Consolidated-Tomoka Land Co. (NYSE MKT:CTO) (the “Company”) today
announced its operating results and earnings for the third quarter ended
September 30, 2014.
OPERATING RESULTS
Operating results for the third quarter ended September 30, 2014 (as
compared to the same period in 2013):
-
Net income was $0.60 per share, an increase of $0.38 per share, or
172.7%;
-
Revenue from Income Properties totaled approximately $3.9 million, an
increase of 17.2%;
-
Revenue from Commercial Loan Investments totaled approximately
$382,000, a decrease of 40.7%;
-
Revenue from Real Estate Operations totaled approximately $8.6
million, an increase of 531.3%; and
-
Revenue from Golf Operations increased by 1.4% and net operating
results improved by 7.4%.
Operating results for the nine months ended September 30, 2014 (as
compared to the same period in 2013):
-
Net income was $0.99 per share, an increase of $0.67 per share, or
209.4%;
-
Revenue from Income Properties totaled approximately $10.8 million, an
increase of 14.6%;
-
Revenue from Commercial Loan Investments totaled approximately $1.6
million, an increase of 145.5%;
-
Revenue from Real Estate Operations totaled approximately $10.9
million, an increase of 443.3%; and
-
Revenue from Golf Operations increased by 2.3% and had a net operating
loss of approximately $311,000, an improvement of 21.5%.
OTHER HIGHLIGHTS
Other highlights for the third quarter ended September 30, 2014 include
the following:
-
Book value per outstanding share increased from $20.53 as of December
31, 2013 to $21.64 as of September 30, 2014;
-
The Company has completed, year-to-date, total acquisitions of income
properties and commercial loan investments of approximately $50.2
million as of September 30, 2014;
-
The weighted average lease duration of our income property portfolio
was 9.7 years as of September 30, 2014, down from 10.2 years as of
September 30, 2013;
-
The Company completed a five year extension of the lease with Best Buy
in McDonough, GA with four one-year extension options at a slightly
reduced rate;
-
Received approximately $137,000 and $260,000 for impact fees for the
quarter and nine months ended September 30, 2014, respectively, versus
approximately $96,000 and $181,000 in the same periods in 2013,
respectively; and
-
Debt totaled approximately $81.2 million at September 30, 2014, with
approximately $54.2 million of available borrowing capacity on our
credit facility, and cash (excluding restricted cash) was
approximately $2.2 million. The Company’s net debt to total market
capitalization equaled 21.4% at September 30, 2014.
Income Property Portfolio Update
Property Acquisitions
On July 17, 2014, the Company acquired a 52,665 square-foot building
situated on approximately 7 acres leased to American Signature Inc., in
Daytona Beach, Florida. The lease has approximately 6 years remaining on
its term. The total purchase price was approximately $5.3 million, and
is located within an approximately 250,000 square-foot retail shopping
center anchored by Best Buy, PetSmart and Barnes & Noble. The Company
also owns the property leased to Barnes & Noble.
Commercial Loan Investments Update
On September 30, 2014, the Company acquired a mezzanine loan secured by
the borrower’s equity interest in an upper upscale hotel in Dallas,
Texas. The Company purchased the $10.0 million performing loan at par.
The loan matures in September 2016 and bears a floating interest rate of
30-day LIBOR plus 725 basis points. The loan is junior to a $64.0
million first mortgage on the hotel in Dallas, Texas. Interest revenue
recognized during the three and nine months ended September 30, 2014 was
approximately $2,000.
Land Update
On August 15, 2014 we sold approximately 75.6 acres of land located on
the east side of Interstate 95 at a sales price of approximately $7.8
million, or approximately $103,000 per acre, with approximately $7.2
million recognized in the quarter ended September 30, 2014 and resulting
in a gain of approximately $3.9 million. An additional gain from the
sale of approximately $324,000 will be recognized as certain road
improvements relating to the site are completed by Volusia County which
is expected to be completed by the end of the first quarter of 2015. As
part of the contractual agreement we agreed to incur costs to prepare
the pad site for vertical construction in an estimated amount of $2.1
million in costs. The pad was delivered and accepted in September 2014.
We received a payment of $400,000 from the CEO Business Alliance, a
local private economic development organization, as reimbursement for a
portion of the costs to prepare the pad. In addition, we have a
commitment from Volusia County to receive additional payments totaling
approximately $1.1 million as certain milestones are reached in
connection with the buyer’s development and operations of the
distribution center. We believe the milestones could be reached in late
2015.
