Business Context and Reporting Period
Consolidated-Tomoka Land Co. (CTO Realty Growth, Inc.) filed this Form 8-K on March 28, 2016, to disclose the entry into a material definitive agreement. The filing details a portfolio sale transaction entered into on the same date.
Key Financial Metrics
- Sales Price: Approximately $51.6 million for a portfolio of 14 single-tenant income properties.
- Debt Assumption: The buyer (SBMC Mesmer, L.P.) will assume an existing mortgage loan of $23.1 million secured by the properties.
- Estimated Gain: Approximately $11.4 million after tax.
- Per Share Impact: Estimated gain of approximately $1.22 per share.
- Transaction Timing: Anticipated to close in the third quarter of 2016.
Material Changes and Transaction Details
The Company agreed to sell a portfolio comprising nine properties leased to a Bank of America subsidiary (primarily in Orange and Los Angeles Counties, CA), two properties leased to a Walgreens subsidiary (Boulder, CO and Palm Bay, FL), one property leased to a CVS subsidiary (Tallahassee, FL), and two ground leases (Chase Bank in Chicago, IL and Buffalo Wild Wings in Phoenix, AZ). The filing does not provide comparative financial data for prior periods as this is a current event report rather than a periodic financial statement.
Outlook, Management Commentary, and Risks
- Use of Proceeds: The Company intends to utilize the proceeds from this sale as part of a Section 1031 like-kind exchange.
- Closing Conditions: The transaction is subject to customary closing conditions.
- Disclosure: A press release regarding the sale was issued on March 31, 2016, and is included as an exhibit.
Investor Verification Checklist
- Verify the final closing date, as the transaction is currently anticipated for Q3 2016 but subject to conditions.
- Confirm the successful execution of the Section 1031 like-kind exchange to ensure tax benefits are realized.
- Monitor the actual gain recognized upon closing to compare against the estimated $11.4 million.
- Review the specific terms of the assumed $23.1 million mortgage to understand any remaining liabilities or covenants.