UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☒~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the quarterly period ended September 30, ~~2017~~2023

☐~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number ~~01-11350~~001-11350

~~CONSOLIDATED-TOMOKA LAND CO.~~CTO REALTY GROWTH, INC.

(Exact name of registrant as specified in its charter)


Maryland		59-0483700
~~Florida~~		~~59-0483700~~
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

~~1140~~369 N. ~~Williamson Blvd.,~~ New York Avenue,Suite ~~140~~201
~~Daytona Beach,~~ Winter Park, Florida		~~32114~~32789
(Address of principal executive offices)		(Zip Code)

~~(386) 274-2202~~(407) 904-3324

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

~~1530 Cornerstone Blvd., Suite 100 Daytona Beach, Florida 32117~~Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading Symbols	Name of each exchange on which registered:
Common Stock, $0.01 par value per share	CTO	NYSE
6.375% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share	CTO-PA	NYSE

~~(Former name, former address and former fiscal year, if changed since last report)~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large ~~accelerated filer~~Accelerated Filer	☐	~~Accelerated filer~~	Accelerated Filer	☒
			
Non-accelerated ~~filer~~Filer	☐~~(Do not check if a smaller reporting company)~~		Smaller ~~reporting company~~Reporting Company	☐
			
~~Emerging growth company~~	☐		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes ☐ No ☒

~~Indicate the number~~As of October 19, 2023, there were 22,686,444 shares ~~outstanding of each~~ of the ~~issuer’s classes of~~registrant’s common stock, ~~as of the latest practicable date.~~

~~Class of Common Stock Outstanding~~

~~October 20, 2017~~

~~$1.00~~$0.01 par value ~~5,581,733~~per share, outstanding.

Table of Contents

INDEX

~~INDEX~~


		Page

		~~Page~~
		No.
PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets – September 30, ~~2017~~2023 (Unaudited) and December 31, ~~2016~~2022		3

Consolidated Statements of Operations – Three and ~~Nine Months~~nine months ended September 30, ~~2017~~2023 and ~~2016~~2022 (Unaudited)		4

Consolidated Statements of Comprehensive Income – Three and ~~Nine Months~~nine months ended September 30, ~~2017~~2023 and ~~2016~~2022 (Unaudited)		5

Consolidated Statements of ~~Shareholders’~~Stockholders’ Equity – ~~Nine Months~~Three and nine months ended September 30, ~~2017~~2023 and 2022 (Unaudited)		6

Consolidated Statements of Cash Flows – Nine ~~Months~~months ended September 30, ~~2017~~2023 and ~~2016~~2022 (Unaudited)		7 8

Notes to Consolidated Financial Statements (Unaudited)		9 10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		39

Item 3. Quantitative and Qualitative Disclosures About Market ~~Risks~~Risk		57 52

Item 4. Controls and Procedures		57 52

PART II—OTHER INFORMATION		57 52

Item 1. Legal Proceedings		57 52

Item 1A. Risk Factors		58 52

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		59 53

Item 3. Defaults Upon Senior Securities		59 53

Item 4. Mine Safety Disclosures		59 53

Item 5. Other Information		59 53

Item 6. Exhibits		60 54

SIGNATURES		61 55

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CTO REALTY GROWTH, INC.

~~CONSOLIDATED-TOMOKA LAND CO.~~

CONSOLIDATED BALANCE SHEETS

(Unaudited)

September 30,
2017

December 31,
2016

ASSETS

Property, Plant, and Equipment:

Income Properties, Land, Buildings, and Improvements

$
317,215,503

$
274,334,139

Golf Buildings, Improvements, and Equipment

6,355,561

3,528,194

Other Furnishings and Equipment

652,479

1,032,911

Construction in Progress

6,246,950

5,267,676

Total Property, Plant, and Equipment

330,470,493

284,162,920

Less, Accumulated Depreciation and Amortization

(21,552,883)

(16,552,077)

Property, Plant, and Equipment—Net

308,917,610

267,610,843

Land and Development Costs

40,750,335

51,955,278

Intangible Lease Assets—Net

35,810,734

34,725,822

Impact Fee and Mitigation Credits

1,265,437

2,322,906

Commercial Loan Investments

11,910,611

23,960,467

Commercial Loan Investments - Held for Sale

15,000,000

—

Cash and Cash Equivalents

5,944,544

7,779,562

Restricted Cash

7,027,196

9,855,469

Refundable Income Taxes

1,510,712

943,991

Other Assets

8,573,622

9,469,088

Total Assets

$
436,710,801

$
408,623,426

LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities:

Accounts Payable

$
1,307,813

$
1,518,105

Accrued and Other Liabilities

7,382,898

8,667,897

Deferred Revenue

1,313,025

1,991,666

Intangible Lease Liabilities - Net

30,026,994

30,518,051

Accrued Stock-Based Compensation

69,877

42,092

Deferred Income Taxes—Net

63,458,746

51,364,572

Long-Term Debt

173,651,530

166,245,201

Total Liabilities

277,210,883

260,347,584

Commitments and Contingencies - See Note 18

Shareholders’ Equity:

Common Stock – 25,000,000 shares authorized; $1 par value, 6,026,610 shares issued and 5,581,235 shares outstanding at September 30, 2017; 6,021,564 shares issued and 5,710,238 shares outstanding at December 31, 2016

5,951,720

5,914,560

Treasury Stock – 445,375 shares at September 30, 2017; 311,326 shares at December 31, 2016

(22,434,800)

(15,298,306)

Additional Paid-In Capital

22,168,687

20,511,388

Retained Earnings

153,562,478

136,892,311

Accumulated Other Comprehensive Income

251,833

255,889

Total Shareholders’ Equity

159,499,918

148,275,842

Total Liabilities and Shareholders’ Equity

$
436,710,801

$
408,623,426

~~See Accompanying Notes to Consolidated Financial Statements~~

(In thousands, except share and per share data)


	As of
	(Unaudited) September 30, 2023		December 31, 2022
ASSETS
Real Estate:
Land, at Cost	$	235,880	$	233,930
Building and Improvements, at Cost		588,224		530,029
Other Furnishings and Equipment, at Cost		851		748
Construction in Process, at Cost		4,127		6,052
Total Real Estate, at Cost		829,082		770,759
Less, Accumulated Depreciation		(50,117)		(36,038)
Real Estate—Net		778,965		734,721
Land and Development Costs		698		685
Intangible Lease Assets—Net		105,851		115,984
Assets Held for Sale—See Note 23		14,504		—
Investment in Alpine Income Property Trust, Inc.		38,162		42,041
Mitigation Credits		1,872		1,856
Mitigation Credit Rights		—		725
Commercial Loans and Investments		46,572		31,908
Cash and Cash Equivalents		7,015		19,333
Restricted Cash		22,618		1,861
Refundable Income Taxes		430		448
Deferred Income Taxes—Net		2,363		2,530
Other Assets—See Note 11		47,323		34,453
Total Assets	$	1,066,373	$	986,545
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Accounts Payable	$	3,969	$	2,544
Accrued and Other Liabilities—See Note 17		18,660		18,028
Deferred Revenue—See Note 18		6,251		5,735
Intangible Lease Liabilities—Net		11,203		9,885
Long-Term Debt		548,219		445,583
Total Liabilities		588,302		481,775
Commitments and Contingencies—See Note 21
Stockholders’ Equity:
Preferred Stock – 100,000,000 shares authorized; $0.01 par value, 6.375% Series A Cumulative Redeemable Preferred Stock, $25.00 Per Share Liquidation Preference, 2,993,206 shares issued and outstanding at September 30, 2023 and 3,000,000 shares issued and outstanding at December 31, 2022		30		30
Common Stock – 500,000,000 shares authorized; $0.01 par value, 22,701,072 shares issued and outstanding at September 30, 2023 and 22,854,775 shares issued and outstanding at December 31, 2022		227		229
Additional Paid-In Capital		168,875		172,471
Retained Earnings		284,789		316,279
Accumulated Other Comprehensive Income		24,150		15,761
Total Stockholders’ Equity		478,071		504,770
Total Liabilities and Stockholders’ Equity	$	1,066,373	$	986,545

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

CTO REALTY GROWTH, INC.

~~CONSOLIDATED-TOMOKA LAND CO.~~

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except share and per share data)


	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2023		2022		2023		2022
Revenues
Income Properties	$	25,183	$	17,694	$	70,373	$	49,229
Management Fee Income		1,094		951		3,294		2,835
Interest Income From Commercial Loans and Investments		1,114		1,323		2,965		3,331
Real Estate Operations		1,079		3,149		2,602		4,395
Total Revenues		28,470		23,117		79,234		59,790
Direct Cost of Revenues
Income Properties		(7,060)		(5,115)		(20,883)		(13,943)
Real Estate Operations		(152)		(1,661)		(876)		(1,940)
Total Direct Cost of Revenues		(7,212)		(6,776)		(21,759)		(15,883)
General and Administrative Expenses		(3,439)		(3,253)		(10,493)		(8,972)
Provision for Impairment		(929)		—		(1,408)		—
Depreciation and Amortization		(11,669)		(7,305)		(32,814)		(20,401)
Total Operating Expenses		(23,249)		(17,334)		(66,474)		(45,256)
Gain on Disposition of Assets		2,464		4,973		3,565		4,728
Other Gains and Income		2,464		4,973		3,565		4,728
Total Operating Income		7,685		10,756		16,325		19,262
Investment and Other Income (Loss)		1,184		(3,065)		(1,296)		(6,270)
Interest Expense		(6,318)		(3,037)		(16,161)		(7,216)
Income (Loss) Before Income Tax Benefit (Expense)		2,551		4,654		(1,132)		5,776
Income Tax Benefit (Expense)		135		163		(375)		461
Net Income (Loss) Attributable to the Company		2,686		4,817		(1,507)		6,237
Distributions to Preferred Stockholders		(1,195)		(1,195)		(3,585)		(3,586)
Net Income (Loss) Attributable to Common Stockholders	$	1,491	$	3,622	$	(5,092)	$	2,651

Per Share Information—See Note 13:
Basic Net Income (Loss) Attributable to Common Stockholders	$	0.07	$	0.20	$	(0.23)	$	0.15
Diluted Net Income (Loss) Attributable to Common Stockholders	$	0.07	$	0.19		(0.23)		0.15

Weighted Average Number of Common Shares
Basic		22,484,561		18,386,435		22,556,642		18,044,299
Diluted		22,484,561		21,505,460		22,556,642		18,044,299

~~(Unaudited)~~The accompanying notes are an integral part of these consolidated financial statements.

Three Months Ended

Nine Months Ended

September 30,

September 30,

September 30,

September 30,


2017

2016

2017

2016

Revenues

Income Properties

$
7,928,258

$
6,021,331

$
22,566,505

$
18,483,654

Interest Income from Commercial Loan Investments

637,801

534,212

1,727,449

2,050,507

Real Estate Operations

2,926,406

4,643,646

45,658,221

18,979,164

Golf Operations

797,420

1,001,368

3,655,877

3,877,923

Agriculture and Other Income

90,717

10,388

323,617

48,070

Total Revenues

12,380,602

12,210,945

73,931,669

43,439,318

Direct Cost of Revenues

Income Properties

(1,715,516)

(1,430,642)

(4,756,744)

(3,811,389)

Real Estate Operations

(459,169)

(1,257,183)

(15,408,547)

(4,638,865)

Golf Operations

(1,272,647)

(1,302,920)

(4,173,244)

(4,154,684)

Agriculture and Other Income

(18,874)

(52,894)

(89,847)

(153,599)

Total Direct Cost of Revenues

(3,466,206)

(4,043,639)

(24,428,382)

(12,758,537)

General and Administrative Expenses

(1,995,512)

(1,821,827)

(7,942,846)

(8,518,410)

Impairment Charges

—

—

—

(2,180,730)

Depreciation and Amortization

(3,161,169)

(1,945,460)

(9,139,434)

(5,818,386)

Gain (Loss) on Disposition of Assets

(266)

11,479,490

(266)

12,842,438

Land Lease Termination

—

—

2,226,526

—

Total Operating Expenses

(8,623,153)

3,668,564

(39,284,402)

(16,433,625)

Operating Income

3,757,449

15,879,509

34,647,267

27,005,693

Investment Income (Loss)

9,724

2,531

27,431

(561,162)

Interest Expense

(2,073,299)

(2,454,390)

(6,279,366)

(6,700,593)

Income Before Income Tax Expense

1,693,874

13,427,650

28,395,332

19,743,938

Income Tax Expense

(726,974)

(5,281,646)

(11,003,132)

(8,624,727)

Net Income

966,900

8,146,004

17,392,200

11,119,211

Less: Net Loss Attributable to Noncontrolling Interest in Consolidated VIE

—

15,010

—

36,964

Net Income Attributable to Consolidated-Tomoka Land Co.

$
966,900

$
8,161,014

$
17,392,200

$
11,156,175

Per Share Information- See Note 10:

Basic

Net Income Attributable to Consolidated-Tomoka Land Co.

$
0.18

$
1.44

$
3.13

$
1.96

Diluted

Net Income Attributable to Consolidated-Tomoka Land Co.

$
0.18

$
1.44

$
3.13

$
1.95

Dividends Declared and Paid

$
0.05

$
0.04

$
0.13

$
0.08

~~See Accompanying Notes to Consolidated Financial Statements~~

Table of Contents

CTO REALTY GROWTH, INC.

~~CONSOLIDATED-TOMOKA LAND CO.~~

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, in thousands)


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Net Income (Loss) Attributable to the Company	$	2,686	$	4,817	$	(1,507)	$	6,237
Other Comprehensive Income:
Cash Flow Hedging Derivative - Interest Rate Swaps		5,901		5,310		8,389		15,933
Total Other Comprehensive Income		5,901		5,310		8,389		15,933
Total Comprehensive Income	$	8,587	$	10,127	$	6,882	$	22,170

~~(Unaudited)~~The accompanying notes are an integral part of these consolidated financial statements.

Three Months Ended

Nine Months Ended


September 30,
2017

September 30,
2016

September 30,
2017

September 30,
2016


Net Income Attributable to Consolidated-Tomoka Land Co.

$
966,900

$
8,161,014

$
17,392,200

$
11,156,175

Other Comprehensive Income

Realized Loss on Investment Securities Sold (Net of Income Tax of $-0- and $222,025 for the nine months ended September 30, 2017 and 2016, respectively)

—

—

—

353,542

Unrealized Gain on Investment Securities (Net of Income Tax of $-0- and $210,652 for the nine months ended September 30, 2017 and 2016, respectively)

—

—

—

335,429

Cash Flow Hedging Derivative - Interest Rate Swap (Net of Income Tax of $3,720 and $69,100 for the three months ended September 30, 2017 and 2016, respectively, and Net of Income Tax of $(2,548) and $(141,450) for the nine months ended September 30, 2017 and 2016, respectively)

5,924

110,031

(4,056)

(225,240)

Total Other Comprehensive Income (Loss), Net of Income Tax

5,924

110,031

(4,056)

463,731

Total Comprehensive Income

$
972,824

$
8,271,045

$
17,388,144

$
11,619,906

~~See Accompanying Notes to Consolidated Financial Statements~~

Table of Contents

CTO REALTY GROWTH, INC.

