Good day and welcome to Consolidated-Tomoka Land Company First Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to John Albright. Please go ahead.

Thank you. Good morning, and welcome to today’s Consolidated-Tomoka Land Company’s Conference Call to review our operating results for the first quarter ended March 31, 2017. My name is John Albright, President and CEO of Consolidated-Tomoka Land Company. On the call with me this morning is Mark Patten, our CFO; and Dan Smith, our General Counsel and Corporate Secretary. Mark and I will review the details of our first quarter financial results in a moment. First, I’ll turn it over to Mark to provide you with customary disclosures regarding our comments on this call today and a few points regarding the format of our call.

Thanks, John. Good morning, everyone. During our call today, we’ll make certain statements that may be considered to be forward-looking statements under federal securities laws. The company’s actual future results may differ significantly from the matters discussed in these forward-looking statements, and we may not release revisions to these forward-looking statements to reflect changes after the statements were made. 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 filings with the SEC and in our earnings release from last night. In addition, let me note that we filed our first quarter 2017 investor deck last night, which is now available on our website. Our investor deck provides additional information you may find useful. Lastly, as most of you know, our 2017 annual shareholder meeting is next week on Wednesday April 26. As you all likely also know, we are in the midst of a proxy contest with Wintergreen Advisers in connection with the matters to be voted on at the 2017 annual meeting, including the election of the company's Board of Directors. Because of these circumstances, we respectfully request and will require that during the Q&A which we’ll hold at the end of our prepared remarks, those of you wishing to ask a question need to ensure that your question pertains solely to the results for the first quarter and as applicable to the transactions that have occurred during the quarter, or to the information contained in our investor deck. We want to ensure the call today is appropriately focused on our first quarter results, which we believe is the primary interest of the attendees on the call. We very much appreciate your cooperation to this request. With that, I'll turn it back over to John.

Thanks, Mark. While we look forward to reviewing our results for the first quarter of 2017 and highlight a number of developments in our business, my opening remarks will address the state of our business and the progress we're making in executing our business plan. The first quarter of 2017 was truly a significant quarter for our company in many ways beyond simply the strong financial results. As you know from our release, we finally closed the first Minto contract, a landmark transaction for CTO in which we sold 1,581 acres for approximately $27.2 million and achieved a tax deferred gain of approximately $20 million, delivering $2.20 in earnings per share after tax. While we're thrilled to close this transaction, the announcement that coincided with this deal will likely prove to be transformational for not just CTO, but Daytona Beach, Volusia County and quite possibly the state of Florida, and indeed the retirement community industry. The announcement of Minto’s partnership with Margaritaville Enterprises and the launch of Latitude Margaritaville brand for a new Minto age restricted lifestyle community, was unprecedented and clearly tapped into a underserved demand segment in the active adult residential space. We’ve mentioned before that Minto indicated that they expect to deliver nearly 300 units per year, if not more, when they get fully ramped up for this 3,400 unit age restricted development. With very little marketing today, the Latitude Margaritaville project has generated more than 50,000 folks registering to learn more about this project. We firmly believe that this project will provide an economic engine for our area for years to come. We're particularly pleased because we believe this engine will serve to activate more of our available land for any number of real estate investment classes. We’re also pleased to have been able to deploy…

Thanks, John. As John mentioned, we had very strong quarter, driven by significantly increased revenues, of which the substantial majority was from our land sales. In addition, our earnings benefited from one element of the acquisition of the golf course land for LPGA International, which relates to the accounting treatment for the related land lease. I'll get to that in a moment. Our total revenues for the quarter ended March 31, 2017 increased by more than $20 million to approximately $38.7 million, an increase of more than 110% from the same period in 2016. As I noted, the largest contributor was from our real estate operation segment, which includes land sales. That segment of the business represented the $20 million increase I mentioned, with the Minto’s sale generating a significant majority of that increase. Net income for the first quarter totaled $12.7 million, an increase of approximately $11.3 million from the same period last year, which is an increase of nearly 800%. Our basic net income per share of $2.28 per share was an increase of $2.03 per share compared to the same period in 2016, or an increase of 812%. Our net income in the first quarter of 2017 reflected the increased revenues I mentioned earlier, offset by the associated increase in direct cost of revenues of approximately $7.2 million, which primarily reflects the cost basis for our increased land sales revenue, as well as a few other elements of our operating results that I'll highlight. Our G&A expense was lower by approximately $1.6 million. A year ago in the first quarter, we incurred approximately $1.6 million in accelerated non-cash stock compensation expense. So absent that item, you might consider our G&A as flat year over year, but we believe it's worth mentioning that a year ago in the…