As of September 30, 2014, we had four executed purchase and sale
agreements to sell land to four different buyers, whose intended use for
the land would include retail, office and residential. These agreements,
in aggregate, represent the potential sale of approximately 15% of our
remaining land holdings with potential sales proceeds totaling more than
approximately $42 million. Each of the transactions are in varying
stages of due diligence by the various buyers, including, in some
instances having made submissions to the planning and development
departments of the applicable governmental authorities. Estimated
closing dates range from the fourth quarter of 2014 to year end 2016. In
addition to other customary closing conditions, the majority of these
transactions are conditioned upon both the receipt of approvals from
various governmental authorities, as well as other matters that are
beyond our control. If such approvals are not obtained, the prospective
buyers may have the ability to terminate the respective agreement prior
to closing. As a result, there can be no assurances regarding the
likelihood or timing of any one of these potential land transactions
being completed or the final terms, including the sales price.
Subsurface Interests Update
On September 19, 2014 the Company received a payment of approximately
$2.5 million from Kerogen Florida Energy Company LP for the fourth year
payment on its eight-year oil exploration lease, representing
approximately $1.9 million of rent for the adjusted acreage of 42,000
acres and $600,000 related to the drilling requirements contained in the
lease.
With the reduced acres leased by Kerogen, the Company has nearly 50,000
acres in Hendry County and approximately 86,000 acres in Lee County to
pursue additional leasing opportunities as both counties have existing
or have had working oil production.
Financing Update
On August 1, 2014 the Company executed the third amendment of the
Company’s unsecured Credit Facility. The amendment increased the
borrowing capacity to $75.0 million under the accordion feature,
extended the term an additional two years to August 1, 2018 and,
decreased the borrowing rate to a rate ranging from the 30-day London
Interbank Offer Rate (“LIBOR”) plus 135 basis points to the 30-day LIBOR
plus 200 basis points based on the total balance outstanding under the
Credit Facility as a percentage of the total asset value of the Company
as defined in the Credit Facility. The third amendment also adjusted a
number of the restrictive covenants and maintenance covenants in the
Credit Facility, primarily to provide the Company with increased
flexibility in its investment activities. The Company paid a fee for
increasing the borrowing commitment level pursuant to the credit
facility terms.
On September 30, 2014, the Company closed on a $30.0 million loan
originated with Wells Fargo Bank, N.A., secured by the Company’s
interest in six income properties. The mortgage loan matures in October
2034, and carries a fixed rate of 4.33% per annum during the first ten
years of the term, and requires payments of interest only during the
first ten years of the loan. After the tenth anniversary of the
effective date of the loan the cash flows generated by the underlying
six income properties must be used to pay down the principal balance of
the loan until paid off or until the loan matures. The loan is fully
pre-payable after the tenth anniversary date of the effective date of
the loan.
Financial Results
Revenue
Total revenue for the quarter ended September 30, 2014 increased 122.8%
to approximately $14.1 million, as compared to approximately $6.3
million during the same period in 2013. This increase was primarily the
result of an increase of approximately $566,000, or 17.2%, in revenue
generated by our income properties, an increase of approximately $7.3
million, or 531.3%, in revenue from our real estate operations, and an
increase of approximately $162,000 in revenue from our agricultural
operations, or 776.6%. In the quarter ended September 30, 2014 compared
to the same period in 2013 revenue from our real estate operations
benefited from a land sale of approximately $7.8 million of which $7.2
million was recognized at the closing of the transaction.
Total revenue for the nine months ended September 30, 2014 increased
71.4% to approximately $27.4 million, as compared to approximately $16.0
million during the same period in 2013. This increase was primarily the
result of an increase of approximately $1.4 million, or 14.6%, in
revenue generated by our income properties, an increase of approximately
$8.9 million, or 443.3%, in revenue from our real estate operations, and
approximately $938,000, or 145.5% in revenue from our commercial loan
investments. Revenue from our real estate operations benefited from two
land transactions of approximately 75.6 acres and 3.06 acres, which
generated revenue of $7.2 million and $392,000, respectively.
Net Income
Net income for the quarter ended September 30, 2014 was approximately
$3.5 million, compared to approximately $1.2 million in the same period
in 2013, an increase of 180.0%. Our results in the third quarter of 2014
benefited from increased revenues of approximately $7.8 million, or
122.8%, offset by an increase in operating expenses of approximately
$4.2 million, or 106.6%. Included in the increased operating expenses
were increased direct costs of revenues of approximately $3.3 million
for our real estate operations relating to the basis in the 75.6 acres
of land sold in the quarter including the costs incurred to prepare the
pad site for vertical construction, increased depreciation and
amortization expense of approximately $154,000 reflecting our larger
income property portfolio, and increased general and administrative
expenses of approximately $299,000. The increased operating expenses
were also impacted by an impairment charge of approximately $421,000
relating to an income property we were under contract to sell with a
sales price and estimated closing costs that resulted in an estimated
loss. We did not recognize any impairment charges in the third quarter
of 2013. The 24.8% increase in general and administrative expenses in
the third quarter of 2014, as compared to the same period in 2013, was
due primarily to an increase in stock compensation costs of
approximately $169,000, due to our higher stock price compared to 2013
and additional payroll related costs. Net income per share for the
quarter ended September 30, 2014, was $0.60 per share, compared to $0.22
per share during the same period in 2013, an increase of $0.38 per share
or 172.7%.
