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Winter Park building buy sets up public company CTO’s new local office

By Ryan Lynch  –  Staff Writer, Orlando Business Journal

A recent building purchase will result in local real estate investment trust CTO Realty Growth Inc. bringing a bigger presence into Winter Park in the coming months.

The Daytona Beach-based REIT (NYSE: CTO) earlier this month completed a sale-leaseback of the 28,000-square foot office building at 369 N. New York Avenue in Winter Park with Columbus, Georgia-based Synovus Bank. CTO on Dec. 20 spent $13.2 million, or $471.43 per square foot, to buy the three-story building, including the surface parking and the Synovus Bank drive-thru, Orange County records showed.

A sale-leaseback enables a company to sell an asset to raise capital, then, it can lease that asset back from the buyer — giving it cash as well as the asset it needs to operate its business.

CTO — one of Central Florida’s largest publicly traded companies with $56.38 million in 2020 revenue, based on Orlando Business Journal research — this month opened a temporary office in the building. It eventually wants to have a third of its total staff — 18 people, as of Dec. 29 — work there, with the balance in Daytona Beach, said Matthew M. Partridge, CTO senior vice president, CFO and treasurer. The REIT expects to hire an undisclosed number of workers in 2022, with the expectation that most would work in Winter Park, Partridge told OBJ. Additionally, CTO President and CEO John Albright lives in Winter Park.

CTO is occupying an undisclosed amount of space on the building’s third floor, but sometime during 2022’s first half eventually will occupy about 4,500 square feet of second-floor space — though the final number isn’t finalized, Partridge said. Synovus will occupy the balance of the space on second floor, he said.

CTO may also redevelop the property in the future into “combination of retail, office and residential components,” the REIT said in a news release. The property has a total allowable floor area ratio of over 80,000 square feet. No redevelopment timetable or plans have been finalized, Partridge said.

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Daytona Beach-based CTO, Texas-based Timberline close 1,600-acre deal

By Richard Bilbao  –  Digital Producer/Senior Staff Writer, Orlando Business Journal

Daytona Beach-based CTO Realty Growth Inc. (NYSE: CTO) has completed the sale of approximately 1,600 acres of land in Daytona Beach to Austin, Texas-based Timberline Real Estate Partners affiliate Timberline Acquisition Partners.

CTO, a real estate investment giant, closed the deal as part of a joint venture with Evanston, Illinois-based hedge fund Magnetar Capital on Dec. 10. The closing price for the deal was $66.3 million — or nearly $41,000 per acre, according to a news release.

The funds from the Timberline sale will go toward repaying its unsecured revolving credit facility, as well as general corporate and working capital purposes.

“We’re thrilled to be completing this final land sale, which provides us with meaningful non-income producing equity to redeploy into our core investment strategy of acquiring high-quality, multi-tenanted retail and mixed-used properties,” said John P. Albright, president and CEO of CTO Realty Growth, via a prepared statement. “As we look toward 2022, the redeployment of proceeds from this final sale will enhance our corporate credit metrics, improve our dividend coverage and drive increased organic [funds from operations] and [adjusted funds from operations] per share growth.”

Uses for the land include a logistics park, multifamily, retail and commercial, previously said Timberline CEO Stan Nix in a prepared statement. Executives with the company were not available for comment.

Big land owner

CTO said the sale ends a 111-year role it held as a significant land owner in Florida, which at one time amounted to approximately 2 million acres. The company had been selling off its remaining 11,000 acres over the past 10 years for more than $287 million combined. Those proceeds were reinvested into other company assets.

The land deal comes on the heels of an even bigger local transaction that occurred in July 2020.

That’s when Orlando-based developer Avalon Park Group/Sitex Properties USA Inc. bought 3,015 acres from CTO for about $40.9 million, or $13,565 an acre. That’s where Avalon Park Group/SitEX plans to build 10,000 residential units along with other commercial development.

Construction trends

New construction starts rose 10% to $889.7 billion in September, according to Hamilton, New Jersey-based Dodge Data & Analytics. Non-residential starts gained 15% to hit $281.8 billion. However, that’s not without some challenges.

“Construction starts have struggled over the last three months as concerns over rising prices, shortages of materials and scarce labor led to declines in activity,” Richard Branch, chief economist for Dodge Construction Network, said in a prepared statement.

“The increase in September, however, partially allays the fear that construction is headed for a free-fall and shows that owners and developers are still ready to move ahead with projects. Starts are likely to continue to trend in a positive but sawtooth fashion in the coming months until a more balanced recovery takes hold next year.”

