CTO Realty Growth, Inc. [CTO] Filings

10-Q 1 cto-20220630x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-11350

CTO REALTY GROWTH, INC.

(Exact name of registrant as specified in its charter)


Maryland		59-0483700
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

1140 N. Williamson Blvd., Suite 140
Daytona Beach, Florida		32114
(Address of principal executive offices)		(Zip Code)

(386) 274-2202

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading Symbols	Name of each exchange on which registered:
Common Stock, $0.01 par value per share	CTO	NYSE
6.375% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share	CTO PrA	NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☐	Accelerated Filer	☒

Non-accelerated Filer	☐	Smaller Reporting Company	☐

		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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 21, 2022, there were 18,317,378 shares of the registrant’s common stock, $0.01 par value per share, outstanding.

Table of Contents

INDEX


		Page
		No.
PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets – June 30, 2022 (Unaudited) and December 31, 2021		3

Consolidated Statements of Operations – Three and six months ended June 30, 2022 and 2021 (Unaudited)		4

Consolidated Statements of Comprehensive Income – Three and six months ended June 30, 2022 and 2021 (Unaudited)		5

Consolidated Statements of Stockholders’ Equity – Three and six months ended June 30, 2022 and 2021 (Unaudited)		6

Consolidated Statements of Cash Flows – Six months ended June 30, 2022 and 2021 (Unaudited)		8

Notes to Consolidated Financial Statements (Unaudited)		10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		39

Item 3. Quantitative and Qualitative Disclosures About Market Risk		50

Item 4. Controls and Procedures		51

PART II—OTHER INFORMATION		51

Item 1. Legal Proceedings		51

Item 1A. Risk Factors		51

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		52

Item 3. Defaults Upon Senior Securities		52

Item 4. Mine Safety Disclosures		52

Item 5. Other Information		52

Item 6. Exhibits		53

SIGNATURES		54

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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—See Note 24		—		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—See Note 12		28,029		14,897
Total Assets	$	802,355	$	733,139
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Accounts Payable	$	1,325	$	676
Accrued and Other Liabilities—See Note 18		15,705		13,121
Deferred Revenue—See Note 19		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—See Note 22
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

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

CTO REALTY GROWTH, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except share and per share 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—See Note 14:
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

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

CTO REALTY GROWTH, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, in thousands)


	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
Other Comprehensive Income (Loss):
Cash Flow Hedging Derivative - Interest Rate Swaps		2,611		(67)		10,623		1,170
Total Other Comprehensive Income (Loss)		2,611		(67)		10,623		1,170
Total Comprehensive Income (Loss)	$	3,829	$	(3,791)	$	12,043	$	5,231

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

CTO REALTY GROWTH, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, in thousands)

For the three months ended June 30, 2022:


	Preferred Stock		Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Stockholders' Equity
Balance April 1, 2022	$	30	$	60	$	—	$	81,092	$	339,828	$	9,529	$	430,539
Net Income Attributable to the Company		—		—		—		—		1,218		—		1,218
Stock Repurchase		—		—		—		(1,147)		—		—		(1,147)
Exercise of Stock Options and Stock Issuance to Directors		—		—		—		88		—		—		88
Stock Issuance, Net of Equity Issuance Costs		—		1		—		5,689		—		—		5,690
Stock-Based Compensation Expense		—		—		—		625		—		—		625
Preferred Stock Dividends Declared for the Period		—		—		—		—		(1,196)		—		(1,196)
Common Stock Dividends Declared for the Period		—		—		—		—		(6,934)		—		(6,934)
Other Comprehensive Income		—		—		—		—		—		2,611		2,611
Balance June 30, 2022	$	30	$	61	$	—	$	86,347	$	332,916	$	12,140	$	431,494

For the three months ended June 30, 2021:


	Preferred Stock		Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Stockholders' Equity
Balance April 1, 2021	$	—	$	60	$	—	$	13,341	$	341,645	$	(673)	$	354,373
Net Loss Attributable to the Company		—		—		—		—		(3,724)		—		(3,724)
Exercise of Stock Options and Stock Issuance to Directors		—		—		—		80		—		—		80
Stock-Based Compensation Expense		—		—		—		667		—		—		667
Equity Issuance Costs		—		—		—		(412)		—		—		(412)
Common Stock Dividends Declared for the Period		—		—		—		—		(6,026)		—		(6,026)
Other Comprehensive Loss		—		—		—		—		—		(67)		(67)
Balance June 30, 2021	$	—	$	60	$	—	$	13,676	$	331,895	$	(740)	$	344,891

Table of Contents

CTO REALTY GROWTH, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)

(Unaudited, in thousands)

For the six months ended June 30, 2022:


