative measures, including the transition to a remote workforce, have not had any material adverse impact on our financial reporting systems, internal controls over financial reporting or disclosure controls and procedures. At this time, we have not laid off, furloughed, or terminated any employee in response to the COVID-19 Pandemic. The Compensation Committee of our Board may reevaluate the performance goals and other aspects of the compensation arrangements of our executive officers later in 2020 as more information about the effects of the COVID-19 Pandemic become known.
A prolonged period of mandated closures or other social-distancing guidelines may adversely impact our tenants’ ability to generate sufficient revenues, and could force tenants to default on their leases, or result in the bankruptcy or insolvency of tenants, which would diminish the rental revenue we receive under our leases. The uncertainty surrounding the COVID-19 Pandemic precludes any prediction as to the ultimate adverse impact on the Company. Nevertheless, the COVID-19 Pandemic presents material uncertainty and risk with respect to our performance, business or financial condition, results from operations and cash flows. The extent of the effects of the COVID-19 Pandemic on our business, results of operations, cash flows, and growth prospects is highly uncertain and will ultimately depend on future developments, none of which can be predicted with any certainty. However, we believe the actions we are taking will help minimize interruptions to our operations and will put us in the best position to participate in the recovery when the time comes. Management and the Board of Directors will continue to actively monitor the effects of the pandemic, including governmental directives in the jurisdictions in which we operate and the recommendations of public health authorities, and will, as needed, take further measures to adapt our business in the best interests of our stockholders and personnel.
1st Quarter Earnings Conference Call & Webcast
The Company will host a conference call to present its operating results for the quarter ended March 31, 2020, Wednesday, April 29, 2020, 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 4102888 when prompted.
A webcast of the call can be accessed at: https://services.choruscall.com/links/cto200422.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 income properties comprised of approximately 2.3 million square feet in diversified markets in the United States and an approximately
We encourage you to review our most recent investor presentation for the quarter ended March 31, 2020, 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 are intended to identify certain of such forward-looking statements, which speak only as of the dates on which they were made, although not all forward-looking statements contain such words. 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 availability of investment properties that meet the Company’s investment goals and criteria, the modification of terms of certain agreements pertaining to the acquisition of income producing assets, uncertainties associated with obtaining required governmental permits and satisfying other closing conditions for planned acquisitions and sales, and the impact of the COVID-19 pandemic on the Company’s business and the business of its tenants, as well as the uncertainties and risk factors discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, 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. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release.
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED BALANCE SHEETS
| (Unaudited) March 31, 2020 | December 31, 2019 | |||||||
| ASSETS | ||||||||
| Property, Plant, and Equipment: | ||||||||
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| Other Furnishings and Equipment | 739,011 | 733,165 | ||||||
| Construction in Progress | 24,788 | 24,788 | ||||||
| Total Property, Plant, and Equipment | 508,969,356 | 393,599,852 | ||||||
| Less, Accumulated Depreciation and Amortization | (23,865,921 | ) | (23,008,382 | ) | ||||
| Property, Plant, and Equipment—Net | 485,103,435 | 370,591,470 | ||||||
| Land and Development Costs | 6,805,176 | 6,732,291 | ||||||
| Intangible Lease Assets—Net | 65,638,034 | 49,022,178 | ||||||