Investment giant Blackstone makes a record Plano apartment deal

By Steve Brown
The Dallas Morning News

One of the country’s largest property investors has made a record North Texas apartment buy.

A unit of investment giant Blackstone Group purchased the Legacy North apartments in Plano’s Legacy Town Center mixed-use development on the Dallas North Tollway, deed records show.

The transaction was expected to fetch more than $300 million. The sale by Invesco Real Estate included almost 1,700 first-class rental units in 17 buildings.

Built between 2007 and 2012, the Legacy North apartments are almost fully leased with rents that average $1,325 a month. Invesco Real Estate had owned the apartments since 2014. The apartments are next to the popular Shops at Legacy restaurant and retail center at Legacy Drive and the tollway.

Walker & Dunlop marketed the apartments for sale.

“There was a substantial amount of interest in Legacy North, resulting in a very competitive process,” said Jeff Price, managing director of investment sales at Walker & Dunlop’s Dallas office. “As you are keenly aware, there is an overwhelming amount of capital that needs to be deployed. The quality and location of Legacy North was attractive to a broad array of buyers.”

The big Plano property deal is just the latest in a record number of North Texas apartment sales. The Dallas-Fort Worth area led the nation in apartment investment in the first half of 2021 with almost $8 billion in sales.

Invesco Real Estate still has a major position in the Legacy market, with a big stake in the $3 billion Legacy West mixed-use project.

Superica to Open at Ashford Lane

The Austin-style restaurant is opening its fifth Georgia location next summer.

Tex-Mex restaurant Superica is set to open Summer 2022 at Ashford Lane, a 268,000-square-foot property in Atlanta’s Central Perimeter, according to a press release.

The Austin-style eatery, owned by chef Ford Fry, will serve up northern Mexican and Texan fare, including tacos made with homemade corn and flour tortillas, wood-fired meats, fresh fish, and of course, plenty of margaritas.

The restaurant will also boast an extensive cocktail menu, curated by Lara Creasy, inspired by “Outlaw Country” and made with only fresh ingredients.

Superica has locations in Atlanta, Nashville, Houston, and Charlotte, North Carolina. The Ashford Lane location, at 4500 Olde Perimeter Way, will be the restaurant’s fifth spot in the Peach State.

“We’re always thinking about how to create that sense of community around what’s important at your Superica,” says Fry. “To me it’s a spot to pull up a chair & catch up with old friends over cold margaritas or a family friendly joint that makes everyone happy.”

Hey, if margaritas are on deck, we’re happy.

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3 “Strong Buy” Stocks with Over 9% Dividend Yield

Yahoo Finance

Markets ended 2020 on a high note, and have started 2021 on a bullish trajectory. All three major indexes have recently surged to all-time highs as investors seemingly looked beyond the pandemic and hoped for signs of a rapid recovery.

Veteran strategist Edward Yardeni sees the economic recovery bringing its own slowdown with it. As the COVID vaccination program allows for further economic opening, with more people getting back to work, Yardeni predicts a wave of pent-up demand, increasing wages, and rising prices – in short, a recipe for inflation.

“In the second half of the year we may be on the lookout for some consumer price inflation which would not be good for overvalued assets,” Yardeni noted.

The warning sign to look for is higher yields in the Treasury bond market. If the Fed eases up on the low-rate policy, Yardeni sees Treasuries reflecting the change first.

A situation like this is tailor-made for defensive stock plays – and that will naturally bring investors to look at high-yield dividend stocks. Opening up the TipRanks database, we’ve found three stocks featuring a hat trick of positive signs: A Strong Buy rating, dividend yields starting at 9% or better – and a recent analyst review pointing toward double-digit upside.

CTO Realty Growth (CTO)

We’ll start with CTO Realty Growth, a Florida-based real estate company that, last year, made an exciting decision for dividend investors: the company announced that it would change its tax status to that of a real estate investment trust (REIT) for the tax year ending December 31, 2020. REITs have long been known for their high dividend yields, a product of tax code requirements that these companies return a high percentage of their profits directly to shareholders. Dividends are usual route of that return.

For background, CTO holds a varied portfolio of real estate investments. The holdings include 27 income properties in 11 states, totaling more than 2.4 million square feet, along with 18 leasable billboards in Florida. The income properties are mainly shopping centers and retail outlets.