	Preferred Stock		Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Stockholders' Equity
Balance January 1, 2022	$	30	$	60	$	—	$	85,414	$	343,459	$	1,517	$	430,480
Net Income Attributable to the Company		—		—		—		—		1,420		—		1,420
Adjustment to Equity Component of Convertible Debt Upon Adoption of ASU 2020-06		—		—		—		(7,034)		4,022		—		(3,012)
Stock Repurchase		—		—		—		(1,147)		—		—		(1,147)
Vested Restricted Stock and Performance Shares		—		—		—		(845)		—		—		(845)
Exercise of Stock Options and Stock Issuance to Directors		—		—		—		237		—		—		237
Stock Issuance, Net of Equity Issuance Costs		—		1		—		8,478		—		—		8,479
Stock-Based Compensation Expense		—		—		—		1,244		—		—		1,244
Preferred Stock Dividends Declared for the Period		—		—		—		—		(2,391)		—		(2,391)
Common Stock Dividends Declared for the Period		—		—		—		—		(13,594)		—		(13,594)
Other Comprehensive Income		—		—		—		—		—		10,623		10,623
Balance June 30, 2022	$	30	$	61	$	—	$	86,347	$	332,916	$	12,140	$	431,494

For the six months ended June 30, 2021:


	Preferred Stock		Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Stockholders' Equity
Balance January 1, 2021	$	—	$	7,250	$	(77,541)	$	83,183	$	339,917	$	(1,910)	$	350,899
Net Income Attributable to the Company		—		—		—		—		4,061		—		4,061
Vested Restricted Stock and Performance Shares		—		—		—		(436)		—		—		(436)
Exercise of Stock Options and Common Stock Issuance		—		—		—		372		—		—		372
Equity Issuance Costs		—		—		—		(428)		—		—		(428)
Stock-Based Compensation Expense		—		—		—		1,336		—		—		1,336
Par Value $0.01 per Share and Treasury Stock Derecognized at January 29, 2021		—		(7,190)		77,541		(70,351)		—		—		—
Common Stock Dividends Declared for the Period		—		—		—		—		(12,083)		—		(12,083)
Other Comprehensive Income		—		—		—		—		—		1,170		1,170
Balance June 30, 2021	$	—	$	60	$	—	$	13,676	$	331,895	$	(740)	$	344,891

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

CTO REALTY GROWTH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


	Six Months Ended
	June 30, 2022		June 30, 2021
Cash Flow from Operating Activities:
Net Income Attributable to the Company	$	1,420	$	4,061
Adjustments to Reconcile Net Income Attributable to the Company to Net Cash Provided by Operating Activities:
Depreciation and Amortization		13,096		9,861
Amortization of Intangible Liabilities to Income Property Revenue		978		(734)
Amortization of Deferred Financing Costs to Interest Expense		337		324
Amortization of Discount on Convertible Debt		109		629
Loss (Gain) on Disposition of Assets		66		(5,440)
Loss on Disposition of Commercial Loans and Investments		179		—
Loss on Extinguishment of Debt		—		641
Impairment Charges		—		16,527
Accretion of Commercial Loans and Investments Origination Fees		(79)		(1)
Non-Cash Imputed Interest		(107)		(214)
Deferred Income Taxes		(589)		(3,994)
Unrealized (Gain) Loss on Investment Securities		4,348		(8,220)
Non-Cash Compensation		1,611		1,700
Decrease (Increase) in Assets:
Refundable Income Taxes		157		(573)
Land and Development Costs		6		399
Mitigation Credits and Mitigation Credit Rights		266		—
Other Assets		(2,802)		(636)
Increase in Liabilities:
Accounts Payable		650		287
Accrued and Other Liabilities		1,915		2,956
Deferred Revenue		852		717
Net Cash Provided By Operating Activities		22,413		18,290
Cash Flow from Investing Activities:
Acquisition of Real Estate and Intangible Lease Assets and Liabilities		(29,621)		(114,021)
Acquisition of Commercial Loans and Investments		(46,876)		(364)
Cash Contribution to Joint Ventures		—		(346)
Proceeds from Disposition of Property, Plant, and Equipment, Net, and Assets Held for Sale		6,754		34,261
Principal Payments Received on Commercial Loans and Investments		17,182		—
Acquisition of Investment Securities		(1,797)		—
Net Cash Used In Investing Activities		(54,358)		(80,470)
Cash Flow From Financing Activities:

CTO Realty Growth, Inc. [CTO] Filings
CTO Realty Growth, Inc. [CTO-PA] Filings
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10-K	[2021-03-05]
10-Q	[2020-11-06]
10-Q	[2020-08-07]
10-Q	[2020-05-11]
10-K	[2020-03-06]
10-Q	[2019-10-23]
10-Q	[2019-07-31]
10-Q	[2019-04-30]
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10-Q	[2018-10-26]
10-Q	[2018-08-01]
10-Q	[2018-05-01]
10-K	[2018-02-28]
10-Q	[2017-10-30]
10-Q	[2017-08-09]
10-Q	[2017-05-09]
10-K	[2017-02-24]
10-Q	[2016-10-28]
10-Q	[2016-07-29]
10-Q	[2016-05-03]
10-K	[2016-03-01]
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10-K	[2015-02-27]
10-Q	[2014-10-28]
10-Q	[2014-08-01]
10-Q	[2014-04-30]
10-K	[2014-03-10]
10-Q	[2013-10-31]
10-Q	[2013-07-30]
10-Q	[2013-05-03]
10-K	[2013-03-08]
10-Q	[2012-11-07]
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CTO Realty Growth, Inc. [CTO] Filings

CTO Realty Growth, Inc. [CTO-PA] Filings