Net income for the nine months ended September 30, 2014 was
approximately $5.7 million, as compared to approximately $1.8 million in
the same period in 2013, an increase of 211.4%. Our results in the first
nine months of 2014 benefited from increased revenue of approximately
$11.4 million, or 71.4%, offset by an increase in operating expenses of
approximately $4.1 million, or 31.9%. Included in the increased
operating expenses were increased direct costs of revenues for our
income properties of approximately $242,000, increased direct cost of
real estate operations revenues of approximately $3.3 million pertaining
to our land sales, increased depreciation and amortization of
approximately $377,000 reflecting our larger income property portfolio,
and increased general administrative expenses of approximately $341,000
or 8.1%. While net income was also impacted by the approximate $421,000
impairment charge related to an income property under contract to be
sold we also recognized an impairment in the same period in 2013 of
approximately $616,000. The 8.1% increase in general and administrative
expenses is comprised primarily of increased stock compensation expenses
of $169,000 over the same period in 2013 as well as an environmental
reserve of approximately $110,000 recognized in the second quarter of
2014 and service costs related to our information systems. Net income
for the nine months ended September 30, 2014, was $0.99 per share, as
compared to $0.32 per share during the same period in 2013, an increase
of $0.67 per share or 209.4%.
CEO and CFO Comments on Operating Results
Mark E. Patten, senior vice president and chief financial officer,
stated, “We are pleased with our third quarter results and the cash
flows generated by not only our growing portfolio of income producing
investments but also a significant land sale and the continuation of our
subsurface lease. We have achieved or are approaching a number of key
elements of our full year guidance for 2014 including earnings per
share, our target for acquisitions, and our target for completed land
transactions.” Mr. Patten also noted, “We’re also pleased to have
completed an amendment to our credit facility which extended the
maturity to 2018, favorably adjusted our Libor based borrowing rates to
Libor plus 135 up to Libor plus 200 and provided additional flexibility
in the covenants and the execution of a fixed rate $30 million mortgage
loan on six of our income properties at 4.33% and interest only for the
first ten years of the twenty year term. As a result of these financings
our fixed to floating ratio is 74% to 26%, respectively, while our
weighted average term to maturity is 11.1 years and our weighted average
borrowing rate is 3.40% on approximately $81.2 million of debt.”
John P. Albright, president and chief executive officer, stated, “We are
pleased to have closed on the sale of 76 acres of land for the
construction of a 630,000 square foot distribution center at east of
Interstate 95 on Dunn Avenue. Published reports indicate this
development project will represent an estimated $80 million in capital
investment and is expected to create more than 450 jobs locally.” Mr.
Albright continued, “The closing of this transaction in the quarter
demonstrates the potential of our company’s growth in earnings and book
value.” Mr. Albright also noted, “We are also pleased to have completed
our recent acquisitions including the Whole Foods Market Center in
Sarasota, Florida which brings a strong urban retail property into our
income property portfolio.”
About Consolidated-Tomoka Land Co.
Consolidated-Tomoka Land Co. is a Florida-based publicly traded real
estate company, which owns a portfolio of income properties and loan
investments in diversified markets in the United States, and over 10,500
acres of land in the Daytona Beach, Florida area. Visit our website at www.ctlc.com.
Forward-Looking Statements
Certain statements contained in this press release (other than
statements of historical fact) are forward-looking statements. The words
“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. Forward-looking statements are made based
upon management’s expectations and beliefs concerning future
developments and their potential effect upon the Company. 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.
The Company wishes to caution readers that the assumptions which form
the basis for forward-looking statements with respect to or that may
impact earnings for the year ended December 31, 2013, and thereafter
include many factors that are beyond the Company’s ability to control or
estimate precisely. For a description of the risks and uncertainties
that may cause actual results to differ from the forward-looking
statements contained in this press release, please see the Company’s
filings with the Securities and Exchange Commission, including, but not
limited to the Company’s most recent Annual Report on Form 10-K. Copies
of each filing may be obtained from the Company or the SEC.