~~CONSOLIDATED-TOMOKA LAND CO.~~

CONSOLIDATED STATEMENTS OF ~~SHAREHOLDERS’~~STOCKHOLDERS’ EQUITY

(Unaudited, in thousands)

For the three months ended September 30, 2023:


	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Stockholders' Equity
Balance July 1, 2023	$	30	$	227	$	168,103	$	291,958	$	18,249	$	478,567
Net Income Attributable to the Company		—		—		—		2,686		—		2,686
Stock Repurchase		—		—		(87)		—		—		(87)
Exercise of Stock Options and Stock Issuance to Directors		—		—		67		—		—		67
Payment of Equity Issuance Costs		—		—		(8)		—		—		(8)
Stock-Based Compensation Expense		—		—		800		—		—		800
Preferred Stock Dividends Declared for the Period		—		—		—		(1,195)		—		(1,195)
Common Stock Dividends Declared for the Period		—		—		—		(8,660)		—		(8,660)
Other Comprehensive Income		—		—		—		—		5,901		5,901
Balance September 30, 2023	$	30	$	227	$	168,875	$	284,789	$	24,150	$	478,071

~~(Unaudited)~~For the three months ended September 30, 2022:

Accumulated

Additional

Other

Total

Common

Treasury

Paid-In

Retained

Comprehensive

Shareholders’


Stock

Stock

Capital

Earnings

Income (Loss)

Equity

Balance January 1, 2017

$
5,914,560

$
(15,298,306)

$
20,511,388

$
136,892,311

$
255,889

$
148,275,842

Net Income

—

—

—

17,392,200

—

17,392,200

Stock Repurchase

—

(7,136,494)

—

—

—

(7,136,494)

Exercise of Stock Options

22,527

—

746,026

—

—

768,553

Vested Restricted Stock

13,298

—

(274,919)

—

—

(261,621)

Stock Issuance

1,335

—

71,887

—

—

73,222

Stock Compensation Expense from Restricted Stock Grants and Equity Classified Stock Options

—

—

1,114,305

—

—

1,114,305

Cash Dividends ($0.13 per share)

—

—

—

(722,033)

—

(722,033)

Other Comprehensive Loss,  Net of Income Tax

—

—

—

—

(4,056)

(4,056)

Balance September 30, 2017

$
5,951,720

$
(22,434,800)

$
22,168,687

$
153,562,478

$
251,833

$
159,499,918


	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Stockholders' Equity
Balance July 1, 2022	$	30	$	61	$	86,347	$	332,916	$	12,140	$	431,494
Net Income Attributable to the Company		—		—		—		4,817		—		4,817
Three-for-One Stock Split		—		122		(122)		—		—		—
Stock Repurchase		—		(1)		(1,644)		—		—		(1,645)
Exercise of Stock Options and Stock Issuance to Directors		—		—		11		—		—		11
Stock Issuance, Net of Equity Issuance Costs		—		6		12,082		—		—		12,088
Stock-Based Compensation Expense		—		—		745		—		—		745
Preferred Stock Dividends Declared for the Period		—		—		—		(1,195)		—		(1,195)
Common Stock Dividends Declared for the Period		—		—		—		(7,221)		—		(7,221)
Other Comprehensive Income		—		—		—		—		5,310		5,310
Balance September 30, 2022	$	30	$	188	$	97,419	$	329,317	$	17,450	$	444,404

~~See Accompanying Notes to Consolidated Financial Statements~~

Table of Contents

CTO REALTY GROWTH, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

(Unaudited, in thousands)

For the nine months ended September 30, 2023:


	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Stockholders' Equity
Balance January 1, 2023	$	30	$	229	$	172,471	$	316,279	$	15,761	$	504,770
Net Loss Attributable to the Company		—		—		—		(1,507)		—		(1,507)
Stock Repurchase		—		(3)		(5,169)		—		—		(5,172)
Vested Restricted Stock and Performance Shares		—		1		(1,029)		—		—		(1,028)
Exercise of Stock Options and Stock Issuance to Directors		—		—		308		—		—		308
Payment of Equity Issuance Costs		—		—		(130)		—		—		(130)
Stock-Based Compensation Expense		—		—		2,424		—		—		2,424
Preferred Stock Dividends Declared for the Period		—		—		—		(3,585)		—		(3,585)
Common Stock Dividends Declared for the Period		—		—		—		(26,398)		—		(26,398)
Other Comprehensive Income		—		—		—		—		8,389		8,389
Balance September 30, 2023	$	30	$	227	$	168,875	$	284,789	$	24,150	$	478,071

For the nine months ended September 30, 2022:


	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Stockholders' Equity
Balance January 1, 2022	$	30	$	60	$	85,414	$	343,459	$	1,517	$	430,480
Net Income Attributable to the Company		—		—		—		6,237		—		6,237
Three-for-One Stock Split		—		122		(122)		—		—		—
Adjustment to Equity Component of Convertible Debt Upon Adoption of ASU 2020-06		—		—		(7,034)		4,022		—		(3,012)
Stock Repurchase		—		(1)		(2,791)		—		—		(2,792)
Vested Restricted Stock and Performance Shares		—		—		(845)		—		—		(845)
Exercise of Stock Options and Common Stock Issuance		—		—		248		—		—		248
Stock Issuance, Net of Equity Issuance Costs		—		7		20,560		—		—		20,567
Stock-Based Compensation Expense		—		—		1,989		—		—		1,989
Preferred Stock Dividends Declared for the Period		—		—		—		(3,586)		—		(3,586)
Common Stock Dividends Declared for the Period		—		—		—		(20,815)		—		(20,815)
Other Comprehensive Income		—		—		—		—		15,933		15,933
Balance September 30, 2022	$	30	$	188	$	97,419	$	329,317	$	17,450	$	444,404

The accompanying notes are an integral part of these consolidated financial statements.

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CTO REALTY GROWTH, INC.

~~CONSOLIDATED-TOMOKA LAND CO.~~

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


	Nine Months Ended
	September 30, 2023		September 30, 2022
Cash Flow from Operating Activities:
Net Income (Loss) Attributable to the Company	$	(1,507)	$	6,237
Adjustments to Reconcile Net Income (Loss) Attributable to the Company to Net Cash Provided by Operating Activities:
Depreciation and Amortization		32,814		20,401
Amortization of Intangible Liabilities to Income Property Revenue		1,793		1,485
Amortization of Deferred Financing Costs to Interest Expense		724		515
Amortization of Discount on Convertible Debt		119		149
Gain on Disposition of Real Estate and Intangible Lease Assets and Liabilities		(3,565)		(3,921)
Gain on Disposition of Commercial Loans and Investments		—		(807)
Provision for Impairment		1,408		—
Accretion of Commercial Loans and Investments Origination Fees		(105)		(150)
Non-Cash Imputed Interest		(22)		(119)
Deferred Income Taxes		167		(544)
Unrealized Loss on Investment Securities		5,663		8,102
Extinguishment of Contingent Obligation		(2,300)		—
Non-Cash Compensation		2,802		2,423
Decrease (Increase) in Assets:
Refundable Income Taxes		18		(5)
Land and Development Costs		(13)		7
Mitigation Credits and Mitigation Credit Rights		709		1,876
Other Assets		(3,792)		(7,895)
Increase in Liabilities:
Accounts Payable		1,424		460
Accrued and Other Liabilities		3,092		4,531
Deferred Revenue		516		1,335
Net Cash Provided By Operating Activities		39,945		34,080
Cash Flow from Investing Activities:
Acquisition of Real Estate and Intangible Lease Assets and Liabilities		(100,588)		(112,843)
Acquisition of Commercial Loans and Investments		(17,477)		(50,130)
Proceeds from Disposition of Property, Plant, and Equipment, Net, and Assets Held for Sale		21,689		40,777
Principal Payments Received on Commercial Loans and Investments		986		44,079
Acquisition of Investment Securities, Net of Proceeds from Sales		(2,883)		(2,253)
Net Cash Used In Investing Activities		(98,273)		(80,370)
Cash Flow From Financing Activities:
Proceeds from Long-Term Debt		132,850		218,500
Payments on Long-Term Debt		(30,600)		(147,000)
Cash Paid for Loan Fees		(132)		(2,610)
Cash Received Exercise of Stock Options and Common Stock Issuance		308		(177)
Cash Used to Purchase Common and Preferred Stock		(5,172)		(2,792)
Cash Paid for Vesting of Restricted Stock		(1,028)		(845)
Proceeds from (Cash Paid for) Issuance of Common Stock, Net		(130)		20,567
Dividends Paid - Preferred Stock		(3,585)		(3,586)
Dividends Paid - Common Stock		(25,744)		(20,292)
Net Cash Provided By Financing Activities		66,767		61,765
Net Increase in Cash, Cash Equivalents and Restricted Cash		8,439		15,475
Cash, Cash Equivalents and Restricted Cash, Beginning of Period		21,194		31,349
Cash, Cash Equivalents and Restricted Cash, End of Period	$	29,633	$	46,824

Reconciliation of Cash to the Consolidated Balance Sheets:
Cash and Cash Equivalents	$	7,015	$	9,532
Restricted Cash		22,618		37,292
Total Cash	$	29,633	$	46,824

~~(Unaudited)~~

Nine Months Ended

September 30,

September 30,

2017

2016

Cash Flow from Operating Activities:

Net Income

$
17,392,200

$
11,119,211

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:

Depreciation and Amortization

9,139,434

5,818,386

Amortization of Intangible Liabilities to Income Property Revenue

(1,632,881)

(1,722,165)

Loan Cost Amortization

350,292

715,448

Amortization of Discount on Convertible Debt

888,851

833,903

Gain on Disposition of Property, Plant, and Equipment and Intangible Assets

266

(12,842,438)

Impairment Charges

—

2,180,730

Accretion of Commercial Loan Origination Fees

(10,144)

(164,893)

Amortization of Fees on Acquisition of Commercial Loan Investments

—

36,382

Discount on Commercial Loan Investment Payoff

—

217,500

Realized Loss (Gain) on Investment Securities

—

575,567

Deferred Income Taxes

12,090,118

8,648,705

Non-Cash Compensation

1,142,090

2,893,589

Decrease (Increase) in Assets:

Refundable Income Taxes

(566,721)

(1,072,888)

Land and Development Costs

11,204,943

(6,083,694)

Impact Fees and Mitigation Credits

1,057,469

491,999

Other Assets

895,466

(3,243,619)

Increase (Decrease) in Liabilities:

Accounts Payable

(210,292)

(173,258)

Accrued and Other Liabilities

(1,984,999)

(750,186)

Deferred Revenue

(678,641)

(11,692,910)

Net Cash Provided By (Used In) Operating Activities

49,077,451

(4,214,631)

Cash Flow from Investing Activities:

Acquisition of Property, Plant, and Equipment and Intangible Lease Assets and Liabilities

(49,689,555)

(2,714,273)

Acquisition of Property, Plant, and Equipment and Intangible Lease Assets and Liabilities through Business Combinations

—

(49,926,670)

Acquisition of Commercial Loan Investments

(2,940,000)

—

Decrease (Increase) in Restricted Cash

2,828,273

7,416,791

Proceeds from Sale of Investment Securities

—

6,252,362

Proceeds from Disposition of Property, Plant, and Equipment

—

49,253,982

Principal Payments Received on Commercial Loan Investments

—

14,282,500

Net Cash Provided By (Used In) Investing Activities

(49,801,282)

24,564,692

Cash Flow from Financing Activities:

Proceeds from Long-Term Debt

24,500,000

32,750,000

Payments on Long-Term Debt

(17,800,000)

(42,050,000)

Cash Paid for Loan Fees

(532,814)

(392,448)

Cash Proceeds from Exercise of Stock Options and Stock Issuance

841,775

57,127

Contributions from Noncontrolling Interest in Consolidated VIE

—

102,844

Cash Used to Purchase Common Stock

(7,136,494)

(5,484,295)

Cash from Excess Tax Benefit (Expense) from Vesting of Restricted Stock

—

302,352

Cash Paid for Vesting of Restricted Stock

(261,621)

(198,713)

Dividends Paid

(722,033)

(456,119)

Net Cash Used In Financing Activities

(1,111,187)

(15,369,252)

Net Increase (Decrease) in Cash

(1,835,018)

4,980,809

Cash, Beginning of Year

7,779,562

4,060,677

Cash, End of Period

$
5,944,544

$
9,041,486

~~See Accompanying Notes to Consolidated Financial Statements~~

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~~CONSOLIDATED-TOMOKA LAND CO.~~CTO REALTY GROWTH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

~~(Unaudited)~~(Unaudited, in thousands)

~~Supplemental Disclosure~~


	Nine Months Ended
	September 30, 2023		September 30, 2022
Supplemental Disclosure of Cash Flow Information:
Cash Paid for Taxes, Net of Refunds Received	$	(231)	$	(111)
Cash Paid for Interest ⁽¹⁾	$	(15,178)	$	(5,785)

Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Unrealized Gain on Cash Flow Hedges	$	8,389	$	15,933
Adjustment to Equity Component of Convertible Debt Upon Adoption of ASU 2020-06	$	—	$	3,012
Common Stock Dividends Declared and Unpaid	$	654	$	523
Assumption of Mortgage Note Payable	$	—	$	17,800

⁽¹⁾	^{Includes capitalized interest of}^$0.2^{million and}^$0.1^{million during the nine months ended September 30, 2023 and 2022, respectively.}

The accompanying notes are an integral part of ~~Cash Flows:~~these consolidated financial statements.

Income taxes refunded, net of payments made, totaled approximately $531,000 during the nine months ended September 30, 2017. Income taxes paid, net of income taxes refunded, totaled approximately $377,000 during the nine months ended September 30, 2016.

Interest totaling approximately $6.0 million was paid during the nine months ended September 30, 2017 and 2016. Interest of approximately $124,000 was capitalized during the nine months ended September 30, 2017, while no interest was capitalized during the nine months ended September 30, 2016.

In connection with the Golf Course Land Purchase (hereinafter defined), each year the Company is obligated to pay the City an annual surcharge of $1 per golf round played (the “Per-Round Surcharge”) with an annual minimum Per-Round Surcharge of $70,000 and a maximum aggregate amount of the Per-Round Surcharge paid equal to $700,000. The maximum amount of $700,000 represents contingent consideration and was reflected as an increase in Golf Buildings, Improvements, and Equipment and also as an increase in Accrued and Other Liabilities on the accompany consolidated balance sheets as of September 30, 2017.

On September 16, 2016, the Company closed on the Portfolio Sale (hereinafter defined). The sales price on the Portfolio Sale was approximately $51.6 million, of which approximately $23.1 million was not received in cash at closing but rather the buyer assumed the Company’s $23.1 million mortgage loan secured by the Portfolio Sale properties. The non-cash transaction was reflected as a decrease in Long-Term Debt of approximately $23.1 million on the accompanying consolidated balance sheets as of September 30, 2016.

