Business Context and Reporting Period
This Form 8-K is filed by Consolidated-Tomoka Land Co. (CTO Realty Growth, Inc.) on November 12, 2015. The report details a significant land sale transaction and associated infrastructure agreements.
Key Financial Metrics
- Sales Price: $9.7 million for approximately 38.93 acres of land.
- Price Per Acre: Approximately $249,000.
- Estimated Total Gain: Approximately $7.7 million.
- Gain Recognition at Closing: Approximately $2.2 million.
- Remaining Gain: Approximately $5.5 million, to be recognized over the next ten months as infrastructure work is completed.
- Expected Infrastructure Funding: Approximately $4.5 million from the Tomoka Town Center Community Development District.
Material Changes and Transaction Details
The company sold land located on the east side of Interstate 95, south of LPGA Boulevard, to an affiliate of Tanger Factory Outlet Centers, Inc. The transaction involves a split recognition of gain based on the percentage-of-completion method for infrastructure improvements at the 230-acre Tomoka Town Center. The company expects to receive $4.5 million from the Town Center District contingent upon achieving specific milestones, including permit issuance, engineer certification, and a certificate of occupancy with at least 70% new retailers.
Outlook, Risks, and Contingencies
- Infrastructure Timeline: Work is expected to be completed over the next ten months, with dedication to the Town Center District anticipated in the third quarter of 2016.
- Future Payments: The company expects annual fixed payments from Tanger over ten years. Additional potential payments exist from contracts with Sam's Club and North American Development Group (NADG) regarding remaining acreage, though these are contingent on future closings.
- Risks: There are no assurances regarding the timing or final terms of potential future sales. Changes in infrastructure costs could impact the estimated gain and its recognition timing. Governmental approvals and satisfaction of closing conditions remain uncertain.
Investor Verification Checklist
- Verify the actual closing date and final sales price of the Tanger Transaction.
- Monitor the progress of infrastructure work to confirm the timing of the $5.5 million remaining gain recognition.
- Track the achievement of milestones required to secure the $4.5 million from the Town Center District.
- Review updates on the status of potential sales to Sam's Club and NADG for the remaining Town Center acreage.
- Assess any changes in the estimated cost of infrastructure work that could alter the total gain.