While the Company periodically reassesses material trends and
uncertainties affecting its results of operations and financial
condition, the Company does not intend to review or revise any
particular forward-looking statement referenced herein in light of
future events.
Disclosures in this press release regarding the Company’s quarter-end
financial results are preliminary and are subject to change in
connection with the Company’s preparation and filing of its Form 10-K
for the year ended December 31, 2013. The financial information in this
release reflects the Company’s preliminary results subject to completion
of the yearend review process. The final results for the year may differ
from the preliminary results discussed above due to factors that
include, but are not limited to, risks associated with final review of
the results and preparation of financial statements.
CONSOLIDATED-TOMOKA LAND CO.
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
(Unaudited)
September 30,
2014
|
|
December 31, 2013
|
ASSETS
|
|
|
|
|
Property, Plant, and Equipment:
|
|
|
|
|
Land, Timber, and Subsurface Interests
|
|
$
|
15,312,067
|
|
|
$
|
15,291,911
|
|
Golf Buildings, Improvements, and Equipment
|
|
|
3,298,993
|
|
|
|
3,103,979
|
|
Income Properties, Land, Buildings, and Improvements
|
|
|
172,641,924
|
|
|
|
154,902,374
|
|
Other Furnishings and Equipment
|
|
|
994,941
|
|
|
|
955,597
|
|
Construction in Progress
|
|
|
—
|
|
|
|
987,303
|
|
|
|
|
|
|
Total Property, Plant, and Equipment
|
|
|
192,247,925
|
|
|
|
175,241,164
|
|
Less, Accumulated Depreciation and Amortization
|
|
|
(14,865,344
|
)
|
|
|
(13,260,856
|
)
|
|
|
|
|
|
Property, Plant, and Equipment - Net
|
|
|
177,382,581
|
|
|
|
161,980,308
|
|
Land and Development Costs
|
|
|
22,863,889
|
|
|
|
23,768,914
|
|
Intangible Assets - Net
|
|
|
6,697,873
|
|
|
|
6,359,438
|
|
Assets held for Sale
|
|
|
3,153,762
|
|
|
|
—
|
|
Impact Fee and Mitigation Credits
|
|
|
5,649,220
|
|
|
|
6,081,433
|
|
Commercial Loan Investments
|
|
|
27,399,082
|
|
|
|
18,845,053
|
|
Cash and Cash Equivalents
|
|
|
2,219,256
|
|
|
|
4,932,512
|
|
Restricted Cash
|
|
|
1,425,507
|
|
|
|
366,645
|
|
Investment Securities
|
|
|
864,342
|
|
|
|
729,814
|
|
Net Pension Asset
|
|
|
492,806
|
|
|
|
407,670
|
|
Other Assets
|
|
|
4,188,156
|
|
|
|
2,711,893
|
|
|
|
|
|
|
Total Assets
|
|
$
|
252,336,474
|
|
|
$
|
226,183,680
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
Liabilities:
|
|
|
|
|
Accounts Payable
|
|
$
|
712,355
|
|
|
$
|
872,331
|
|
Accrued Liabilities
|
|
|
5,483,109
|
|
|
|
4,726,809
|
|
Deferred Revenue
|
|
|
3,449,265
|
|
|
|
3,344,351
|
|
Accrued Stock-Based Compensation
|
|
|
428,217
|
|
|
|
247,671
|
|
Income Taxes Payable
|
|
|
110,559
|
|
|
|
1,044,061
|
|
Deferred Income Taxes - Net
|
|
|
33,989,478
|
|
|
|
32,552,068
|
|
Long-Term Debt
|
|
|
81,190,011
|
|
|
|
63,227,032
|
|
|
|
|
|
|
Total Liabilities
|
|
|
125,362,994
|
|
|
|
106,014,323
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ Equity:
|
|
|
|
|
Common Stock -25,000,000 shares authorized; $1 par value, 5,907,650
shares issued and -5,867,180 shares outstanding at September 30,
2014; 5,866,759 shares issued and 5,852,125 shares outstanding at
December 31, 2013
|
|
|
5,831,083
|
|
|
|
5,767,192
|
|
Treasury Stock – 40,470 shares at September 30, 2014; 14,634 shares
at December 31, 2013
|
|
|
(1,381,566
|
)
|
|
|
(453,654
|
)
|
Additional Paid-In Capital
|
|
|
10,565,383
|
|
|
|
8,509,976
|
|
Retained Earnings
|
|
|
112,111,407
|
|
|
|
106,581,305
|
|
Accumulated Other Comprehensive Loss
|
|
|
(152,827
|
)
|
|
|
(235,462
|
)
|
|
|
|
|
|
Total Shareholders’ Equity
|
|
|
126,973,480
|
|
|
|
120,169,357
|
|
|
|
|
|
|
Total Liabilities and Shareholders’ Equity
|
|
$
|
252,336,474
|
|
|
$
|
226,183,680
|
|
|
|
|
|
|
|
|
|
|
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED-TOMOKA LAND CO.