~~See Accompanying Notes to Consolidated Financial Statements~~

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. DESCRIPTION OF BUSINESS ~~AND PRINCIPLES OF INTERIM STATEMENTS~~

Description of Business

~~The terms “us,” “we,” “our,” and “the Company” as used in this report refer to Consolidated-Tomoka Land Co. together with our consolidated subsidiaries.~~

We are a ~~diversified real estate operating company.~~ publicly traded, self-managed equity REIT that focuses on the ownership, management, and repositioning of high-quality retail and mixed-use properties located primarily in what we believe to be faster growing, business-friendly markets exhibiting accommodative business tax policies, outsized relative job and population growth, and where retail demand exceeds supply. We have pursued our investment strategy by investing primarily through fee simple ownership of our properties, commercial loans and preferred equity.

We own and manage, ~~thirty-six~~sometimes utilizing third-party property management companies, 23 commercial real estate properties in ~~eleven~~9 states in the United States. As of September 30, ~~2017,~~2023, we owned ~~twenty-four~~7 single-tenant and ~~twelve~~16 multi-tenant income-producing properties ~~with over 1.9~~comprising 4.1 million square feet of gross leasable space. We

In addition to our income property portfolio, as of September 30, 2023, our business included the following:

Management Services:

●

A fee-based management business that is engaged in managing Alpine Income Property Trust, Inc. (“PINE”), see Note 5, “Related Party Management Services Business”.

Commercial Loans and Investments:

●

A portfolio of three commercial loan investments and one preferred equity investment which is classified as a commercial loan investment.

Real Estate Operations:

●

A portfolio of subsurface mineral interests associated with approximately 352,000 surface acres in 19 counties in the State of Florida (“Subsurface Interests”); and

●

An inventory of mitigation credits produced by the Company’s formerly owned mitigation bank.

Our business also ~~own and manage a portfolio of undeveloped land totaling approximately 8,100 acres~~includes our investment in ~~the City of Daytona Beach, Florida (the “City”).~~PINE. As of September 30, ~~2017,~~2023, the fair value of our investment totaled $38.2 million, or 15.1% of PINE’s outstanding equity, including the units of limited partnership interest (“OP Units”) we ~~have four commercial loan investments including one fixed-rate and one variable–rate mezzanine commercial mortgage loan, a variable-rate B-Note representing a secondary tranche~~hold in ~~a commercial mortgage loan, and a fixed-rate first mortgage loan. We have golf operations~~Alpine Income Property OP, LP (the “PINE Operating Partnership”), which ~~consist~~are redeemable for cash, based upon the value of an equivalent number of shares of PINE common stock at the time of the ~~LPGA International Golf Club,~~redemption, or shares of PINE common stock on a one-for-one basis, at PINE’s election. Our investment in PINE generates investment income through the dividends distributed by PINE. In addition to the dividends we receive from PINE, our investment in PINE may benefit from any appreciation in PINE’s stock price, although no assurances can be provided that such appreciation will occur, the amount by which ~~is managed by a third party. We also lease some of~~ our land for nineteen billboards, have agricultural operations that are managed by a third party, which consist of leasing land for hay production, timber harvesting, and hunting leases, and own and manage Subsurface Interests (hereinafter defined). The results of our agricultural and subsurface leasing operationsinvestment will increase in value, or the timing thereof. Any dividends received from PINE are included in ~~Agriculture~~investment and ~~Other Income and Real Estate Operations, respectively, in our~~other income (loss) on the accompanying consolidated statements of operations.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim Financial Information

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. These unaudited consolidated financial statements do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements, and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2022, which provides a more complete understanding of the Company’s accounting policies, financial position, operating results, business properties, and other matters. The unaudited consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to present fairly the financial position of the Company and the results of operations for the interim periods.

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The results of operations for the three and nine ~~months~~month periods ended September 30, ~~2017~~2023 are not necessarily indicative of results to be expected for the year ending December 31, ~~2017.~~2023.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and other entities in which we have a controlling interest. Any real estate entities or properties included in the consolidated financial statements have been consolidated only for the periods that such entities or properties were owned or under control by us. All ~~significant~~ inter-company balances and transactions have been eliminated in the consolidated financial statements. ~~Noncontrolling interests~~As of September 30, 2023, the Company has an equity investment in ~~consolidated pass-through entities are recognized before income taxes.~~PINE.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Among other factors, fluctuating market conditions that can exist in the national real estate markets and the volatility and uncertainty in the financial and credit markets make it possible that the estimates and assumptions, most notably those related to the Company’s investments in income properties, could change materially due to continued volatility in the real estate and financial markets, or as a result of a significant dislocation in those markets.

Cash and Cash Equivalents

Cash and cash equivalents ~~include~~includes cash on hand, bank demand accounts, and money market accounts having original maturities of 90 days or less. The Company’s bank balances as of September 30, ~~2017~~2023 and December 31, 2022 include certain amounts over the Federal Deposit Insurance Corporation limits.

Restricted Cash

Restricted cash totaled ~~approximately $7.0~~$22.6 million at September 30, ~~2017~~2023, of which ~~approximately $5.5~~$21.8 million ~~of cash~~ is being held in various escrow accounts to be reinvested through the like-kind exchange structure into ~~one or more~~other income ~~properties. Approximately $415,000 is being held in a reserve account primarily for property taxes~~properties, and ~~insurance escrows in~~

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~~connection with our financing of two properties acquired in January 2013; approximately $836,000~~$0.8 million is being held in three ~~separate escrow~~interest and/or real estate tax reserve accounts related to three separate land transactions of which one closed in each of December 2013, December 2015, and February 2017; approximately $127,000 is being held in a reserve for interest and property taxes for the $3.0 million first mortgage loan investment originated in July 2017; and approximately $147,000 is being held in a capital replacement reserve account in connection with our financing of six income properties with Wells Fargo.

~~Investment Securities~~

~~In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 320,~~ ~~Investments – Debt and Equity Securities~~, the Company’s ~~investments in debt~~commercial loans and equity securities (“Investment Securities”) have been determined to be classified as available-for-sale. Available-for-sale securities are carried at fair value in the consolidated balance sheets, with the unrealized gains and losses, net of tax, reported in other comprehensive income.investments.

Realized gains and losses, and declines in value judged to be other-than-temporary related to equity securities, are included in investment income in the consolidated statements of operations. With respect to debt securities, when the fair value of a debt security classified as available-for-sale is less than its cost, management assesses whether or not: (i) it has the intent to sell the security or (ii) it is more likely than not that the Company will be required to sell the security before its anticipated recovery. If either of these conditions are met, the Company must recognize an other-than-temporary impairment through earnings for the differences between the debt security’s cost basis and its fair value, and such amount is included in investment income in the consolidated statements of operations. There were no other-than-temporary impairments during the three or nine months ended September 30, 2017 or 2016. The Company completed the disposition of its remaining position in Investment Securities during the three months ended March 31, 2016 resulting in a loss of approximately $576,000. There were no Investment Securities remaining as of September 30, 2017 or 2016.

The cost of Investment Securities sold is based on the specific identification method. Interest and dividends on Investment Securities classified as available-for-sale are included in investment income in the consolidated statements of operations.

The fair value of the Company’s available-for-sale equity securities were measured quarterly, on a recurring basis, using Level 1 inputs, or quoted prices for identical, actively traded assets. The fair value of the Company’s available-for-sale debt securities were measured quarterly, on a recurring basis, using Level 2 inputs.

Derivative Financial Instruments and Hedging Activity

~~Interest Rate Swap.~~ During the year ended December 31, 2016, in conjunction with the variable-rate mortgage loan secured by our property located in Raleigh, North Carolina leased to Wells Fargo Bank, NA (“Wells Fargo”), the Company entered into an interest rate swap to fix the interest rate (the “Interest Rate Swap”).

The Company accounts for its cash flow hedging ~~derivative~~derivatives in accordance with FASB ASC Topic 815-20, Derivatives and Hedging. Depending upon the hedge’s value at each balance sheet date, the ~~derivative is~~derivatives are included in either ~~Other Assets~~other assets or ~~Accrued~~accrued and ~~Other Liabilities~~other liabilities on the consolidated balance sheet at ~~its~~their fair value. On the date ~~the Interest Rate Swap~~each interest rate swap was entered into, the Company designated the ~~derivative~~derivatives as a hedge of the variability of cash flows to be paid related to the recognized long-term debt ~~liability.~~liabilities.

The Company ~~formally~~ documented the relationship between the hedging ~~instrument~~instruments and the hedged item, as well as its risk-management objective and strategy for undertaking the hedge ~~transaction.~~transactions. At the ~~hedge’s~~hedges’ inception, the Company ~~formally~~ assessed whether the ~~derivative~~derivatives that isare used in hedging the ~~transaction is~~transactions are highly effective in offsetting changes in cash flows of the hedged ~~item,~~items, and we will continue to do so on ~~an ongoing~~a quarterly basis. As the terms of the Interest Rate Swap and the associated debt are identical, the Interest Rate Swap qualifies for the shortcut method, therefore, it is assumed that there is no hedge ineffectiveness throughout the entire term of the Interest Rate Swap.

Changes in fair value of the ~~Interest Rate Swap~~hedging instruments that are highly effective and designated and qualified as a cash-flow ~~hedge~~hedges are recorded in other comprehensive income and loss, until earnings are affected by the variability in cash flows of the designated hedged ~~item.~~items (see Note 16, “Interest Rate Swaps”).

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Fair Value of Financial Instruments

The carrying amounts of the Company’s financial assets and liabilities including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued and other liabilities at September 30, ~~2017~~2023 and December 31, ~~2016,~~2022, approximate fair value because of the short maturity of these instruments. The carrying amount of the Company’s investments in variable rate commercial loans approximates fair value at September 30, 2017 and December 31, 2016, since the floating rates of the loans reasonably approximate current market rates for notes with similar risks and maturities. The carrying value of the Company’s ~~credit facility~~

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Credit Facility (hereinafter defined) as of September 30, 2023 and December 31, 2022, approximates current market rates for revolving credit arrangements with similar risks and maturities. The face value of the Company’s fixed rate commercial ~~loan investment,~~loans and investments, the 2026 Term Loan (hereinafter defined), the 2027 Term Loan (hereinafter defined), the 2028 Term Loan (hereinafter defined), mortgage ~~notes,~~note, and convertible debt isheld as of September 30, 2023 and December 31, 2022 are measured at fair value based on current market rates for financial instruments with similar risks and ~~maturities. See~~maturities (see Note 6,8, “Fair Value of Financial ~~Instruments.”~~Instruments”).

Fair Value Measurements

The Company’s estimates of fair value of financial and non-financial assets and liabilities is based on the framework established by U.S. GAAP. The framework specifies a hierarchy of valuation inputs which was established to increase consistency, clarity and comparability in fair value measurements and related disclosures. U.S. GAAP describes a fair value hierarchy based upon three levels of inputs that may be used to measure fair value, two of which are considered observable and one that is considered unobservable. The following describes the three levels:

●

Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities.

●

Level 2 – Valuation is based upon inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

●

Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques.

~~Classification of Commercial Loan Investments~~

Loans held for investment are stated at the principal amount outstanding and include the unamortized deferred loan fees offset by any applicable unaccreted purchase discounts and origination fees, if applicable. Loans held for sale are classified separately and stated at the lower of cost or fair value once a decision has been made to sell loans not previously for sale. See Note 3, “Commercial Loan Investments” for two loans classified as held for sale as of September 30, 2017.

~~Commercial Loan Investment Impairment~~

For each of the Company’s commercial loans held for investment, the Company evaluates the performance of the collateral property and the financial and operating capabilities of the borrower/guarantor, in part to assess whether any deterioration in the credit has occurred, and for possible impairment of the loan. Impairment would reflect the Company’s determination that it is probable that all amounts due according to the contractual terms of the loan would not be collected. Impairment is measured based on the present value of the expected future cash flows from the loan discounted at the effective rate of the loan or the fair value of the collateral. Upon measurement of impairment, the Company would record an allowance to reduce the carrying value of the loan with a corresponding recognition of loss in the results of operations. Significant exercise of judgment is required in determining impairment, including assumptions regarding the estimate of expected future cash flows, collectability of the loan, the value of the underlying collateral and other provisions including guarantees. The Company has determined that, as of September 30, 2017 and December 31, 2016, no allowance for impairment was required.

Recognition of Interest Income from Commercial ~~Loan~~Loans and Investments

Interest income on commercial ~~loan~~loans and investments includes interest payments made by the borrower and the accretion of purchase discounts and loan origination fees, offset by the amortization of loan costs. Interest payments are accrued

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based on the actual coupon rate and the outstanding principal balance and purchase discounts and loan origination fees are accreted into income using the effective yield method, adjusted for prepayments.

~~Impact Fees and~~

Mitigation Credits

~~Impact fees and mitigation~~

Mitigation credits are stated at historical cost. As these assets are sold, the related revenues and cost ~~basis~~of sales are reported as revenues from, and direct costs of, real estate operations, respectively, in the consolidated statements of operations.

Accounts Receivable

Accounts receivable related to income properties, which are classified in other assets on the consolidated balance sheets, primarily consist of accrued tenant reimbursable ~~expenses.~~expenses and other tenant receivables. Receivables related to ~~tenant reimbursable expenses~~income property tenants totaled ~~approximately $303,000~~$3.6 million and ~~$125,000~~$2.2 million as of September 30, ~~2017~~2023 and December 31, ~~2016,~~2022, respectively.

Accounts receivable related to real estate operations, which are classified in other assets on the consolidated balance sheets, totaled ~~approximately $2.4~~$0.8 million ~~and $3.8 million as of~~ as of September 30, ~~2017~~2023 and December 31, ~~2016, respectively. As more fully described in Note 9, “Other Assets,” these~~2022. The accounts receivable as of September 30, 2023 and December 31, 2022 are primarily related to the reimbursement of certain infrastructure costs completed by the Company in conjunction with two land sale transactions that closed during the fourth quarter of ~~2015.~~2015 as more fully described in Note 11, “Other Assets.”

~~Trade accounts receivable primarily consist~~

The amount due from the buyer of ~~receivables related to~~ the golf operations ~~which are classified in other assets on~~for the ~~consolidated balance sheets. Trade accounts receivable related~~rounds surcharge the Company paid to ~~golf operations, which primarily consist~~the City of ~~amounts due from members or from private events,~~Daytona Beach, totaled ~~approximately $219,000~~$0.1 million and ~~$326,000~~$0.2 million as of September 30, ~~2017~~2023 and December 31, ~~2016,~~2022, respectively.

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The collectability of the aforementioned receivables shall be considered and adjusted through an allowance for doubtful accounts which is ~~determined based~~included in income property revenue on the ~~aging~~consolidated statements of ~~the receivable and a review of the specifically identified accounts using judgments.~~operations. As of September 30, ~~2017~~2023 and December 31, ~~2016, no~~2022, the Company’s allowance for doubtful accounts ~~was required.~~totaled $2.3 million and $1.8 million, respectively.