| Assets Held for Sale | 4,633,801 | 833,167 | ||||||
| Investment in Joint Ventures | 55,741,248 | 55,736,668 | ||||||
| Investment in Alpine Income Property Trust, Inc. | 25,108,018 | 38,814,425 | ||||||
| Mitigation Credits | 2,559,434 | 2,322,596 | ||||||
| Commercial Loan Investments | 39,658,204 | 34,625,173 | ||||||
| Cash and Cash Equivalents | 18,593,046 | 6,474,637 | ||||||
| Restricted Cash | 2,910,392 | 128,430,049 | ||||||
| Other Assets | 10,284,943 | 9,703,549 | ||||||
| Total Assets | $ | 717,035,731 | $ | 703,286,203 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Liabilities: | ||||||||
| Accounts Payable | $ | 1,239,274 | $ | 1,385,739 | ||||
| Accrued and Other Liabilities | 8,574,703 | 5,687,192 | ||||||
| Deferred Revenue | 5,634,425 | 5,830,720 | ||||||
| Intangible Lease Liabilities—Net | 27,207,594 | 26,198,248 | ||||||
| Liabilities Held for Sale | 831,320 | 831,320 | ||||||
| Income Taxes Payable | 998,519 | 439,086 | ||||||
| Deferred Income Taxes—Net | 86,969,609 | 90,282,173 | ||||||
| Long-Term Debt | 313,372,702 | 287,218,303 | ||||||
| Total Liabilities | 444,828,146 | 417,872,781 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders’ Equity: | ||||||||
| Common Stock – 25,000,000 shares authorized; | 6,044,971 | 6,017,218 | ||||||
| Treasury Stock – 1,389,657 shares at March 31, 2020 and 1,306,359 shares at December 31, 2019 | (77,355,328 | ) | (73,440,714 | ) | ||||
| Additional Paid-In Capital | 32,190,616 | 26,689,795 | ||||||
| Retained Earnings | 312,626,687 | 326,073,199 | ||||||
| Accumulated Other Comprehensive Income (Loss) | (1,299,361 | ) | 73,924 | |||||
| Total Shareholders’ Equity | 272,207,585 | 285,413,422 | ||||||
| Total Liabilities and Shareholders’ Equity | $ | 717,035,731 | $ | 703,286,203 |
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended | ||||||||
| March 31, | March 31, | |||||||
| 2020 | 2019 | |||||||
| Revenues | ||||||||
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| Management Fee Income | 702,601 | — | ||||||
| Interest Income from Commercial Loan Investments | 1,052,049 | — | ||||||
| Real Estate Operations | 80,751 | 234,901 | ||||||
| Total Revenues | 12,838,432 | 10,959,319 | ||||||
| Direct Cost of Revenues | ||||||||
| Income Properties | (2,113,095 | ) | (1,932,488 | ) | ||||
| Real Estate Operations | (1,524,366 | ) | (46,167 | ) | ||||
| Total Direct Cost of Revenues | (3,637,461 | ) | (1,978,655 | ) | ||||
| General and Administrative Expenses | (3,091,740 | ) | (2,501,620 | ) | ||||
| Impairment Charges | (1,904,500 | ) | — | |||||
| Depreciation and Amortization | (4,552,471 | ) | (3,346,287 | ) | ||||
| Total Operating Expenses | (13,186,172 | ) | (7,826,562 | ) | ||||
| Gain on Disposition of Assets | — | 6,869,957 | ||||||
| Gain on Extinguishment of Debt | 636,937 | — | ||||||
| Other Gains and Income | 636,937 | 6,869,957 | ||||||
| Total Operating Income | 289,197 | 10,002,714 | ||||||
| Investment and Other Income (Loss) | (13,186,398 | ) | 38,755 | |||||
| Interest Expense | (3,452,598 | ) | (2,923,229 | ) | ||||
| Income (Loss) from Continuing Operations Before Income Tax Expense | (16,349,799 | ) | 7,118,240 | |||||
| Income Tax Benefit (Expense) from Continuing Operations | 4,087,940 | (1,774,640 | ) | |||||
| Income (Loss) from Continuing Operations | (12,261,859 | ) | 5,343,600 | |||||
| Income from Discontinued Operations (Net of Income Tax) | — | 1,124,499 | ||||||
| Net Income (Loss) | $ | (12,261,859 | ) | $ | 6,468,099 | |||
| Per Share Information: | ||||||||
| Basic | ||||||||
| Net Income (Loss) from Continuing Operations | $ | (2.60 | ) | $ | 1.00 | |||
| Net Income from Discontinued Operations (Net of Income Tax) | — | 0.21 | ||||||
| Basic Net Income (Loss) per Share | $ | (2.60 | ) | $ | 1.21 | |||
| Diluted | ||||||||
| Net Income (Loss) from Continuing Operations | $ | (2.60 | ) | $ | 1.00 | |||
| Net Income from Discontinued Operations (Net of Income Tax) | — | 0.21 | ||||||
| Diluted Net Income (Loss) per Share | $ | (2.60 | ) | $ | 1.21 | |||
| Weighted Average Number of Common Shares: | ||||||||
| Basic | 4,711,396 | 5,345,870 | ||||||
| Diluted | 4,711,396 | 5,345,870 |
Mark E. Patten, Sr. Vice President and CFO
Email: mpatten@ctlc.com
Phone: (386) 944-5643
Facsimile: (386) 274-1223