Thanks, Mark. With regard to our income property portfolio, we had a strong quarter, investing more than $19 million at a weighted average investment yield and acquisition of approximately 6.4% above the low end of our guidance of 6%. Subsequent to quarter end, we acquired a 22,500 square foot single tenant property just outside of Boston for $6.3 million, which represented a 7.1% investment cap rate at the acquisition date. The property is leased to Jo-Ann stores under a triple net lease, with a remaining term of 12 years. We really like this asset for a number of reasons, but to mention a couple of highlights. It’s situated along a high traffic corridor for Metro Boston and is an area that has high barriers of entry for new supply and strong demographics. In addition to our income property acquisitions, we have also executed both leases for the two restaurants we’ll be developing on the beach parcel site in Daytona Beach. We’re pleased to have completed these two 15 year leases, one with the operator for LandShark Bar and Grill, which is a Margaritaville concept, and the other with Cocina 214 Restaurant & Bar. As we mentioned in our earnings release, we're expecting to complete the development of these two restaurants, each at a little over 6,000 square feet in time for the tenants to commence operations in the first quarter of 2018. That concludes our prepared remarks. At this time, we'll open it up for questions. Operator?

Thank you. We will now begin the question-and-answer session. [Operator Instructions]. And our first question comes from David Corak with FBR Capital Markets. Please go ahead.

Good morning guys. Can you kind of walk us through just very broadly how you're feeling about the various retail sector exposures in your income producing portfolio at this point and how we should think about that transforming going forward, if you’re comfortable with exposures now or if you are more favor - you're favoring other sectors going forward.

Sure. Thanks, Dave for the question. So obviously we've been very focused on investing in really good located real estate and strong markets, more infill locations, stronger demographics as you will see from our investor presentation that we put up last night. There's a page there that has our demographics of our portfolio compared to some net lease REITs. And so obviously we're always thinking about the downside. And so for instance when we buy retail pieces of property, for instance Jo-Ann's in Boston, we're looking at the rental rate that they’re paying, the basis we’re paying and what could back fill that box if something happens. And given that location with 100,000 people a day of traffic, with the infill nature very difficult to develop anything else in that corridor, we feel very comfortable that there'll be other retailers to backfill it if something ever happened to that tenant. Same thing with for instance Staples in Sarasota. Urban property. We’ve put in on our investor presentation an aerial showing that location where it's again an infill type location. We feel very good that if they ever left, there’d be plenty of tenants that would like that exposure on Fruitville Road and plenty of people that would fit into that kind of box. So we're always looking for real estate that's going to be more of a long term position that will always have different users. So when we bought a portfolio of restaurants, that's not going to have an effect on - the Amazon effect if you will. Those are really strong locations in Austin and Charlottesville and in Charlotte, North Carolina. Obviously BofA in Monterey, California with development potential. So we're always kind of looking over our shoulder and always kind of looking at the downside. So we feel very comfortable with our portfolio and as we invest going forward, we're always looking for something that that particular tenant might not be there forever and we're not relying on that tenant to meet our returns.

Okay. Fair enough. And then turning over to the beach parcel and the rents you guys are lining up to get from those two restaurants presumably I guess in 1Q ’18 or a little bit after, can you just talk about kind of the economics or the yield on that deal? I guess another way to look at it is, what's your basis in the land today? What do you have to put into it from here and then maybe even, what do you think the fair market value of the land is today? Obviously your previous partner bought that for somewhere in the $30 million range a few years ago, but how should we think about valuing that parcel today?

