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Land is in the ‘rearview mirror’ for this Central Florida real estate firm. Here’s what’s next.

Jack Witthaus
Staff Writer
Orlando Business Journal

A mega acreage deal may help transition Daytona Beach’s largest landowner into a real estate investment trust.

Consolidated-Tomoka Land Co. (NYSE American: CTO) revealed it sold a controlling interest on Oct. 16 in all — yes all — of its 5,300 acres in Daytona Beach. The Daytona Beach-based real estate company sold the land for $97 million to funds managed by Evanston, Illinois-based hedge fund Magnetar Capital, whose Magnetar Financial LLC owns about 4.6% of the company’s shares, according to Yahoo Finance. Investors in Consolidated-Tomoka seemed pleased, as the company’s stock price grew 6.4% by the market’s close on Oct. 17.

Consolidated-Tomoka President and CEO John Albright told investors on a not-so-typical third-quarter earnings call that land was in the “rearview mirror.” “The market wasn’t valuing the land whatsoever as far as where our stock’s been trading. So right now, we are very focused on investing that capital in income-producing properties.”

That excited some investors on the call who saw the deal as a potential opportunity to turn the company into a REIT, which essentially owns and leases space. The income from the REIT’s leased properties then is given as dividends to shareholders.

Albright declined to say Oct. 17 if the company would become a REIT. He told Orlando Business Journal in a statement that the 5,300-acre “joint venture” deal with Magnetar Capital allows the company “more flexibility in how we structure deals with developers.”

But Alrbight did say in the earnings call that the deal “definitely speeds up the conversation about what’s next for CTO” and said there would be more communication on what that next step for the company would be.

That didn’t stop analysts from weighing in on the REIT speculation during the earnings call.

“I just want to say up front, I give my vote toward becoming a REIT sooner rather than later,” said Brian Rohman, a portfolio manager and analyst for Boston-based Boston Partners Global Investors Inc., which owns about 2.8% of the company.

Investors later speculated that Consolidated-Tomoka’s ownership of the LPGA International Golf Club would be a roadblock to becoming a REIT. But that roadblock apparently has been cleared. On Oct. 18, Consolidated-Tomoka announced it had sold the golf club for about $3.5 million to an affiliate of Manassas, Virginia-based Fore Golf Services Inc. The LPGA International Golf Club had suffered “significant operating losses,” Albright said in a prepared statement.

Consolidated-Tomoka’s stock was trading higher as of late morning Oct. 18, and its stock has a 52-week range of $49.23-$68.64. The company traces its roots back to 1902, and at one point owned more than 1.8 million acres of land in Florida.

Daytona’s LPGA golf courses have new owner

Daytona Beach’s LPGA International has been sold for $3.45 million to Fore Golf Partners, a Virginia-based company that has owned and managed more than 100 private clubs, daily fee golf courses and resorts over the past 38 years.

DAYTONA BEACH — The pair of golf courses at LPGA International have a new owner, the beginning of a new chapter for the popular courses that have bled money for decades.

Fore Golf Partners late Thursday completed its $3.45 million purchase of the two 18-hole courses on the city’s west side. The Virginia-based company acquired the 657-acre golf club property from Consolidated-Tomoka Land Co.

Daytona Beach-based Consolidated-Tomoka, which announced the deal Friday morning, also said it paid off its remaining liability to the city totaling $540,000.

That payment covered the per-round surcharge the company agreed to pay the city in connection with its prior buyout of the land lease with the city.

Manassas, Virginia-based Fore Golf, in turn, agreed to pay Consolidated-Tomoka $560,000 in the future based on a per-round surcharge of $1.50 for each round of golf played at LPGA Golf Club.

“We’re pleased to have completed the sale of the golf operations, which has sustained significantly operating losses throughout the history of the Golf Club and required substantial capital expenditures in recent years,” said Consolidated-Tomoka CEO John Albright.

“We’re glad to transition the golf courses to an experienced operator,” said Albright, whose company owns income-producing commercial real estate properties in multiple states. “This (operating golf courses) is not our core business.”

The sale included the Clubhouse at LPGA International, which includes a restaurant called Malcolm’s Bar & Grill as well as a golf pro shop. LPGA Golf Club employs approximately 125 full-and part-time employees.

“The bulk of the jobs are going to stay with the new owner,” Albright said, adding that there may be changes in senior management positions at the golf club.

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