CTO Realty Growth, Inc.

This conference is scheduled to begin shortly. Please continue to stand by. Thank you for your patience. Thank you. Thank you. Good day and thank you for standing by. Welcome to the CTO Realty Growth fourth quarter and year end 2021 earnings call. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star then one on your telephone keypad. please be advised today's conference may be recorded. If you require operator assistance during the call, please press star, then zero. I'd now like to hand the conference over to Matt Partridge, Chief Financial Officer.

Good morning, everyone, and thank you for joining us today for the CTO Realty Growth Fourth Quarter and Year-End 2021 Operating Results Conference Call. With me is our CEO and President, John Albright. Before we begin, I'd like to remind everyone that many of our comments today are considered forward-looking statements under federal securities law. The company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we undertake no duty to update these statements. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's Form 10-K, Form 10-Q, and other SEC filings. You can find our SEC reports, earnings release, and supplemental information on our website at ctoreit.com. With that, I will now turn the call over to John.

Thanks, Matt. In our first full year as a REIT, we made tremendous progress refining our portfolio and executing on our retail-focused investment strategy. We closed out the year with a number of grocery-anchored traditional retail and mixed-use acquisitions in highly desirable markets, strong leasing activity, and opportunistic single-tenant dispositions, and the sale of the remaining assets in our land joint venture. The final monetization of the land completes our exit from the land-owning business, which spanned over 110 years. As we reflect on our more recent activities of 2021 and the impact of those activities we have on the future, I am very pleased with the advances we have made to further improve our high-quality portfolio and how we've positioned CTO to drive outsized AFFO growth through a combination of organic and external opportunities. Drilling down into our fourth quarter activities, we had a record acquisition quarter acquiring nearly $140 million of property as we redeployed the proceeds generated from our third and fourth quarter distributions and a new term loan we completed in November. For the year, we acquired nearly $250 million of assets and initial yield of 7.2%. The acquisitions are located in strong sub-markets of some of the most in-demand cities in the United States, including Raleigh, Dallas, Atlanta, Santa Fe, Las Vegas, Salt Lake City, and Orlando. Some of these acquisitions will drive future growth through repositioning opportunities, and some provide strong, stable, in-place cash flows that support our attractive 7% dividend yield. In all instances, we expect leasing to ban property cash flows and residual value in the real estate to continue to benefit from our market's robust population growth in their business-friendly operating environments. On the disposition front, we sold 15 properties in 2021, 14 of which were single-tenant assets for a total disposition volume of $162 million. The weighted average exit cap rate was 6%, generating a combined gain on sale of more than $28 million today. and representing more than 120 basis points of net investment spread between our weighted average acquisition cap rate and our weighted average disposition cap rate. Operationally, we ended the quarter with economic occupancy of nearly 89% and leased occupancy of more than 92%, reflecting the significant progress we've made in executing on our repositioning plan at Ashford Lane and the incremental gains across a number of our properties in our portfolio. During the fourth quarter, we signed new leases at an average rent of more than $41 per square foot. Most of the new leases were at Ashford Lane, Atlanta, where we are currently under construction on the lawn, which we expect to be completed in late spring or early summer. Of our renewals and extensions during the quarter, we experienced more than 15% growth in comparable new per square foot lease rates, demonstrating our ability to realize higher rents when the expiring leases have no remaining contractual options. The impact of our leasing gains on our portfolio same-store NOI is going to be significant for 2022 and 2023, and we're looking forward to reporting these more traditional retail metrics beginning in the first quarter. Just at Ashford Lane alone, we're scheduled to have Super Rica, The Hall, Brown Bag Seafood, Paris Baguette, Wholesome Juice Bar, Jenny's Ice Cream, Hawkers, Grana, and Sweetgreen all opened their doors for business in 2022, transforming the property into a dining destination and driving increased foot traffic for the property's other retail tenants. As we think about the upcoming year, we'll continue to concentrate our efforts on high-quality, well-located retail and mixed-use acquisition opportunities. The acquisition activity will drive our disposition efforts as we focus on selling our remaining office properties and completing our portfolio shift to retail and mixed-use. With that, I'll now turn the call back over to Matt.