During the third quarter, the most recent reported, CTO sold off some 3,300 acres of undeveloped land for $46 million, acquired two income properties for $47.9 million, and collected ~93% of contractual base rents due. The company also authorized a one-time special distribution, in connection with its shift to REIT status; its purpose was to put the company in compliance with income return regulation during tax year 2020. The one-time distribution was made in cash and stock, and totaled $11.83 per share.

The regular dividend paid in Q3 was 40 cents per common share. That was increased in Q4 to $1, a jump of 150%; again, this was done to put the company in compliance with REIT-status requirements. At the current dividend rate, the yield is 9.5%, far higher than the average among financial sector peer companies.

Analyst Craig Kucera, of B. Riley, believes that CTO has plenty of options going forward to expand its portfolio through acquisition: “CTO hit the high end of anticipated disposition guidance at $33M in 4Q20, bringing YTD dispositions to nearly $85M, with the largest disposition affiliated with the exercise of a tenant’s option to purchase a building from CTO in Aspen, CO. Post these dispositions, we estimate >$30M in cash and restricted cash for additional acquisitions, and we expect CTO to be active again in 1H21.”

To this end, Kucera rates CTO a Buy along with a $67 price target. At current levels, his target implies a 60% one-year upside potential. (To watch Kucera’s track record, click here)

Overall, CTO has 3 reviews on record from Wall Street’s analysts, and they all agree that this stock is a Buy, making the analyst consensus of Strong Buy unanimous. The shares are priced at $41.85, and their average price target of $59.33 suggests room for ~42% growth in the year ahead.

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Significantly more retail, apartments coming to Daytona’s LPGA area in 2021

DAYTONA BEACH — When Cindy Ferrera moved her business to the new Latitude Landings shopping center in late 2019, it only took five minutes to drive to the nearby Tanger Outlets on the other side of Interstate 95.

“It now takes me 15 minutes to get there at lunchtime and it’s not even a mile away,” said the State Farm Insurance agent. Ferrera said it’s an astonishing indicator of how fast Daytona Beach’s LPGA area has grown in the past year despite the coronavirus pandemic.

That growth includes hundreds of new homes at the Jimmy Buffett-themed Latitude Margaritaville 55-and-older community next door, several new luxury apartment complexes and more new shops and restaurants, both at Latitude Landings as well as at Tomoka Town Center where Tanger Outlets is located.

Development is not going to slow in the LPGA area in 2021.

The New Year will see growth there accelerate even faster with a new 21-acre shopping center called the Shoppes at Williamson Crossing set to open across the street from Tomoka Town Center.

Two more shopping areas are poised to break ground in 2021: the Cornerstone Exchange retail center planned behind Cornerstone Office Park on the southwest corner of LPGA and Williamson boulevards; and the Tymber Creek Village development planned across the street from Latitude Landings.

All told, the three new shopping centers could bring nearly a half-million square feet of additional retail stores, restaurants and service businesses to the LPGA area.

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Ohio developer faces competing bid by Chicago developer to build new VA clinic in Daytona

DAYTONA BEACH — One thing appears certain: the Daytona Beach area will soon be getting a new Veterans Affairs outpatient center. What has yet to be determined is who will build it.

Just days after a Cleveland, Ohio, developer became the first to publicly unveil plans to build a VA clinic here, a Chicago, Illinois area-based developer has stepped forward with its competing project that would be built next door.

And there could be more, conceded Joshua Hausman, a principal and co-owner of Lake Forest, Illinois-based WD Schorsch.

“We would welcome the opportunity to build the VA clinic in Daytona Beach,” said Hausman whose company submitted its bid under the name of a subsidiary called JTW Development. “The fact is, it’s a closed bid process so we have no idea who we’re competing with.”

John Albright, CEO of Daytona Beach-based CTO Realty Growth Inc., confirmed that JTW Development agreed in January to put 15 acres under contract to buy from his company. The site is along the west side of Williamson Boulevard, one block north of LPGA Boulevard.

Albright said a third developer had been looking to potentially buy another site further north on Williamson from his company in hopes of competing to land the federal government contract to build the new VA clinic. That developer backed out after the federal government ruled out the site because of potential flooding concerns.

Albright declined to identify the third developer. He said the federal government’s rejection of the site was because of an “old map that needed to be updated.” “It’s not actually in a flood plain,” he said.

“I hear there actually could be another (fourth) developer out there (bidding for the VA contract) as well.” he added. “I don’t know where the other site is.”

