Business Context and Reporting Period
This Form 8-K Current Report was filed by CTO Realty Growth, Inc. (CTO) on April 2, 2021, with the latest event reported on April 6, 2021. The filing details the execution of Purchase and Sale Agreements (PSAs) for the sale of retail net lease properties to Alpine Income Property Trust, Inc. (PINE), an entity in which CTO holds approximately 23.5% equity and serves as the external manager.
Key Financial Metrics and Transaction Details
- Total Proposed Sale Price: Approximately $56.0 million ($45.0 million for six properties and $11.0 million for one property).
- Deposit Amount: $1.0 million (refundable during the inspection period for the six-property deal).
- Debt Assumption: PINE is expected to assume a loan with an outstanding balance of approximately $30.0 million.
- Loan Terms: Fixed interest rate of 4.33%, maturing in October 2034, with prepayment without penalty allowed beginning in October 2024.
- Revenue/Profit/Cash Flow: The filing text does not provide current period revenue, profit, cash flow, or margin data.
Material Changes and Transaction Structure
On April 2, 2021, CTO subsidiaries entered into a PSA to sell six retail net lease properties to PINE for $45.0 million. On April 6, 2021, a separate PSA was signed for the sale of one additional single-tenant property for approximately $11.0 million. Both transactions were triggered by PINE exercising its right of first offer under an exclusivity agreement dated November 26, 2019. The transactions are contingent upon PINE assuming the existing $30.0 million debt secured by the properties, subject to special servicer consent.
Guidance, Risks, and Contingencies
Management has not provided financial guidance in this filing. The completion of these sales is subject to significant contingencies and risks:
- Closing Conditions: All representations and warranties must be true at closing, and all covenants must be performed.
- Lease Status: Leases must be in full force without default, and no tenant may have filed for bankruptcy or initiated insolvency proceedings.
- Debt Assumption: The sale is contingent on the special servicer consenting to the transfer of properties and PINE's assumption of the debt. If consent is not granted, PINE may terminate the agreement.
- Uncertainty: The filing explicitly states there can be no assurance that any or all of the properties will be sold.
Investor Verification Checklist
- Verify the status of the $1.0 million deposit and whether the inspection period has concluded.
- Confirm whether the special servicer has consented to the transfer of the $30.0 million loan.
- Check for any tenant defaults or bankruptcy filings at the six properties and the single property.
- Monitor for subsequent filings confirming the closing of the transactions or their termination.
- Review the impact of the potential $56.0 million cash inflow and debt removal on CTO's future liquidity and leverage ratios.