Yes, sure. So you're right. So the way that transaction transpired before us was a developer bought it for $35 million. The lender or (indiscernible) money lender, made a loan for $25 million. They foreclosed on it. We bought into their position and totally bought 100% of their position after we were able to entitle it for a million square feet. So our basis is $12 million. And so we signed up these two leases, one LandShark, one Cocina 214. And the structure is that we’d invest up to roughly $16 million on those two restaurants. One restaurant is going to put in more capital. The other will put in all the capital. And the structure is, what we've looked at on the beach side is the highly successful beach restaurants in Daytona. There’s only a couple that are positioned beachfront and the parking situation for the other tenants are very constrained and challenged. So we're, this particular parcel six acres, we have plenty of parking and we feel that with these new restaurant concepts, if they just did the sales of these other restaurants with older kind of facilities and limited parking, we're going to hit potentially double digit equity yields, unlevered equity yields. So the way we look at it is obviously two restaurants, single storey restaurants on a six acre parcel on the beach that we just entitled for a million square feet, is going to be really a covered land play. So on its own, we feel like the returns are going to be very inspiring, but with long term potential of a redevelopment play. And so you may remember that we structured in these leases that we can buy out the tenants after five years and tear down the restaurants if the market is robust enough to build a 20, 30 storey type condo, hotel or a mixture.

Hey David, just to be clear, what John was saying is our total basis once we build the restaurants, would be about 16 A.

Okay, thank you for clearing that. That’s helpful. Just when we look at valuing that asset, it's certainly one that could be plus or minus $5 million or $10 million to the upside. So just trying to get a sense of that. But thank you for the color there. And then moving over to Minto, can you just - I appreciate the comments earlier, but can you just talk about the traction that Minto is getting with this Margaritaville concept? I mean for all intents and purposes, I mean it's literally been all over the news, but in one of the press releases, one of the lines that Minto - someone from Minto said was that they're conceivably looking for more land than just one and two, conceivably more than the 6,000 to 7,000 homes that I think they specifically mentioned you guys in that as a potential seller. How should we think about that going forward? I mean you obviously have that parcel of land that is adjacent to Minto two I believe that you’d proposed residential. So I mean how should we think about that going forward?

Yes. No, thanks. So you're right. Just to kind of back up. So the first phase that they purchased is going to basically handle 3,400 units. So when they talk about in their press releases that this community is 6,900 acres, they're obviously incorporating phase two that they have under contract with us. And right now they're doing a lot of their engineering work, site planning work and so forth. And so - and they've also made public remarks that's been picked up in the press that they may look at acquiring additional land from us. And so that would mean our last parcel available would be that 1,000 acres. We call it track F along SR40. So they’re certainly pleased with the unbelievable response. Right now they’re 100% focused on their project getting underway that you can see one of our aerials in our presentation that they've done a tremendous amount of work already. So they're doing a lot of trade work with the different trades out there as far as making sure they can get the labor and the sub contractors necessary to deliver 300 homes plus per year. But yes, they see that with the traction they've gotten here and the popularity of this, that they're going to need more land. So we hope that that strength follows through and we can kind of accommodate them. But that’s definitely something that could be on the cards.

Okay. And it’s definitely 55 and older in those communities?

Yes, definitely. So it will be a little bit (indiscernible) for you, David.

Well, there goes that. Yes. Okay. Appreciate that. All right, then one last one for me. Any update on the timing or economics at the Grove?

Yes. So the Grove is going very well. We've had a very positive response from 24 Hour, that this opening for them has been very strong. And so we are around 56% leased now with lots of other tenants touring as we basically finish up the renovation. But these tenants that have been signed up, we're starting to build that work now. So these tenants will basically all kind of come online or start coming online in the third and fourth quarter. So right now there’s a lot of coordination with regards to build out. So we have demoed the old space and do build out, but it's all going very well. And so it's getting more and more traction. Wawa is still on tap for 2018 to start construction on their store there.

Okay, great. That’s helpful guys. I appreciate the time.

[Operator Instructions]. And there are no more questions at this time. So this concludes our question-and-answer session. I would now like to turn the conference back over to Mark Patten for any closing remarks.

Thanks, Steven. Thank you again everyone for attending our call this morning. We appreciate your interest in Consolidated-Tomoka Land Company. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. you may now disconnect.