The federal government is expected to make its decision by the end of September.

The VA clinic that Hausman’s company is proposing to develop would be a two-story building offering a total of 138,108 square feet of space, according to a copy of site plans obtained by The News-Journal.

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JTD Land plans new homes in Daytona Beach

By Alex Soderstrom  – Staff Writer, Orlando Business Journal

A recent land buy in Volusia County will tee off the construction of 140 new homes near the LPGA International golf course. 

Kissimmee-based developer JTD Land Co. LLC bought 98 acres in Daytona Beach in a deal that closed Aug. 11, CTO Realty Growth announced. The entity that sold the property is related to Daytona Beach-based CTO (NYSE: CTO).

‘Aggressive’ for local land 

JTD Land paid $2.8 million for the land and plans to develop the site into a subdivision with single-family homes that can be accessed via LPGA Boulevard. JTD Land Vice President Craig Harris declined to comment on the project. 

The timeline for the project is unknown. 

It’s not the only planned development near the LPGA golf course. Clearwater-based Boos Development Group Inc. wants to rezone roughly 61.4 acres northeast of LPGA Boulevard and Tournament Drive for apartments and 11 commercial parcels for its Tymber Creek Village project, according to documents recently filed with the state. 

The area has seen “virtually no” development activity since the early 2000s, which makes it ripe for new construction as Daytona Beach grows, John Albright, president and CEO of CTO, previously told Orlando Business Journal. In recent years, new residential and commercial developments nearby, such as Latitude Margaritaville and a Trader Joe’s distribution site, have brought new homes and jobs to the area, which creates demand for more retail and apartments.

Volusia County is ideal for single-family home development due to its low cost of land, Brad Parker, a land expert with Longwood-based Southern Realty, told OBJ. As suburban Orlando counties such as Osceola County get more expensive for construction, development will move further outside Orlando, he said. 

“I see people getting more aggressive to get land in Volusia County.” 

Home demand on the rise  

New homes are important locally because construction creates jobs and subcontractor opportunities. Plus, local housing activity often is considered a reflection of the overall health of the local economy. Every home sale in the state has an estimated local economic impact of $77,858, according to a 2018 study by the National Association of Realtors. 

There were 1,154 homes sold in the Daytona Beach area in the first quarter, up 19.6% from 965 sold in first-quarter 2019, according to the most recent data from the Daytona Beach Association of Realtors. The median sales price of $250,000 was up 6.4% from first-quarter 2019’s $235,000. 

Like Daytona Beach, home sales are up in Orlando. There were 3,103 homes sold in the region in June, down 9% from 3,412 sold in June 2019, but up 45.9% from 2,127 sold in May, according to the Orlando Regional Realtor Association.

Home prices in Orlando are higher than Daytona Beach, with Orlando boasting a median home sales price of $265,000. 

Developer completes $40.9M buy of 3,000 acres in Daytona

The developer of the planned 10,000-home Avalon Park Daytona community north of Latitude Margaritaville on Tuesday completed his $40.9 million purchase of more than 3,000 acres. Developer Beat Kahli says he expects to break ground in 2021.

DAYTONA BEACH — Developer Beat Kahli took a big step this week to bringing his vision of creating a new town here closer to reality.

The developer on Tuesday completed a $40.9 million purchase of just over 3,000 acres along the south side of State Road 40/West Granada Boulevard.

“We’re going full speed ahead,” said Kahli, the chairman and CEO of Orlando-based Avalon Park Group and SitEX Properties USA.

Kahli said he plans to break ground on the community called Avalon Park Daytona in 2021.

On full build-out the community is expected to bring 10,000 homes and a 400-acre downtown to the fast-growing area west of Interstate 95. It will be directly north of the Jimmy Buffett-themed Latitude Margaritaville 55-and-older community and ICI Homes’ 1,200-home Mosaic “full life” community off of LPGA Boulevard.

The land sale is the biggest ever in terms of dollar amount in the Daytona Beach area to a single developer, according to John Albright, the CEO of CTO Realty Growth Inc.

CTO was the seller of the 3,015 acres to Kahli’s SitEX Properties USA. Albright’s company changed its name earlier this year from Consolidated-Tomoka Land Co.

CTO’s previous biggest land sale to a single developer was its $27.2 million sale in 2017 of 1,581 acres to Minto Communities, developer of the 3,400-home Latitude Margaritaville.

