CTO Realty Growth, Inc. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K, dated June 28, 2021, reports on CTO Realty Growth, Inc.'s entry into an underwriting agreement and the subsequent filing of Articles Supplementary to its charter. The Company is a real estate investment trust (REIT) incorporated in Maryland.
Key Financial Metrics and Capital Structure
The filing details a capital raise through the issuance of preferred stock rather than reporting operational financial results such as revenue or net income.
- Security Issued: 3,000,000 shares of 6.375% Series A Cumulative Redeemable Preferred Stock.
- Offering Price: $25.00 per share.
- Total Proceeds: $75,000,000 (calculated from 3,000,000 shares at $25.00).
- Dividend Rate: 6.375% cumulative, payable quarterly in arrears beginning September 30, 2021.
- Redemption Price: $25.00 per share plus accrued dividends.
- Redemption Date: Generally not redeemable before July 6, 2026, except for REIT qualification or change of control.
Material Changes
The primary material change is the creation of a new class of senior securities. The Series A Preferred Stock ranks senior to the Company's common stock regarding distribution rights and liquidation preferences. This issuance imposes restrictions on the Company's ability to declare dividends on junior securities if dividends on the Series A Preferred Stock are not declared.
Outlook, Risks, and Management Commentary
The offering is expected to close on July 6, 2021, subject to customary closing conditions. The underwriting agreement was entered into with Wells Fargo Securities, LLC, as representative. Key terms include:
- Voting Rights: Holders generally have no voting rights, except in limited circumstances, such as the failure to pay dividends for six or more quarterly periods.
- Change of Control: Upon a change of control, the Company may redeem the stock within 120 days, or holders may convert the preferred stock into common stock based on a formula.
- REIT Status: Ownership and transfer restrictions are in place to preserve the Company's qualification as a REIT.
Investor Verification Checklist
- Verify the closing of the offering on or about July 6, 2021, and the receipt of net proceeds.
- Review the full text of the Articles Supplementary (Exhibit 3.1) for complete terms regarding conversion formulas and change of control provisions.
- Confirm the Company's ability to service the new 6.375% dividend obligation alongside existing debt and equity obligations.
- Monitor the impact of the new senior security on the Company's ability to pay common stock dividends.