Purchase Accounting for Acquisitions of Real Estate Subject to a Lease

Investments in real estate are carried at cost less accumulated depreciation and impairment losses, if any. The cost of investments in real estate reflects their purchase price or development cost. We evaluate each acquisition transaction to determine whether the acquired asset meets the definition of a business. Under ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, an acquisition does not qualify as a business when there is no substantive process acquired or substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets or the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay. Transaction costs related to acquisitions that are asset acquisitions are capitalized as part of the cost basis of the acquired assets, while transaction costs for acquisitions that are deemed to be acquisitions of a business are expensed as incurred. Improvements and replacements are capitalized when they extend the useful life or improve the productive capacity of the asset. Costs of repairs and maintenance are expensed as incurred.

In accordance with ~~the~~ FASB guidance, ~~on business combinations,~~ the fair value of the real estate acquired with in-place leases is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, the value of in-place leases, and the value of leasing costs, based in each case on their relative fair values.

The fair value of the tangible assets of an acquired leased property is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land, building and tenant improvements based on the determination of the fair values of these assets.

In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded as other assets or liabilities based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases, and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining term of the lease, including the probability of renewal periods.value. The capitalized above-market lease values are amortized as a reduction of rental income over the remaining terms of the respective leases. The capitalized below-market lease values are amortized as an increase to rental income over the initial term unless ~~the Company~~management believes that it is likely that the tenant will renew the ~~option whereby~~lease upon expiration, in which case the Company amortizes the value attributable to the renewal over the renewal period.

The aggregate value of other acquired intangible assets, consisting of in-place leases, is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates over (ii) the estimated fair value of the property as-if-vacant, determined as set forth above. The value of in-place leases ~~exclusive of the value of above-market~~ and ~~below-market in-place leases is~~leasing costs are amortized to expense over the remaining non-cancelable periods of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be written off.

The ~~value~~Company incurs costs related to the development and leasing of its properties. Such costs include, but are not limited to, tenant ~~relationships~~improvements, leasing commissions, rebranding, facility expansion and other capital improvements, and are included in construction in progress during the development period. When a construction project is ~~reviewed on individual transactions~~considered to be substantially complete, the capitalized costs are reclassified to the appropriate real estate asset and depreciation begins. The Company assesses the level of construction activity to determine the amount, if ~~future value was derived from~~any, of interest expense to be capitalized to the ~~acquisition.~~underlying construction projects.

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Assets Held for Sale

~~Prior~~Investments in real estate which are determined to ~~October 1, 2016,~~be “held for sale” pursuant to FASB Topic 360-10, Property, Plant, and Equipment are reported separately on the ~~Company determined that income property purchases subject to a lease, whether that lease is in-place or originated~~consolidated balance sheets at the ~~time~~lesser of ~~acquisition, qualify~~carrying value or fair value, less costs to sell. Real estate investments classified as a business combination, and acquisition costs were expensed in the period the transaction closes. In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations which clarified the definition of a business. Pursuant to ASU 2017-01, the acquisition of an income property subject to a lease no longer qualifies as a business combination, but rather an asset acquisition. The Company early adopted ASU 2017-01 effective October 1, 2016 on a prospective basis. Accordingly,held for ~~income property acquisitions during the fourth quarter of 2016 and during 2017, acquisition costs have been capitalized.~~ sale are not depreciated.

Sales of Real Estate

~~Gains~~

When income properties are disposed of, the related cost basis of the real estate, intangible lease assets, and intangible lease liabilities, net of accumulated depreciation and/or amortization, and any accrued straight-line rental income balance for the underlying operating leases are removed, and gains or losses from the dispositions are reflected in net income within gain (loss) on disposition of assets. In accordance with the FASB guidance, gains or losses on sales of real estate are generally recognized using the full accrual method.

Gains and losses on land sales, in addition to the sale of Subsurface Interests and mitigation credits, are accounted for as required by FASB ASC Topic ~~976-605-25,~~ ~~Accounting for Real Estate~~606, Revenue from Contracts with Customers. The Company recognizes revenue from ~~the sale of real estate at the time the sale is consummated, unless the property is sold on a deferred payment plan and the initial payment does not meet established criteria, or~~such sales when the Company ~~retains some form of continuing involvement~~transfers the promised goods in the ~~property.~~contract based on the transaction price allocated

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to the performance obligations within the contract. As market information becomes available, ~~real estate~~the underlying cost basis is analyzed and recorded at the lower of cost or market.

Income Taxes

The Company elected to be taxed as a REIT for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”) commencing with its taxable year ended December 31, 2020. The Company believes that, commencing with such taxable year, it has been organized and has operated in such a manner as to qualify for taxation as a REIT under the U.S. federal income tax laws. The Company intends to continue to operate in such a manner. As a REIT, the Company will be subject to U.S. federal and state income taxation at corporate rates on its net taxable income; the Company, however, may claim a deduction for the amount of dividends paid to its stockholders. Amounts distributed as dividends by the Company will be subject to taxation at the stockholder level only. While the Company must distribute at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, to qualify as a REIT, the Company intends to distribute all of its net taxable income. The Company is allowed certain other non-cash deductions or adjustments, such as depreciation expense, when computing its REIT taxable income and distribution requirement. These deductions permit the Company to reduce its dividend payout requirement under U.S. federal income tax laws. Certain states may impose minimum franchise taxes. To comply with certain REIT requirements, the Company holds certain of its non-REIT assets and operations through taxable REIT subsidiaries (“TRSs”) and subsidiaries of TRSs, which will be subject to applicable U.S. federal, state and local corporate income tax on their taxable income. For the periods presented, the Company held a total of two TRSs subject to taxation. The Company’s TRSs will file tax returns separately as C-Corporations.

The Company uses the asset and liability method to account for income ~~taxes.~~taxes for the Company’s TRSs. Deferred income taxes result primarily from the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes ~~see~~(see Note ~~17,~~20, “Income ~~Taxes.”~~Taxes”). In June 2006, the FASB issued additional guidance, which clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements included in income taxes. The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The interpretation also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, and disclosure and transition. In accordance with FASB guidance included in income taxes, the Company has analyzed its various federal and state filing positions and believes that its income tax filing positions and deductions are well documented and supported. Additionally, the Company believes that its accruals for tax liabilities are adequate. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to the FASB guidance.

NOTE 2.3. INCOME PROPERTIES

Leasing revenue consists of long-term rental revenue from retail, office, and commercial income properties, which is recognized as earned, using the straight-line method over the life of each lease. Lease payments below include straight-line base rental revenue as well as the non-cash accretion of above and below market lease amortization. The variable lease payments are comprised of percentage rent and reimbursements from tenants for common area maintenance, insurance, real estate taxes, and other operating expenses.

The components of leasing revenue are as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Leasing Revenue
Lease Payments	$	19,547	$	13,556	$	55,187	$	38,760
Variable Lease Payments		5,636		4,138		15,186		10,469
Total Leasing Revenue	$	25,183	$	17,694	$	70,373	$	49,229

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Minimum future base rental receipts under non-cancelable operating leases, excluding percentage rent and other lease payments that are not fixed and determinable, having remaining terms in excess of one year subsequent to September 30, 2023, are summarized as follows (in thousands):


Year Ending December 31,	Amounts
Remainder of 2023	$	20,578
2024		75,476
2025		70,529
2026		60,705
2027		49,104
2028		35,430
2029 and Thereafter (Cumulative)		58,431
Total	$	370,253

2023 Acquisitions. During the nine months ended September 30, ~~2017,~~2023, the Company acquired ~~three single-tenant income properties and two~~four buildings within an existing multi-tenant income ~~properties,~~property, one multi-tenant income property, and one vacant land parcel adjacent to an existing multi-tenant property for an aggregate purchase price of ~~approximately $40.0~~$80.0 million, or ~~an aggregate~~a total acquisition cost of ~~approximately $40.7~~$80.3 million, as follows:

●

Four properties, totaling 24,100 square feet, within the 28,100 square foot retail portion of Phase II of The Exchange at Gwinnett located in Buford, Georgia (the “Gwinnett Property”), for an aggregate purchase price of $14.6 million, or a total acquisition cost of $14.7 million including capitalized acquisition costs. The four properties are leased to six different tenants with a weighted average remaining lease term of 9.9 years at acquisition. The Company is under contract to acquire the remaining 4,000 square-foot property that makes up the remaining retail portion of Phase II of The Exchange at Gwinnett for a purchase price of $2.3 million. The Company previously purchased the Sprouts-anchored Phase I portion of The Exchange at Gwinnett in December 2021.

●

The Plaza at Rockwall, a multi-tenant income property located in Rockwall, Texas for a purchase price of $61.2 million, or a total acquisition cost of $61.3 million including capitalized acquisition costs. The Plaza at Rockwall comprises 446,500 square feet, was 95% occupied at acquisition, and had a weighted average remaining lease term of 4.2 years at acquisition.

●

A vacant land parcel adjacent to the previously acquired Collection at Forsyth property, located in the Forsyth County submarket of Atlanta, Georgia, for a purchase price of $4.3 million.

Of the aggregate $80.3 million total acquisition cost, ~~approximately $18.0~~$21.2 million was allocated to land, ~~approximately $19.3~~$53.6 million was allocated to buildings and improvements, ~~approximately $4.9~~and $8.7 million was allocated to intangible assets pertaining to the in-place lease value, leasing ~~fees~~costs, and above market lease value and ~~approximately $1.5~~$3.2 million was allocated to intangible liabilities for the below market lease value. The ~~weighted average~~ amortization period for the intangible assets and liabilities was ~~approximately 9.8~~5.6 years at acquisition. ~~The properties acquired during the nine months ended September 30, 2017 are described below:~~

Property

Remaining Lease
Tenant Description

Tenant Type

Property
Location

Date of
Acquisition

Square-Feet

Property
Acres

Purchase Price

Percentage
Leased

Term
(in years)
Staples, Inc. (an affiliate of)

Single-Tenant

Sarasota, Florida

01/27/17

18,120

1.2

$
4,075,000

100%

5.0
Grocery-Anchored Shopping Center (Westcliff)

Multi-Tenant

Fort Worth, Texas

03/01/17

136,185

10.3

15,000,000

96%

4.1
JoAnn Stores, Inc.

Single-Tenant

Boston, Massachusetts

04/06/17

22,500

2.6

6,315,000

100%

11.8
LA Fitness
Multi-Tenant Retail Building

Single-Tenant
Multi-Tenant

Tampa, Florida

04/28/17

45,000
6,715

5.3

14,650,000

100%

13.9

228,520

$
40,040,000

~~No income properties were disposed of during the nine months ended September 30, 2017.~~

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On April 7, 2017, rent commenced on the 15-year lease with 24 Hour Fitness, the anchor tenant at The Grove of Winter Park located in Winter Park, Florida. The lease is for approximately 40,000 square feet, or 36% of the 112,000 square foot multi-tenant retail center. As of October 27, 2017, the multi-tenant retail center was approximately 60% leased with nine different tenants including 24 Hour Fitness.

2023 Dispositions.During the nine months ended September 30, ~~2016,~~2023, the Company sold three income properties for an aggregate sales price of $22.9 million and aggregate gains on sales of $3.3 million. The sales consisted of (i) an outparcel of the multi-tenant property known as Eastern Commons, located in Henderson, Nevada, for $2.1 million, resulting in a gain of $0.8 million, (ii) an outparcel of the multi-tenant property known as Crossroads Towne Center, located in Chandler, Arizona, for $2.3 million, resulting in a gain of $1.2 million, and (iii) a single tenant office property located in Reston, Virginia leased to General Dynamics for $18.5 million, resulting in a gain of $1.3 million.

On October 12, 2023, as described in Note 24, “Subsequent Events,” the Company sold the Westcliff Shopping Center located in Fort Worth, Texas (the “Westcliff Property”), which was classified as held for sale as of September 30, 2023, for a sales price of $14.8 million. An impairment charge of $0.9 million was recognized on the Westcliff Property during the three months ended September 30, 2023, as described in Note 10, “Provision for Impairment.”

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2022 Acquisitions. During the nine months ended September 30, 2022, the Company acquired ~~seven single-tenant~~two multi-tenant income properties ~~and one multi-tenant income property,~~ for an aggregate purchase price of ~~approximately $49.8 million.~~$119.3 million, or a total acquisition cost of $119.7 million, as follows:

●

Price Plaza Shopping Center, a multi-tenant income property located in Katy, Texas for a purchase price of $39.1 million, or a total acquisition cost of $39.2 million including capitalized acquisition costs. Price Plaza Shopping Center comprises 205,813 square feet, was 95% leased at acquisition, and had a weighted average remaining lease term of 5.7 years at acquisition. In connection with the acquisition of Price Plaza Shopping Center, the company assumed a $17.8 million fixed-rate mortgage note, as further discussed in Note 15, “Long-Term Debt.”

●

Madison Yards, a multi-tenant grocery-anchored income property located in Atlanta, Georgia for a purchase price of $80.2 million, or a total acquisition cost of $80.5 million including capitalized acquisition costs. Madison Yards comprises 162,500 square feet, was 98% leased at acquisition, and had a weighted average remaining lease term of 10.4 years at acquisition.

~~Nineteen income properties were disposed of during~~Of the aggregate $119.7 million total acquisition cost, $35.4 million was allocated to land, $65.9 million was allocated to buildings and improvements, and $19.7 million was allocated to intangible assets pertaining to the in-place lease value, leasing costs, and above market lease value and $1.3 million was allocated to intangible liabilities for the below market lease value. The amortization period for the intangible assets and liabilities was 9.0 years at acquisition.

2022 Dispositions. During the nine months ended September 30, ~~2016 for an aggregate sales price of approximately $74.3 million. An impairment of approximately $210,000 was charged to earnings during~~2022, the nine months ended September 30, 2016 related to one of the sales completed during the second quarter of 2016 sales as more fully described in Note 8, “Impairment of Long-Lived Assets.” Additionally, an impairment of approximately $942,000 was charged to earnings during the nine months ended September 30, 2016 on theCompany sold six income properties, including (i) Party City, a single-tenant income property located in ~~Altamonte Springs, Florida leased to PNC Bank~~Oceanside, New York for ~~which~~$6.9 million, (ii) the sale closed in September 2016 as more fully described in Note 8, “Impairment of Long-Lived Assets.” Included in the nineteen income properties disposed of during the nine months ended September 30, 2016 were the Company’s portfolio of fourteenCarpenter Hotel ground lease, a single-tenant income property located in Austin, Texas, which was recorded as a commercial loan investment prior to its disposition, for $17.1 million, (iii) the multi-tenant Westland Gateway Plaza located in Hialeah, Florida, which was recorded as a commercial loan investment prior to its disposition, for $22.2 million, (iv) Chuy’s, a single-tenant property, located in Jacksonville, Florida for $5.8 million, (v) Firebirds, a single-tenant property, located in Jacksonville, Florida for $5.5 million, and (vi) 245 Riverside, a multi-tenant office income property located in Jacksonville, Florida for $23.6 million. The sale of these six properties ~~(the “Portfolio Sale”) for~~reflect a ~~sales price~~total disposition volume of ~~approximately $51.6~~$81.1 million, ~~which included the buyer’s assumption~~resulting in aggregate gains of ~~the Company’s existing $23.1 million mortgage loan secured by the Portfolio Sale properties.~~$4.7 million.