″(Kahli’s purchase) is an incredible confirmation that Daytona is a very attractive location for developers,” said Albright.

“The success of Latitude Margaritaville (one of the nation’s fastest-growing 55-and-older communities in 2018 and 2019) showed that this area is highly desired,” he added.

Volusia County Property Appraiser Larry Bartlett said the land purchase by Kahli is the third largest in county history.

The biggest was a $81.2 million land sale in 2006 of roughly 5,900 acres in New Smyrna Beach to an entity known as Hammock Creek Green LLC. That same tract of land was sold in 2013 for $61.5 million and is now part of the 47,000-acre Farmton development site in southeast Volusia County that is owned by Chicago, Illinois-area developer Miami Corp.

A 1,600-acre portion of the land that Kahli purchased Tuesday was originally under contract to be sold to Minto as future expansion space for Latitude Margaritaville.

Kahli’s purchase combines both that parcel with 1,000 acres just east of Tiger Bay State Forest that were originally under contract to be sold to ICI Homes Chairman and CEO Mori Hosseini.

Both sites were entitled to accommodate residential communities that would have had thousands of homes and separate neighborhood retail centers.

Kahli’s purchase also included two additional land parcels. One is a 150-acre swath of land directly west of where Hand Avenue currently ends on the other side of I-95. The other is a 286-acre parcel that mainly consists of wetlands on the east side of Tiger Bay State Forest.

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Consolidated’s big month was a real bell-ringer

In Consolidated- Tomoka Land Co.’s 117-year history, it’s safe to say the Daytona Beach company has never had a bigger month than it had this past October. After a relatively quiet first two weeks, the company on Oct. 16 announced the $97 million sale of a controlling stake in the remaining 5,300 acres of undeveloped land it owned in Daytona Beach.

The sale of land mostly in the area surrounding the Interstate 95/LPGA Boulevard, in one single transaction to Evanston, Illinois based Magnetar Capital, shattered the record Consolidated-Tomoka set last year for most revenue generated in a single year — $60 million — from sales of undeveloped real estate.

Two days later, the company announced the $3.45 million sale of its two golf courses as well as the clubhouse at LPGA International to Virginia-based Fore Golf Services Inc. Then on Oct. 23, Consolidated-Tomoka made another big announcement, or rather, two of them: plans for an upcoming an initial public offering of common stock shares in a new separate company it is forming called Alpine Income Property Trust Inc., as well as plans to change its own name at the beginning of 2020 to CTO Realty Growth. CTO also happens to be the symbol for Consolidated-Tomoka’s common stock, which trades on the NYSE American stock exchange.

Alpine, a real estate investment trust, is expected to have its common stock shares traded on the New York Stock Exchange under the symbol “PINE.” It will initially consist of 20 single-tenant income-producing properties that it will purchase from Consolidated-Tomoka as the company soon to be known as CTO shifts its primary focus to investing in multitenant commercial properties. But Albright will become CEO of both companies as Alpine will be managed by Consolidated-Tomoka. The two companies will also share the same headquarters offices in Daytona Beach at 1140 Williamson Blvd.

Consolidated- Tomoka on Oct. 16 also announced its third quarter earnings, which included an increase in net income per share to 31 cents, up from 26 cents for the same period a year ago. Turns out, October included another big milestone for the company. On Oct. 16, Consolidated-Tomoka for the first time in its history rang the closing bell of the New York Stock Exchange to mark the 50th anniversary of its becoming a public company. “We were thrilled to have represented the shareholders of Consolidated-Tomoka in celebrating 50 years of trading on the NYSE,” said Albright who wielded the wooden mallet used to ring the stock change’s closing bell. It as a “very cool experience,” Albright said. “Not many companies have that distinction (of ringing the bell at the New York Stock Exchange).”

Albright was accompanied by co-workers Mark Patten, senior vice president and chief financial officer at Consolidated-Tomoka, and Tammy MacIsaac, the company’s land information manager. MacIsaac also is the company’s longestserving current employee, having joined the staff at Consolidated-Tomoka 33 years ago, Albright said. Also taking part in the trip to the NYSE in New York City were the current members of Consolidated-Tomoka’s board of directors, led by chairwoman Laura Franklin, as well as past-board member William L. Olivari, former partner of Ormond Beach certified public accounting firm Olivari & Associates. Consolidated- Tomoka employs 15 workers.

Clayton Park is business editor of The Daytona Beach News- Journal. He can be reached at clayton.park@news-jrnl.com.