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Revenues
|
|
|
|
|
|
|
|
|
Income Properties
|
|
$ 3,864,632
|
|
$ 3,298,447
|
|
$ 10,821,121
|
|
$ 9,445,677
|
Interest Income from Commercial Loan Investments
|
|
382,087
|
|
644,198
|
|
1,581,746
|
|
644,198
|
Real Estate Operations
|
|
8,645,034
|
|
1,369,397
|
|
10,925,215
|
|
2,010,722
|
Golf Operations
|
|
994,651
|
|
981,118
|
|
3,844,428
|
|
3,758,629
|
Agriculture and Other Income
|
|
182,731
|
|
20,845
|
|
258,052
|
|
149,028
|
|
|
|
|
|
|
|
|
|
Total Revenues
|
|
14,069,135
|
|
6,314,005
|
|
27,430,562
|
|
16,008,254
|
|
|
|
|
|
|
|
|
|
Direct Cost of Revenues
|
|
|
|
|
|
|
|
|
Income Properties
|
|
(456,869 )
|
|
(427,341 )
|
|
(1,281,380 )
|
|
(1,038,922 )
|
Real Estate Operations
|
|
(3,435,357 )
|
|
(174,411 )
|
|
(3,758,283 )
|
|
(480,152 )
|
Golf Operations
|
|
(1,309,789 )
|
|
(1,321,337 )
|
|
(4,155,009 )
|
|
(4,154,338 )
|
Agriculture and Other Income
|
|
(34,158 )
|
|
(33,821 )
|
|
(144,690 )
|
|
(120,275 )
|
|
|
|
|
|
|
|
|
|
Total Direct Cost of Revenues
|
|
(5,236,173 )
|
|
(1,956,910 )
|
|
(9,339,362 )
|
|
(5,793,687 )
|
|
|
|
|
|
|
|
|
|
General and Administrative Expenses
|
|
(1,506,964 )
|
|
(1,207,593 )
|
|
(4,562,645 )
|
|
(4,221,831 )
|
Impairment Charges
|
|
(421,040)
|
|
—
|
|
(421,040)
|
|
(616,278 )
|
Depreciation and Amortization
|
|
(886,618)
|
|
(732,427)
|
|
(2,505,007)
|
|
(2,128,185)
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses
|
|
(8,050,795 )
|
|
(3,896,930 )
|
|
(16,828,054 )
|
|
(12,759,981 )
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
6,018,340
|
|
2,417,075
|
|
10,602,508
|
|
3,248,273
|
|
|
|
|
|
|
|
|
|
Interest Income
|
|
14,246
|
|
—
|
|
42,564
|
|
391
|
Interest Expense
|
|
(569,154 )
|
|
(509,898 )
|
|
(1,554,583 )
|
|
(1,316,026 )
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations
|
|
|
|
|
|
|
|
|
Before Income Tax Expense
|
|
5,463,432
|
|
1,907,177
|
|
9,090,489
|
|
1,932,638
|
Income Expense Benefit
|
|
(1,984,741 )
|
|
(735,713 )
|
|
(3,388,483 )
|
|
(736,121 )
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations
|
|
3,478,691
|
|
1,171,464
|
|
5,702,006
|
|
1,196,517
|
Income from Discontinued Operations (Net of Tax)
|
|
—
|
|
70,840
|
|
—
|
|
634,602
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$ 3,478,691
|
|
$ 1,242,304
|
|
$ 5,702,006
|
|
$ 1,831,119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Information:
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
|
|
|
|
|
|
Income from Continuing Operations
|
|
$ 0.60
|
|
$ 0.21
|
|
$ 0.99
|
|
$ 0.21
|
Income from Discontinued Operations (Net of Tax)
|
|
—
|
|
0.01
|
|
—
|
|
0.11
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$ 0.60
|
|
$ 0.22
|
|
$ 0.99
|
|
$ 0.32
|
|
|
|
|
|
|
|
|
|
Dividends Declared and Paid
|
|
$ 0.00
|
|
$ 0.00
|
|
$ 0.03
|
|
$ 0.03
|
|
See Accompanying Notes to Consolidated Financial Statements
Copyright Business Wire 2014