NOTE 3.4. COMMERCIAL ~~LOAN~~LOANS AND INVESTMENTS

Our investments in commercial loans or ~~similar~~similarly structured ~~finance~~ investments, such as preferred equity, mezzanine loans or other subordinated debt, have been and are expected to continue to be secured by ~~commercial or residential~~ real estate or the borrower’s pledge of its ownership interest in the entity that owns the real estate. The ~~first mortgage loans we invest in or originate~~investments are ~~for~~associated with commercial real estate located in the United States and its territories, and are current or performing with either a fixed or floating rate. Some of these loans may be syndicated in either a pari-passu or senior/subordinated structure. Commercial first mortgage loans generally provide for a higher recovery rate due to their senior position in the underlying collateral. Commercial mezzanine loans are typically secured by a pledge of the borrower’s equity ownership in the underlying commercial real estate. Unlike a mortgage, a mezzanine loan is not secured by a lien on the property. An investor’s rights in a mezzanine loan are usually governed by an intercreditor agreement that provides holders with the rights to cure defaults and exercise control on certain decisions of any senior debt secured by the same commercial property.

2023 Activity. On February 21, 2023, the borrower of the 4311 Maple Avenue mortgage note repaid the principal balance of $0.4 million, leaving no remaining balance outstanding as of September 30, 2023.

On ~~July 31, 2017,~~March 1, 2023, the Company originated a ~~$3.0~~$15.0 million first mortgage loan secured by the Founders Square property located in Dallas, Texas. The loan is interest-only with a ~~parcel~~term of ~~beachfront land in~~three years with a fixed interest rate of 8.75%. The Company received an origination fee of 1.0% or $0.15 million.

During the ~~City of Daytona Beach Shores, Florida which~~nine months ended September 30, 2023, the Company funded $2.2 million to the borrower ~~intends~~and received $0.6 million in principal repayments under the construction loan originated in January 2022 and secured by the property and improvements to ~~develop as~~be constructed thereon for the second phase of The Exchange at Gwinnett project located in Buford, Georgia. As of September 30, 2023, there is no remaining commitment to the borrower.

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Watters Creek Investment. On April 7, 2022, the Company entered into a ~~residential condominium~~preferred equity agreement to provide $30.0 million of funding towards the total investment in Watters Creek at Montgomery Farm, a grocery-anchored, mixed-use property located in Allen, Texas (the ~~“Beach Loan”~~“Watters Creek Investment”). The ~~Beach Loan~~Watters Creek Investment matures on ~~August 1, 2018, includes a~~April 6, 2025, has two one-year extension ~~option,~~options, bears a fixed interest rate of ~~11.00%,~~8.50% at the time of acquisition with increases during the initial term as well as the option terms, and requires payments of interest only prior to maturity. At closing, ~~a loan~~an origination fee of ~~$60,000~~$0.15 million was received by the Company. ~~Should~~The Watters Creek Investment represents $30.0 million, or approximately 23%, of funding towards the ~~borrower seek~~total investment in Watters Creek at Montgomery Farm, a grocery-anchored, mixed-use property located in Allen, Texas (the “Watters Creek Property”). The remaining funding is comprised of a combination of third-party sponsorship equity and a secured first mortgage.

The Company’s variable interest in the entity underlying the Watters Creek Investment is primarily due to ~~obtain financing for~~ the ~~development~~inherent credit risk associated with the $30.0 million fixed-return preferred investment. The day-to-day operations, including asset management and leasing, of the ~~project the Beach Loan would likely be paid off in connection with that financing.~~

~~As of September 30, 2017,~~Watters Creek Property are managed by an unrelated third-party. Pursuant to FASB ASC Topic 810, Consolidation, the Company ~~owned four performing commercial loan investments which have an aggregate outstanding principal balance~~determined we are not the primary beneficiary of ~~approximately $27.0 million. These loans are secured by real estate, or~~ the ~~borrower’s equity interest~~entity underlying the Watters Creek Investment; accordingly, the entity was not consolidated. The investment was recorded in real estate, located in Daytona Beach Shores, Florida, Sarasota, Florida, Dallas, Texas, and Atlanta, Georgia, and have an average remaining maturity of approximately 0.9 years and a weighted average interest rate of 9.6%.

The Company sold its two commercial loan investments secured by hotel properties in Atlanta, Georgia and Dallas, Texas which have an aggregate principal value of $15.0 million at a slight premium to par. See Note 21, “Subsequent Events.” These two loans have been classified as held for sale on the ~~accompanying~~ consolidated balance sheets as ~~of September 30, 2017 as summarized below:~~

Date of

Maturity

Original Face

Current Face

Lower of Cost

Description

Investment

Date

Amount

Amount

or Market

Coupon Rate
Mezz – Hotel – Atlanta, GA

January 2014

February 2019

$
5,000,000

$
5,000,000

$
5,000,000

12.00%
Mezz – Hotel, Dallas, TX

September 2014

September 2018

10,000,000

10,000,000

10,000,000

30 day LIBOR
plus 7.50%
Total

$
15,000,000

$
15,000,000

$
15,000,000

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~~The portion of the Company’s~~a commercial loan investment ~~portfolio held~~at the time of acquisition. The significant factors related to this determination included, but were not limited to, the Company not having the power to direct the activities of the entity underlying the Watters Creek Investment due to (i) the day-to-day operations being managed by an unrelated third-party and (ii) the Company’s position as minority lender with fixed returns and maturity dates for ~~investment was~~the repayment of the $30.0 million preferred investment.

The Company’s commercial loans and investments were comprised of the following at September 30, ~~2017:~~2023 (in thousands):

Date of

Maturity

Original Face

Current Face

Carrying

Description

Investment

Date

Amount

Amount

Value

Coupon Rate

B-Note – Retail Shopping Center, Sarasota, FL

May 2014

June 2018

$
8,960,467

$
8,960,467

$
8,960,467

30 ‑day LIBOR
plus 7.50%

First Mortgage - Land Parcel, Daytona Beach, FL

July 2017

August 2018

3,000,000

3,000,000

2,950,144

11.00%

Total

$
11,960,467

$
11,960,467

$
11,910,611

~~The~~


Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon Rate
Construction Loan – The Exchange At Gwinnett – Buford, GA	January 2022	January 2024	$	8,700	$	1,857	$	1,848	7.25%
Preferred Investment – Watters Creek – Allen, TX	April 2022	April 2025		30,000		30,000		29,924	8.75%
Mortgage Note – Founders Square – Dallas, TX	March 2023	March 2026		15,000		15,000		14,879	8.75%
Promissory Note – Main Street – Daytona Beach, FL	June 2023	May 2033		400		400		400	7.00%
			$	54,100	$	47,257	$	47,051
CECL Reserve								(479)
Total Commercial Loans and Investments							$	46,572

With respect to the $1.5 million improvement loan at Ashford Lane originated in May 2022, during the nine months ended September 30, 2023, the Company took possession of the improvements that were funded by such loan pursuant to the applicable security agreement and, accordingly, the carrying value of the ~~commercial loan~~ investment ~~portfolio at September 30, 2017 consisted of the following:~~was reclassified as building and improvements.


	~~Total~~
~~Current Face Amount~~	$	~~11,960,467~~
~~Unamortized Fees~~		—
~~Unaccreted Origination Fees~~		~~(49,856)~~
~~Total Commercial Loan Investments~~	$	~~11,910,611~~

The Company’s commercial ~~loan investment portfolio was~~loans and investments were comprised of the following at December 31, ~~2016:~~2022 (in thousands):

Date of

Maturity

Original Face

Current Face

Carrying

Description

Investment

Date

Amount

Amount

Value

Coupon Rate

Mezz – Hotel – Atlanta, GA

January 2014

February 2019

$
5,000,000

$
5,000,000

$
5,000,000

12.00%

B-Note – Retail Shopping Center, Sarasota, FL

May 2014

June 2017

8,960,467

8,960,467

8,960,467

30 day LIBOR
plus 7.50%

Mezz – Hotel, Dallas, TX

September 2014

September 2017

10,000,000

10,000,000

10,000,000

30 day LIBOR
plus 7.25%

Total

$
23,960,467

$
23,960,467

$
23,960,467


Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon Rate
Mortgage Note – 4311 Maple Avenue – Dallas, TX	October 2020	April 2023	$	400	$	400	$	395	7.50%
Construction Loan – The Exchange At Gwinnett – Buford, GA	January 2022	January 2024		8,700		220		173	7.25%
Preferred Investment - Watters Creek – Allen, TX	April 2022	April 2025		30,000		30,000		29,887	8.50%
Improvement Loan - Ashford Lane – Atlanta, GA	May 2022	April 2025		1,500		1,453		1,453	12.00%
			$	40,600	$	32,073	$	31,908

The carrying value of the commercial ~~loan investment~~loans and investments portfolio ~~as of~~at September 30, 2023 and December 31, ~~2016 was~~2022 consisted of the following (in thousands):


	As of
	September 30, 2023		December 31, 2022
Current Face Amount	$	47,257	$	32,073
Unaccreted Origination Fees		(206)		(161)
CECL Reserve		(479)		(4)
Total Commercial Loans and Investments	$	46,572	$	31,908

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NOTE 5. RELATED PARTY MANAGEMENT SERVICES BUSINESS

The Company’s management fee income is within the scope of FASB ASC Topic 606, Revenue from Contracts with Customers. Management fee income is recognized as revenue over time, over the period the services are performed.

Alpine Income Property Trust. Pursuant to the Company’s management agreement with PINE, the Company generates a base management fee equal to 0.375% per quarter of PINE’s total equity (as defined in the management agreement and based on a 1.5% annual rate), calculated and payable in cash, quarterly in arrears. The Company also has an opportunity to achieve additional cash flows as manager of PINE pursuant to an annual incentive fee based on PINE’s total stockholder return exceeding an 8% cumulative annual hurdle rate (the “Outperformance Amount”) subject to a high-water mark price. PINE would pay the Company an incentive fee with respect to each annual measurement period in an amount equal to the ~~face amount.~~greater of (i) $0.00 and (ii) the product of (a) 15% multiplied by (b) the Outperformance Amount multiplied by (c) the weighted average shares. No ~~commercial loan investments were classified as held~~incentive fee was earned for ~~sale as of~~the year ended December 31, ~~2016.~~2022.

~~NOTE 4. LAND AND SUBSURFACE INTERESTS~~

~~As of~~During the three and nine months ended September 30, ~~2017,~~2023, the Company ~~owned approximately 8,100 acres of undeveloped land in Daytona Beach, Florida, along six miles of~~earned management fee revenue from PINE totaling $1.1 million and $3.3 million, respectively. Dividend income for three and nine months ended September 30, 2023 totaled $0.6 million and $1.9 million, respectively. During the ~~west~~three and ~~east sides of Interstate 95. Currently,~~nine months ended September 30, 2022, the ~~majority of this land is used for agricultural purposes. Approximately 1,100 acres of our land holdings are located on the east side of Interstate 95~~Company earned management fee revenue from PINE totaling $0.9 million and are generally well suited for commercial development. Approximately 7,000 acres of our land holdings are located on the west side of Interstate 95 and the majority of this land is generally well suited for residential development. Included in the western land is approximately 1,100 acres, primarily an 850-acre parcel and three smaller parcels, which are located further west of Interstate 95 and a few miles north of Interstate 4 that is generally well suited for industrial purposes.

~~Real estate operations revenue consisted of the following~~$2.8 million, respectively. Dividend income for the three and nine months ended September 30, ~~2017~~2022, totaled $0.6 million and ~~2016, respectively:~~

Three Months Ended
September 30, 2017

Three Months Ended
September 30, 2016

Nine Months Ended
September 30, 2017

Nine Months Ended
September 30, 2016
Revenue Description

($000's)

($000's)

($000's)

($000's)
Land Sales Revenue

$
—

$
318

$
39,564

$
508
Tomoka Town Center - Percentage of Completion Revenue

—

3,654

—

16,456
Revenue from Reimbursement of Infrastructure Costs

—

—

1,276

—
Impact Fee and Mitigation Credit Sales

548

209

1,987

481
Subsurface Revenue

2,374

463

2,827

1,535
Fill Dirt and Other Revenue

4

—

4

—
Total Real Estate Operations Revenue

$
2,926

$
4,644

$
45,658

$
18,980

~~The Tomoka Town Center consists of approximately 235 acres of which approximately 180 acres~~$1.7 million, respectively. Management fee revenue from PINE, included in management services, and dividend income, included in investment and other loss, are developable. During 2015 and 2016, land sales with a gross sales price totaling approximately $21.4 million within the Tomoka Town Center consisted of sales of approximately 99 acres to Tanger Outlets, Sam’s Club, and North American Development Group (“NADG”) (the “Tomoka Town Center Sales Agreements”). The Company performed certain infrastructure

~~Table of Contents~~

~~work, beginning~~reflected in the ~~fourth quarter~~accompanying consolidated statements of ~~2015 through completion~~operations.

The following table represents amounts due from (to) PINE as of September 30, 2023 and December 31, 2022 which are included in other assets on the consolidated balance sheets (in thousands):


	As of
Description	September 30, 2023		December 31, 2022
Management Services Fee due From PINE	$	1,095	$	993
Dividend Receivable		337		337
Other		133		(30)
Total	$	1,565	$	1,300

On November 26, 2019, as part of PINE’s IPO, the Company sold PINE 15 properties for aggregate cash consideration of $125.9 million. In connection with the IPO, the Company contributed to the PINE Operating Partnership five properties in exchange for an aggregate of 1,223,854 OP Units, which had an initial value of $23.3 million. Additionally, on November 26, 2019, the Company purchased 394,737 shares of PINE common stock for a total purchase price of $7.5 million in a private placement and 421,053 shares of PINE common stock in the ~~fourth quarter~~IPO for a total purchase price of ~~2016, which required~~$8.0 million.

On October 26, 2021, the ~~sales~~Board authorized the purchase by the Company of up to $5.0 million in shares of common stock of PINE (the “Prior PINE Share Purchase Authorization”). Pursuant to the Prior PINE Share Purchase Authorization, during the year ended December 31, 2022, CTO purchased 155,665 shares of PINE common stock in the open market for $2.7 million, or an average price per share of $17.57. Pursuant to the Prior PINE Share Purchase Authorization, during the year ended December 31, 2021, the Company purchased 8,088 shares of PINE common stock on the ~~Tomoka Town Center Sales Agreements~~open market for a total of $0.1 million, or an average price of $17.65 per share.

On February 16, 2023, the Board cancelled the Prior PINE Share Purchase Authorization and authorized the purchase by the Company of up to ~~be recognized on the percentage-of-completion basis. As the infrastructure work was completed~~$2.1 million in ~~the fourth quarter~~shares of ~~2016, all revenue related~~common stock of PINE (the “2023 PINE Share Purchase Authorization”). Pursuant to the Tomoka Town Center Sales Agreements had been recognized as of December 31, 2016. The timing of the remaining reimbursements for the cost of the infrastructure work which totals approximately $2.4 million is more fully described in Note 9, “Other Assets.”

Tanger Outlets completed its approximately 350,000 square foot outlet mall in November 2016. As of October 30, 2017, NADG has begun pre-construction on its approximately 500,000 square foot retail power center.

~~During~~2023 PINE Share Purchase Authorization, during the nine months ended September 30, ~~2017,~~2023, the Company ~~completed~~purchased 129,271 shares of PINE common stock on the ~~sale~~open market for a total of ~~approximately 19 acres to NADG (the “Third NADG Land Sale”). The remaining developable acreage~~$2.1 million, or an average price of ~~approximately 62 acres is currently under contract with NADG as described in the land pipeline in Note 18, “Commitment and Contingencies.”~~

~~Land Sales.~~ $16.21 per share. No ~~land sales~~purchases of PINE common stock were ~~completed~~made during the three months ended September 30, ~~2017. During the nine months ended~~2023.

As of September 30, ~~2017, a total~~2023, CTO owns, in the aggregate, 1,223,854 OP Units and 1,108,814 shares of ~~approximately 1,669 acres were sold for approximately $39.6~~PINE common stock, representing an investment totaling $38.2 million, ~~as described below:~~

Gross Sales

Price per Acre

Gain

Date of

No. of

Price

($ Rounded

on Sale


Buyer (or Description)

Location

Sale

Acres

($000's)

000's)

($000's)

1

Minto Communities, LLC

West of I-95

02/10/17

1,581.00

$
27,151

$
17,000

$
20,041

2

Commercial

East of I-95

03/22/17

6.35

1,556

245,000

11

Subtotal - Q1 2017

1,587.35

28,707

18,000

20,052

3

Commercial

East of I-95

04/05/17

27.50

3,218

117,000

2,955

4

Commercial

East of I-95

04/13/17

4.50

1,235

274,000

13

5

Commercial

West of I-95

04/25/17

30.00

2,938

98,000

627

6

NADG - Parcel B-I (FPII)

East of I-95

06/27/17

19.43

3,467

178,000

3,263
(1)

Subtotal - Q2 2017

81.43

10,858

133,000

6,858

YTD Q3 2017

1,668.78

$
39,565

$
24,000

$
26,910

~~(1)The gain~~or 15.1% of ~~approximately $3.3 million on the Third NADG Land Sale includes an infrastructure reimbursement payment of approximately $955,000 received in conjunction with the closing on June 27, 2017.~~PINE’s outstanding equity.

A total of 4.5 acres were sold during the three months ended September 30, 2016 for approximately $205,000. A total of approximately 12.0 acres were sold during the nine months ended September 30, 2016 for approximately $2.4 million as described below:

Gross Sales

Gain

Date of

No. of

Price (1)

Price

on Sale


Buyer (or Description)

Location

Sale

Acres

($000's)

per Acre

($000's)
1

Commercial / Retail

East of I-95

02/12/16

3.1

$
190

$
61,000

$
145
2

NADG - OutParcel

East of I-95

03/30/16

4.4

2,000

455,000

1,304

Subtotal - Q1 2016

7.50

2,190

292,000

1,449

3

Minto Sales Center

West of I-95

09/27/16

4.50

205

46,000

126

Subtotal - Q3 2016

4.50

205

46,000

126

YTD Q3 2016

12.0

$
2,395

$
200,000

$
1,575

~~(1)~~Land Sales Revenue for the nine months ended September 30, 2016 is equal to the Gross Sales Price of land sales of $2.40 million, less the $2.0 million sales price for the NADG – OutParcel, as the NADG – OutParcel revenue is included in Tomoka Town Center – Percentage of Completion Revenue, plus approximately $113,000 of incentives received and earned during the three months ended September 30, 2016 related to the Distribution Center sale which closed during 2014.

~~Pipeline.~~ ~~For a description of our land which is currently under contract, see the land pipeline in Note 18, “Commitment and Contingencies.”~~

~~Land Impairments.~~ There were no impairment charges related to the Company’s undeveloped land during the nine months ended September 30, 2017. For a description of impairment charges totaling approximately $1.0 million on the

Table of Contents

~~Company’s undeveloped land during the nine months ended September 30, 2016, see Note 8, “Impairment of Long-Lived Assets.”~~

~~Beachfront Development.~~ During the year ended December 31, ~~2015,~~2022, PINE exercised its right, pursuant to an Exclusivity and Right of First Offer Agreement between the Company ~~acquired, through a real estate venture with an unaffiliated third party institutional investor, an interest in approximately six acres of vacant beachfront~~and PINE (the “ROFO Agreement”), to purchase one single-tenant income property ~~located in Daytona Beach, Florida. The property was acquired for approximately $11.3 million of which~~from the Company ~~contributed approximately $5.7 million. As~~for a purchase price of ~~December 31, 2015, the real estate venture~~$6.9 million, which sale was fully consolidated as the Company determined that it was the primary beneficiary of the variable interest entity. On November 17, 2016, the Company acquired the unaffiliated third party’s 50% interest for approximately $4.8 million, a discount of approximately $879,000. The discount was recorded through equitycompleted on ~~the consolidated balance sheet during~~January 7, 2022. During the year ended December 31, ~~2016. The~~2021, PINE exercised its right to purchase the following properties from the Company ~~evaluated its interest in~~pursuant to the ~~six-acre vacant beachfront~~ROFO Agreement: (i) a portfolio of six net leased properties for an aggregate purchase price of $44.5 million, and (ii) one single-tenant income property for ~~impairment~~a purchase price of $11.5 million.

NOTE 6. REAL ESTATE OPERATIONS

Real Estate Operations

Land and ~~determined that no impairment was necessary as of~~development costs at September 30, 2023 and December 31, ~~2016. As the Company owns the entire real estate venture~~2022 were as ~~of September 30, 2017, there is no longer a consolidated VIE.~~follows (in thousands):

The cost basis of the six-acre vacant beachfront property asset totaled approximately $11.7 million as of September 30, 2017 which includes costs for entitlement. The beachfront property received approval of the rezoning and entitlement of the site to allow for the development of two restaurants and also for the future potential development of up to approximately 1.2 million square feet of vertical density. In the first quarter of 2017, the Company executed a 15-year lease agreement with the operator of LandShark Bar & Grill, for an approximately 6,264 square foot restaurant property the Company will develop on the parcel. The annual rent under the lease is based on a percentage of the tenant’s net operating income (“NOI”) until the Company has received its investment basis in the property and thereafter, the Company will receive a lower percentage of the tenant’s NOI during the remaining lease term. In the second quarter of 2017, the Company executed a 15-year lease agreement with the tenant, Cocina 214 Restaurant & Bar, for the second restaurant property to be developed on the parcel. The annual rent is equal to the greater of $360,000 per year or a certain percentage of gross sales. The lease also provides for additional percentage rent upon the achievement of certain gross sales thresholds. The Company completed the design phase and commenced construction on the two restaurants during the three months ended September 30, 2017.


	As of
	September 30, 2023		December 31, 2022
Land and Development Costs	$	358	$	358
Subsurface Interests		340		327
Total Land and Development Costs	$	698	$	685

Subsurface Interests. As of September 30, 2017, the Company has incurred approximately $2.2 million of design and construction costs. See Note 18, “Commitment and Contingencies” for the total expected cost to be incurred for the development of the site and both restaurants. The Company expects the development of the two restaurant properties to be completed in time for the tenants to commence operations during January of 2018. Upon completion of the construction of the two income properties and commencement of the tenant leases, the total investment in the beach parcel will be classified as Income Properties, Land, Building, and Improvements, within the Property, Plant, and Equipment classification on the Company’s consolidated balance sheets.

~~Other Real Estate Assets.~~ The Company owns impact fees with a cost basis of approximately $416,000 and mitigation credits with a cost basis of approximately $849,000 for a combined total of approximately $1.3 million as of September 30, 2017. During the nine months ended September 30, 2017, the Company sold mitigation credits for approximately $1.5 million, for a gain of approximately $1.2 million, or $0.14 per share, after tax. Additionally, the Company recorded the transfer of mitigation credits with a cost basis of approximately $298,000 as a charge to direct cost of revenues of real estate operations during the nine months ended September 30, 2017, as more fully described in Note 18, “Commitments and Contingencies.” During the nine months ended September 30, 2017 and 2016, the Company received cash payments of approximately $506,000 and $481,000, respectively, for impact fees with a cost basis that was generally of equal value.

As of December 31, 2016, the Company owned impact fees with a cost basis of approximately $925,000 and mitigation credits with a cost basis of approximately $1.4 million for a combined total of approximately $2.3 million.

~~Subsurface Interests.~~ ~~As of September 30, 2017,~~2023, the Company owns ~~full or fractional subsurface oil, gas, and mineral interests underlying approximately 462,000 “surface”~~352,000 acres of ~~land owned by others in 20 counties in Florida (the “Subsurface Interests”).~~Subsurface Interests. The Company leases certain of the Subsurface Interests to mineral exploration firms for exploration. ~~Our~~The Company’s subsurface operations consist of revenue from the leasing of exploration rights and in some instances, additional revenues from royalties applicable to production from the leased ~~acreage.~~

acreage, which revenues are included within real estate operations in the consolidated statements of operations. During the three ~~months ended September 30, 2017, the Company sold~~ approximately 38,750 acres of subsurface interests in Osceola County, Florida for approximately $2.1 million (the “Osceola Subsurface Sale”). The gain from the Osceola Subsurface Sale totaled approximately $2.08 million, or $0.23 per share, after tax. ~~The Company expects to utilize the proceeds from this sale to acquire an income property through the 1031 like-kind exchange structure.~~

~~Table of Contents~~

During 2011, an eight-year oil exploration lease was executed. On September 20, 2017, the Company amended the oil exploration lease to, among other things, extend the expiration of the original term for five additional years to the new expiration date of September 22, 2024. The lease calls for annual lease payments which are recognized as revenue ratably over the respective twelve-month lease periods. In addition, non-refundable drilling penalty payments are made as required by the drilling requirements in the lease which are recognized as revenue when received.

~~Lease payments on the respective acreages~~ and ~~drilling penalties received through lease year seven are as follows:~~

Acreage

Lease Year

(Approximate)

Florida County

Lease Payment (1)

Drilling Penalty (1)

Lease Year 1 - 9/23/2011 - 9/22/2012

136,000

Lee and Hendry

$
913,657

$
—

Lease Year 2 - 9/23/2012 - 9/22/2013

136,000

Lee and Hendry

922,114

—

Lease Year 3 - 9/23/2013 - 9/22/2014

82,000

Hendry

3,293,000

1,000,000

Lease Year 4 - 9/23/2014 - 9/22/2015

42,000

Hendry

1,866,146

600,000

Lease Year 5 - 9/23/2015 - 9/22/2016

25,000

Hendry

1,218,838

175,000

Lease Year 6 - 9/23/2016 - 9/22/2017

15,000

Hendry

806,683

150,000

Lease Year 7 - 9/23/2017 - 9/22/2018

15,000

Hendry

806,683

50,000

Total Payments Received to Date

$
9,827,121

$
1,975,000

~~(1)~~Generally, cash payment for the Lease Payment and Drilling Penalty is received on or before the first day of the lease year. The Drilling Penalty, which is due within thirty days from the end of the prior lease year, is recorded as revenue when received, while the Lease Payment is recognized on a straight-line basis over the respective lease term. Pursuant to the amendment for the Year 7 renewal, the Lease Payment and Drilling Penalty were both received on October 11, 2017. See separate disclosure of revenue recognized per period below.

The terms of the lease state the Company will receive royalty payments if production occurs, and may receive additional annual rental payments if the lease is continued in years eight through thirteen. The lease is effectively thirteen one-year terms as the lessee has the option to terminate the lease at the end of each lease year.

Lease income generated by the annual lease payments is recognized on a straight-line basis over the guaranteed lease term. For the three months ended September 30, 2017 and 2016, lease income of approximately $203,000 and $297,000, respectively, was recognized. For the nine months ended September 30, ~~2017~~2023, the Company sold subsurface oil, gas, and ~~2016, lease income~~mineral rights of ~~approximately $603,000~~465 acres for a sales price of $0.6 million and ~~$904,000, respectively, was recognized. There can be no assurance that~~3,481 acres for a sales price of $1.0 million, respectively. During the ~~oil exploration lease will be extended beyond the expiration of the current term of September 22, 2018 or, if extended, the terms or conditions of such extension.~~

~~During the~~three and nine months ended September 30, ~~2017 and 2016,~~2022, the Company ~~also received~~sold subsurface oil, ~~royalties from operating oil wells on 800~~gas, and mineral rights of 1,500 acres ~~under~~for a ~~separate lease with~~sales price of $0.7 million and 14,582 acres for a separate operator. Revenues received from oil royalties totaled approximately $19,000 and $16,000, during the three months ended September 30, 2017 and 2016, respectively. Revenues received from oil royalties totaled approximately $69,000 and $32,000, during the nine months ended September 30, 2017 and 2016,sales price of $1.6 million, respectively.

The Company is not prohibited from ~~the disposition of~~selling any or all of its Subsurface Interests. Should the Company complete a transaction to sell all or a portion of its Subsurface Interests, the Company may utilize the like-kind exchange structure in acquiring one or more replacement investments including income-producing properties. The Company may release surface entry rights or other rights upon request of a surface owner for a negotiated release fee typically based on a percentage of the surface value. ~~There were no releases~~Should the Company complete a transaction to sell all or a portion of ~~surface entry rights during~~its Subsurface Interests or complete a release transaction, the ~~nine months ended September 30, 2017.~~Company may utilize the like-kind exchange structure in acquiring one or more replacement investments including income-producing properties. Cash payments for the release of surface entry rights totaled ~~approximately $450,000 during~~$0.5 million and $0.2 million in the nine months ended September 30, ~~2016, which is included in revenue~~2023 and 2022, respectively.

Mitigation Credits. The Company owns an inventory of mitigation credits with a cost basis of $1.9 million as of September 30, 2023. As of December 31, 2022, the Company owned mitigation credits and mitigation credit rights with an aggregate cost basis of $2.6 million. During the nine months ended September 30, 2023, the remaining mitigation credit rights were released and transferred to mitigation credits as they became available for sale. On December 29, 2022, the Company completed the sale of the entity that owned the mitigation bank previously owned by the Company. A balance of mitigation credits and mitigation credit rights were retained by the Company as part of the sale agreement.

Revenues and the cost of sales of mitigation credit sales are reported as revenues from, and direct costs of, real estate operations, respectively, in the consolidated statements of operations. During the nine months ended September 30, 2023, 9.45 mitigation credits were sold for $1.1 million resulting in a gain of $0.3 million. During the nine months ended September 30, 2022, 26.62 credits were sold for an aggregate $2.6 million resulting in a gain of $0.8 million.

NOTE 5.7. INVESTMENT SECURITIES

~~During the first quarter~~

As of ~~2016,~~September 30, 2023, the Company ~~completed~~owns, in the ~~disposition~~aggregate and on a fully diluted basis, 2.33 million shares of ~~its remaining position~~PINE, or 15.1% of PINE’s total shares outstanding for an investment value of $38.2 million, which total includes 1.2 million OP Units, or 7.9%, which the Company received in ~~investment securities, including~~exchange for the contribution of certain income properties to the PINE Operating Partnership, in addition to 1,108,814 shares of common stock ~~and debt~~owned by the Company, or 7.2%. The Company has elected the fair value option related to the aggregate investment in securities of aPINE pursuant to ASC 825, otherwise such investments would have been accounted for under the equity method. For detailed financial information

Table of Contents

regarding PINE, please refer to its financial statements, which are publicly ~~traded real estate company, with a total basis~~available on the website of ~~approximately $6.8 million, resulting in net proceeds of approximately $6.3 million, or a loss of approximately $576,000.~~the Securities and Exchange Commission at http://www.sec.gov under the ticker symbol “PINE.”

The Company ~~had no remaining~~calculates the unrealized gain or loss based on the closing stock price of PINE at each respective balance sheet date. The unrealized, non-cash gains and losses resulting from the changes in the closing stock price of PINE are included in investment and other loss in the accompanying consolidated statements of operations.

The Company’s available-for-sale securities as of September 30, ~~2017 or~~2023 and December 31, ~~2016.~~2022 are summarized below (in thousands):


	Cost		Unrealized Gains in Investment Income		Unrealized Losses in Investment Income		Estimated Fair Value (Level 1 Inputs)
September 30, 2023
Common Stock	$	20,482	$	—	$	(2,342)	$	18,140
Operating Units		23,253		—		(3,231)		20,022
Total Equity Securities		43,735		—		(5,573)		38,162
Total Available-for-Sale Securities	$	43,735	$	—	$	(5,573)	$	38,162

December 31, 2022
Common Stock	$	18,382	$	308	$	—	$	18,690
Operating Units		23,253		98		—		23,351
Total Equity Securities		41,635		406		—		42,041
Total Available-for-Sale Securities	$	41,635	$	406	$	—	$	42,041

~~Table of Contents~~

~~The following is a table reflecting the gains and losses recognized on the sale of investment securities during the nine months ended September 30, 2017 and 2016:~~

For the nine months ended September 30,


2017

2016

Proceeds from the Disposition of Debt Securities

$
—

$
827,738

Cost Basis of Debt Securities Sold

—

(843,951)

Loss recognized in Statement of Operations on the Disposition of Debt Securities

$
—

$
(16,213)

Proceeds from the Disposition of Equity Securities

—

5,424,624

Cost Basis of Equity Securities Sold

—

(5,983,978)

Gain (Loss) recognized in Statement of Operations on the Disposition of Equity Securities

$
—

$
(559,354)

Total Gain (Loss) recognized in Statement of Operations on the Disposition of Debt and Equity Securities

$
—

$
(575,567)

NOTE 6.8. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents the carrying value and estimated fair value of the Company’s financial instruments not carried at fair value on the consolidated balance sheets at September 30, ~~2017~~2023 and December 31, ~~2016:~~2022 (in thousands):


	September 30, 2017				December 31, 2016
	Carrying		Estimated		Carrying		Estimated
	Value		Fair Value		Value		Fair Value

									September 30, 2023				December 31, 2022
									Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Cash and Cash Equivalents - Level 1	$	5,944,544	$	5,944,544	$	7,779,562	$	7,779,562	$	7,015	$	7,015	$	19,333	$	19,333
Restricted Cash - Level 1		7,027,196		7,027,196		9,855,469		9,855,469	$	22,618	$	22,618	$	1,861	$	1,861
Commercial Loan Investments - Level 2		11,910,611		12,025,860		23,960,467		24,228,242
Commercial Loan Investments - Held for Sale - Level 2		15,000,000		15,181,779		—		—
Commercial Loans and Investments - Level 2									$	46,572	$	47,809	$	31,908	$	32,960
Long-Term Debt - Level 2		173,651,530		178,222,572		166,245,201		171,111,337	$	548,219	$	517,666	$	445,583	$	426,421

To determine estimated fair values of the financial instruments listed above, market rates of interest, which include credit assumptions, were used to discount contractual cash flows. The estimated fair values are not necessarily indicative of the amount the Company could realize on disposition of the financial instruments. The use of different market assumptions or estimation methodologies could have a material effect on the estimated fair value amounts.

~~The following table presents the fair value~~

Table of ~~assets measured on a recurring basis by Level as of September 30, 2017:~~Contents

Fair Value at Reporting Date Using

Quoted Prices in

Significant

Active Markets

Significant Other

Unobservable


September 30,

for Identical

Observable Inputs

Inputs

2017

Assets (Level 1)

(Level 2)

(Level 3)



Cash Flow Hedge - Interest Rate Swap

$
409,985

$
—

$
409,985

$
—
Total

$
409,985

$
—

$
409,985

$
—

The following table presents the fair value of assets measured on a recurring basis by ~~Level~~level as of September 30, 2023 and December 31, ~~2016:~~2022 (in thousands). See Note 16, “Interest Rate Swaps” for further disclosure related to the Company’s interest rate swaps.

Fair Value at Reporting Date Using

Quoted Prices in

Significant

Active Markets

Significant Other

Unobservable


December 31,

for Identical

Observable Inputs

Inputs

2016

Assets (Level 1)

(Level 2)

(Level 3)



Cash Flow Hedge - Interest Rate Swap

$
416,590

$
—

$
416,590

$
—
Total

$
416,590

$
—

$
416,590

$
—


			Fair Value at Reporting Date Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2023
Cash Flow Hedge - 2026 Term Loan Interest Rate Swaps	$	5,699	$	—	$	5,699	$	—
Cash Flow Hedge - 2027 Term Loan Interest Rate Swaps	$	10,576	$	—	$	10,576	$	—
Cash Flow Hedge - 2028 Term Loan Interest Rate Swaps	$	2,715	$	—	$	2,715	$	—
Cash Flow Hedge - Credit Facility Interest Rate Swaps	$	5,160	$	—	$	5,160	$	—
Investment Securities	$	38,162	$	38,162	$	—	$	—
December 31, 2022
Cash Flow Hedge - 2026 Term Loan Interest Rate Swaps	$	6,047	$	—	$	6,047	$	—
Cash Flow Hedge - 2027 Term Loan Interest Rate Swaps	$	10,111	$	—	$	10,111	$	—
Cash Flow Hedge - 2028 Term Loan Interest Rate Swaps	$	(397)	$	—	$	(397)	$	—
Investment Securities	$	42,041	$	42,041	$	—	$	—

~~At December 31, 2016, approximately eight acres of undeveloped land under contract~~

The Westcliff Property, which was classified as held for sale as of ~~December 31, 2016~~September 30, 2023, was measured at its fair value during the three and nine months ended September 30, 2023, as further described in Note 10, “Provision for Impairment.” None of the Company’s assets other than the Westcliff Property were measured on a non-recurring basis ~~using Level 3 inputs in the fair value hierarchy, which resulted in an aggregate impairment charge of approximately $1.0 million. These land contracts closed during the nine months ended September~~

~~Table of Contents~~

~~30, 2017, therefore, the fair value measurement is no longer applicable. Accordingly, there were no assets~~ as of September 30, ~~2017 whose fair value was~~2023. None of the Company’s assets were measured on a non-recurring ~~basis.~~basis as of December 31, 2022.

NOTE 7.9. INTANGIBLE ~~LEASE~~ ASSETS AND LIABILITIES

Intangible ~~lease~~ assets and liabilities consist of the value of above-market and below-market leases, the value of in-place leases, and the value of leasing costs, based in each case on their fair values.

Intangible ~~lease~~ assets and liabilities consisted of the following as of September 30, ~~2017~~2023 and December 31, ~~2016:~~2022 (in thousands):

As of

September 30,
2017

December 31,
2016

Intangible Lease Assets:

Value of In-Place Leases

$
34,382,237

$
30,978,776

Value of Above Market In-Place Leases

2,966,322

2,905,624

Value of Intangible Leasing Costs

8,480,647

7,010,192

Sub-total Intangible Lease Assets

45,829,206

40,894,592

Accumulated Amortization

(10,018,472)

(6,168,770)

Sub-total Intangible Lease Assets—Net

35,810,734

34,725,822

Intangible Lease Liabilities (included in accrued and other
liabilities):

Value of Below Market In-Place Leases

(34,882,965)

(33,370,217)

Sub-total Intangible Lease Liabilities

(34,882,965)

(33,370,217)

Accumulated Amortization

4,855,971

2,852,166

Sub-total Intangible Lease Liabilities—Net

(30,026,994)

(30,518,051)

Total Intangible Assets and Liabilities—Net

$
5,783,740

$
4,207,771


	As of
	September 30, 2023		December 31, 2022
Intangible Lease Assets:
Value of In-Place Leases	$	94,496	$	90,335
Value of Above Market In-Place Leases		31,756		32,008
Value of Intangible Leasing Costs		26,577		25,531
Sub-total Intangible Lease Assets		152,829		147,874
Accumulated Amortization		(46,978)		(31,890)
Sub-total Intangible Lease Assets—Net		105,851		115,984
Intangible Lease Liabilities (Included in Accrued and Other Liabilities):
Value of Below Market In-Place Leases		(15,071)		(12,307)
Sub-total Intangible Lease Liabilities		(15,071)		(12,307)
Accumulated Amortization		3,868		2,422
Sub-total Intangible Lease Liabilities—Net		(11,203)		(9,885)
Total Intangible Assets and Liabilities—Net	$	94,648	$	106,099

The following table reflects the net amortization of intangible assets and liabilities during the three and nine months ended September 30, ~~2017~~2023 and ~~2016:~~2022 (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Amortization Expense	$	4,837	$	3,076	$	13,724	$	8,605
Accretion to Income Properties Revenue		487		507		1,793		1,485
Net Amortization of Intangible Assets and Liabilities	$	5,324	$	3,583	$	15,517	$	10,090

Three Months

Three Months

Nine Months

Nine Months

Ended

Ended

Ended

Ended

9/30/2017

9/30/2016

9/30/2017

9/30/2016


($000's)

($000's)

($000's)

($000's)
Depreciation and Amortization Expense

$
1,201

$
626

$
3,479

$
1,715
Increase to Income Properties Revenue

(552)

(559)

(1,633)

(1,722)
Net Amortization of Intangible Assets and Liabilities

$
649

$
67

$
1,846

$
(7)

Table of Contents

The estimated future amortization ~~and accretion of~~expense (income) related to net intangible ~~lease~~ assets and liabilities is as ~~follows:~~follows (in thousands):

Future Accretion

Net Future

Future

to Income

Amortization of

Amortization

Property

Intangible Assets

Year Ending December 31,

Amount

Revenue

and Liabilities

Remainder of 2017

$
1,201,316

$
(551,619)

$
649,697

2018

4,805,264

(2,217,330)

2,587,934

2019

4,776,705

(2,212,206)

2,564,499

2020

4,335,284

(2,145,477)

2,189,807

2021

2,644,848

(2,296,332)

348,516

2022

2,026,921

(2,367,492)

(340,571)

Thereafter

13,789,831

(16,005,973)

(2,216,142)

Total

$
33,580,169

$
(27,796,429)

$
5,783,740


Year Ending December 31,	Future Amortization Amount		Future Accretion to Income Property Revenue		Net Future Amortization of Intangible Assets and Liabilities
Remainder of 2023	$	4,779	$	509	$	5,288
2024		19,115		2,036		21,151
2025		16,796		1,984		18,780
2026		15,053		2,140		17,193
2027		12,153		1,254		13,407
2028		7,473		1,231		8,704
2029 and Thereafter		8,668		1,457		10,125
Total	$	84,037	$	10,611	$	94,648

~~Table~~As of ~~Contents~~

September 30, 2023, the weighted average amortization period of total intangible assets and liabilities was 6.0 years and 7.0 years, respectively.

NOTE 8.10. PROVISION FOR IMPAIRMENT ~~OF LONG-LIVED ASSETS~~

In the aggregate, $1.4 million of impairment charges were recorded during the nine months ended September 30, 2023, with no such charges during the nine months ended September 30, 2022, as described below.

Income Properties. The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The fair value of long-lived assets required to be assessed for impairment is determined on a non-recurring basis using Level 3 inputs in the fair value hierarchy. These Level 3 inputs may include, but are not limited to, executed purchase and sale agreements on specific properties, third party valuations, discounted cash flow models, and other model-based techniques.

During the three and nine months ended September 30, 2023, the Company recorded a $0.9 million impairment charge on the sale of the Westcliff Property. The purchase and sale agreement for the Company’s sale of the Westcliff Property was executed on July 28, 2023. The impairment charge of $0.9 million represents the sales price, less the book value of the asset as of September 30, 2023, less costs to sell. The sale of the Westcliff Property closed on October 12, 2023.

There were no impairment charges on the Company’s income property portfolio during the three or nine months ended September 30, 2022.

Commercial Loans and Investments. The Company evaluates the collectability of its commercial loans and investments on a quarterly basis or whenever events or circumstance indicate that the carrying amount of an asset may not be recoverable. The Company accounts for provisions for credit losses in accordance with ASC Topic 326, Measurement of Credit Losses on Financial Instruments.

During the nine months ended September 30, 2023, the Company recorded a $0.5 million impairment charge, which was recorded during the three months ended March 31, 2023, representing the provision for credit losses related to our commercial loans and investments. There were no such impairment charges during the nine months ended September 30, ~~2017.~~2022.

~~During the nine months ended September 30, 2016, an impairment charge~~

Table of approximately $942,000 was recognized on an income property in Altamonte Springs, Florida leased to PNC Bank under contract for sale as of June 30, 2016. The total impairment charge represents the anticipated loss on the sale of approximately $783,000 plus estimated closing costs of approximately $159,000. This sale closed in September 2016.Contents

During the nine months ended September 30, 2016, an impairment charge of approximately $717,000 was recognized on approximately 4 of the approximately 6 acres of undeveloped land in Daytona Beach, Florida for which a contract for sale was executed during the three months ended June 30, 2016. Such acreage was repurchased in prior years by the Company and carried a higher cost basis than the remainder of the Company’s historical land holdings. The total impairment charge represents the anticipated loss on the sale of approximately $646,000 plus estimated closing costs of approximately $71,000. This sale closed in March 2017.

During the nine months ended September 30, 2016, an impairment charge of approximately $311,000 was recognized on approximately 4 acres of undeveloped land in Daytona Beach, Florida for which a contract for sale was executed subsequent to June 30, 2016. Such acreage was repurchased in a prior year by the Company and carried a higher cost basis than the remainder of the Company’s historical land holdings. The total impairment charge represents the anticipated loss on the sale of approximately $256,000 plus estimated closing costs of approximately $55,000. This sale closed in April 2017.

During the nine months ended September 30, 2016, an impairment charge of approximately $210,000 was recognized on an income property held for sale as of March 31, 2016. The total impairment charge represented the loss on the sale of approximately $134,000 plus closing costs of approximately $76,000. This sale closed in April 2016.

NOTE 9.11. OTHER ASSETS

Other assets consisted of the ~~following:~~

As of

September 30,
2017

December 31,
2016

Income Property Tenant Receivables

$
303,326

$
125,383

Income Property Straight-line Rent Adjustment

2,269,988

1,773,946

Interest Receivable from Commercial Loan Investments

73,739

72,418

Cash Flow Hedge - Interest Rate Swap

409,985

416,590

Infrastructure Reimbursement Receivables

2,381,038

3,844,236

Golf Operations Receivables

219,015

325,510

Deferred Deal Costs

357,108

745,878

Prepaid Expenses, Deposits, and Other

2,559,423

2,165,127

Total Other Assets

$
8,573,622

$
9,469,088

following as of September 30, 2023 and December 31, 2022 (in thousands):


	As of
	September 30, 2023		December 31, 2022
Income Property Tenant Receivables, Net of Allowance for Doubtful Accounts ⁽¹⁾	$	3,616	$	2,206
Income Property Straight-line Rent Adjustment and COVID-19 Deferral Balance		6,294		6,214
Operating Leases - Right-of-Use Asset		451		63
Golf Rounds Surcharge		126		216
Cash Flow Hedge - Interest Rate Swap		24,150		16,158
Infrastructure Reimbursement Receivables		845		824
Prepaid Expenses, Deposits, and Other		8,525		5,421
Due from Alpine Income Property Trust, Inc.		1,565		1,300
Financing Costs, Net of Accumulated Amortization		1,751		2,051
Total Other Assets	$	47,323	$	34,453

⁽¹⁾	Allowance for doubtful accounts was $2.3 million and $1.8 million as of September 30, 2023 and December 31, 2022, respectively.

Infrastructure Reimbursement Receivables. As of September 30, 2023 and December 31, ~~2016,~~2022, the ~~Infrastructure Reimbursement Receivables~~infrastructure reimbursement receivables were all related to the land sales within the Tomoka Town ~~Center and~~Center. The balance as of September 30, 2023 consisted of ~~approximately $1.1~~$0.7 million ~~in incentives due from the community development district, approximately $250,000 due from NADG for a fill dirt agreement, approximately $1,750,000~~ due from Tanger for infrastructure reimbursement to be repaid ~~over 10 years~~ in ~~$175,000~~four remaining annual installments of approximately $0.2 million each, net of a discount of ~~approximately $191,000,~~$0.06 million, and ~~approximately $990,000~~$0.2 million due from Sam’s Club for infrastructure reimbursement to be repaid ~~over 9~~in two remaining ~~years in $110,000~~annual installments of $0.1 million each, net of a discount of ~~approximately $80,000.~~$0.01 million.

NOTE 12. EQUITY

STOCK SPLIT

On April 27, 2022, the Company announced that its Board of Directors approved a three-for-one stock split of the Company’s common stock to be effected in the form of a stock dividend. Each stockholder of record at the close of business on June 27, 2022 (the “Record Date”), received two additional shares of the Company’s common stock for each share held as of the Record Date. The ~~$1.1~~new shares were distributed after the market closed on June 30, 2022. The Company’s stock began trading at the post-split price on July 1, 2022. Pursuant to FASB ASC Topic 505, Equity, the Company has adjusted the computations of basic and diluted earnings per share retroactively for all periods presented. Similarly, the Company has retroactively updated the disclosures in each prior period presented to conform to the split-adjusted dividend amount, for per share amounts including but not limited to dividends declared, stock-based compensation shares outstanding, ATM program activity, and share repurchases.

SHELF REGISTRATION

On April 1, 2021, the Company filed a shelf registration statement on Form S-3, relating to the registration and potential issuance of its common stock, preferred stock, debt securities, warrants, rights, and units with a maximum aggregate offering price of up to $350.0 million (the “2021 Registration Statement”). The Securities and ~~$250,000 receivables, as well as~~Exchange Commission declared the ~~second installment~~2021 Registration Statement effective on April 19, 2021.

On October 11, 2022, the Company filed a new shelf registration statement on Form S-3, relating to the registration and potential issuance of ~~$110,000 from Sam’s Club, were all received subsequent~~its common stock, preferred stock, debt securities, warrants, rights, and units with a maximum aggregate offering price of up to ~~December~~$500.0 million (the “2022 Registration Statement”). The Securities and Exchange Commission declared the 2022 Registration Statement effective on October 26, 2022. The 2021 Registration Statement was terminated concurrently with the effectiveness of the 2022 Registration Statement.

Table of Contents

EQUITY OFFERING

On December 5, 2022, the Company completed a follow-on public offering of 3,450,000 shares of common stock, which included the full exercise of the underwriters’ option to purchase an additional 450,000 shares of common stock. Upon closing, the Company issued 3,450,000 shares and received net proceeds of $62.4 million, after deducting the underwriting discount and expenses.

ATM PROGRAM

On April 30, 2021, the Company implemented a $150.0 million “at-the-market” equity offering program (the “2021 ATM Program”) pursuant to which the Company sold shares of the Company’s common stock. During the six months ended June 30, 2022, the Company sold 395,574 shares under the ATM Program for gross proceeds of $8.7 million at a weighted average price of $21.95 per share, generating net proceeds of $8.6 million after deducting transaction fees totaling $0.1 million. During the year ended December 31, ~~2016, leaving approximately $2.4~~2022, the Company sold 961,261 shares under the 2021 ATM Program for gross proceeds of $21.1 million at a weighted average price of $21.99 per share, generating net proceeds of $20.8 million after deducting transaction fees totaling less than $0.3 million. The 2021 ATM Program was terminated in ~~Infrastructure Reimbursements Receivable as~~connection with the establishment of the 2022 ATM Program, hereinafter defined.

On October 28, 2022, the Company implemented a $150.0 million “at-the-market” equity offering program (the “2022 ATM Program”) pursuant to which the Company may sell, from time to time, shares of the Company’s common stock. During the year ended December 31, 2022, the Company sold 604,765 shares under the 2022 ATM Program for gross proceeds of $12.3 million at a weighted average price of $20.29 per share, generating net proceeds of $12.1 million after deducting transaction fees totaling $0.2 million.

In the aggregate, under the 2021 ATM Program and 2022 ATM Program, during the year ended December 31, 2022, the Company sold 1,566,026 shares for gross proceeds of $33.4 million at a weighted average price of $21.33 per share, generating net proceeds of $32.9 million after deducting transaction fees totaling $0.5 million.

The Company was not active under the 2022 ATM Program during the nine months ended September 30, ~~2017.~~2023.

PREFERRED STOCK

On June 28, 2021, the Company priced a public offering of 3,000,000 shares of its 6.375% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”) at a public offering price of $25.00 per share. The ~~first installment~~offering closed on July 6, 2021 and generated total net proceeds to the Company of $72.4 million, after deducting the underwriting

discount and expenses. The Series A Preferred Stock ranks senior to the Company’s common stock with respect to dividend rights and rights upon liquidation, dissolution or winding up of the ~~Tanger infrastructure reimbursement~~Company. The Series A Preferred Stock has no maturity date and will remain outstanding unless redeemed.

The Series A Preferred Stock is not redeemable by the Company prior to July 6, 2026 except under limited circumstances intended to preserve the Company’s qualification as a REIT for U.S. federal income tax purposes or upon the occurrence of ~~$175,000~~a change of control, as defined in the Articles Supplementary designating the Series A Preferred Stock (the “Articles Supplementary”). Upon such change in control, the Company may redeem, at its election, the Series A Preferred Stock at a redemption price of $25.00 per share plus any accumulated and unpaid dividends up to, but excluding the date of redemption, and in limited circumstances, the holders of preferred stock shares may convert some or all of their Series A Preferred Stock into shares of the Company’s common stock at conversion rates set forth in the Articles Supplementary.

See Note 14, “Share Repurchases” for the Company’s Series A Preferred Stock repurchase activity.

Table of Contents

DIVIDENDS

The Company elected to be taxed as a REIT for U.S. federal income tax purposes under the Code commencing with its taxable year ended December 31, 2020. In order to maintain its qualification as a REIT, the Company must annually distribute, at a minimum, an amount equal to 90% of its taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, and must distribute 100% of its taxable income (including net capital gains) to eliminate U.S. federal income taxes payable by the Company. Because taxable income differs from cash flow from operations due to non-cash revenues and expenses (such as depreciation and other items), in certain circumstances, the Company may generate operating cash flow in excess of its dividends, or alternatively, may need to make dividend payments in excess of operating cash flows.

The following table outlines dividends declared and paid for each issuance of CTO’s stock during the three and nine months ended September 30, 2023 and 2022 (in thousands, except per share data):


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Series A Preferred Stock
Dividends	$	1,195	$	1,195	$	3,585	$	3,586
Per Share	$	0.40	$	0.40	$	1.20	$	1.20

Common Stock
Dividends	$	8,544	$	7,095	$	25,744	$	20,292
Per Share	$	0.38	$	0.38	$	1.14	$	1.11

2025 NOTES

Effective January 1, 2022, the Company adopted ASU 2020-06 whereby diluted EPS includes the dilutive impact of the 2025 Notes (hereinafter defined) using the if-converted method. Upon adoption, during the three months ended March 31, 2022, the Company recorded a $7.0 million adjustment to reduce additional paid-in capital to eliminate the non-cash equity component of the 2025 Notes with corresponding offsets including (i) a $4.0 million cumulative effect adjustment to the opening balance of retained earnings and (ii) a $3.0 million adjustment to eliminate the non-cash portion of the convertible notes discount, net of accumulated amortization (the “2025 Notes Adjustment”). The 2025 Notes Adjustment was ~~received~~made on ~~October 16, 2017.~~January 1, 2022, and is reflected in the accompanying consolidated statements of stockholders’ equity.

NOTE ~~10.~~13. COMMON STOCK AND EARNINGS PER SHARE

Basic earnings per common share is computed by dividing net income (loss) attributable to common stockholders during the period by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is based on the assumption of the conversion of stock options and vesting of restricted stock at the beginning of each period using the treasury stock method at average cost for the periods. Effective as of January 1, 2022, diluted earnings per common share also reflects the 2025 Notes on an if-converted basis.

Three Months Ended

Nine Months Ended


September 30,
2017

September 30,
2016

September 30,
2017

September 30,
2016

Income Available to Common Shareholders:

Net Income Attributable to Consolidated-Tomoka Land Co.

$
966,900

$
8,161,014

$
17,392,200

$
11,156,175

Weighted Average Shares Outstanding

5,513,327

5,662,933

5,548,644

5,700,316

Common Shares Applicable to Stock

Options Using the Treasury Stock Method

9,266

4,009

16,630

9,920

Total Shares Applicable to Diluted Earnings Per Share

5,522,593

5,666,942

5,565,274

5,710,236

Per Share Information:

Basic

Net Income Attributable to Consolidated-Tomoka Land Co.

$
0.18

$
1.44

$
3.13

$
1.96

Diluted

Net Income Attributable to Consolidated-Tomoka Land Co.

$
0.18

$
1.44

$
3.13

$
1.95

Table of Contents

The ~~effect~~following is a reconciliation of ~~70,000~~basic and ~~93,000~~diluted earnings per common share for each of the periods presented (in thousands, except share and per share data):


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Basic and Diluted Earnings:
Net Income (Loss) Attributable to Common Stockholders, Used in Basic EPS	$	1,491	$	3,622	$	(5,092)	$	2,651
Add Back: Effect of Dilutive Interest Related to 2025 Notes ⁽¹⁾		—		539		—		—
Net Income (Loss) Attributable to Common Stockholders, Used in Diluted EPS	$	1,491	$	4,161	$	(5,092)	$	2,651

Basic and Diluted Shares:
Weighted Average Shares Outstanding, Basic		22,484,561		18,386,435		22,556,642		18,044,299
Common Shares Applicable to Dilutive Effect of 2025 Notes ⁽²⁾		—		3,119,025		—		—
Weighted Average Shares Outstanding, Diluted		22,484,561		21,505,460		22,556,642		18,044,299

Per Share Information:
Net Income (Loss) Attributable to Common Stockholders
Basic	$	0.07	$	0.20	$	(0.23)	$	0.15
Diluted	$	0.07	$	0.19	$	(0.23)	$	0.15

⁽¹⁾

As applicable, includes interest expense, amortization of discount, amortization of fees, and other changes in net income or loss that would result from the assumed conversion of the 2025 Convertible Senior Notes to derive FFO (as defined herein) effective January 1, 2022 due to the implementation of ASU 2020-06 which requires presentation on an if-converted basis. For the three and nine months ended September 30, 2023, a total of $0.5 million and $1.6 million of interest was not included, respectively, as the impact of the 2025 Notes, if-converted, would have been antidilutive to net income (loss) attributable to common stockholders for the respective periods. For the three months ended September 30 2022, a total of $0.5 million was included as the impact to earnings per share, if-converted, would have been dilutive to net income attributable to common stockholders for the period. For the nine months ended September 30, 2022, the impact of $1.6 million was not included as the impact to earnings per share, if-converted, would have been antidilutive to net income attributable to common stockholders for the period.

⁽²⁾

A total of 3.4 million and 3.3 million shares, representing the dilutive impact of the 2025 Notes, upon adoption of ASU 2020-06 effective January 1, 2022, were not included in the computation of diluted net income (loss) attributable to common stockholders for each of the three and nine month periods ended September 30, 2023, respectively, because they were antidilutive to net income (loss) attributable to common stockholders for the respective periods. A total of 3.1 million shares, representing the dilutive impact of the 2025 Notes, upon adoption of ASU 2020-06 effective January 1, 2022, were included in the computation of diluted net income per share attributable to common stockholders for the three months ended September 30, 2022, because they were dilutive to net income attributable to common stockholders for the period. A total of 3.1 million shares, representing the dilutive impact of the 2025 Notes, were not included in the computation of diluted net income per share attributable to common stockholders for the nine months ended September 30, 2022, because they were antidilutive to net income attributable to common stockholders for the period.

There were no potentially dilutive securities ~~was not included~~ for the three months ended September 30, ~~2017~~2023 or 2022 related to the Company’s stock options and ~~2016, respectively, as the effect would be anti-dilutive.~~restricted stock. The effect of ~~77,750~~36,307 and ~~32,500~~68,269 potentially dilutive ~~securities was~~restricted stock units were not included for the nine months ended September 30, ~~2017~~2023 and ~~2016,~~2022, respectively, as the effect would be ~~anti-dilutive.~~antidilutive.

Table of Contents

Effective January 1, 2022, the Company adopted ASU 2020-06 whereby diluted EPS includes the dilutive impact, if any, of the 2025 Notes (hereinafter defined) using the if-converted method, irrespective of intended cash settlement. The Company intends to settle its ~~4.50%~~3.875% Convertible Senior Notes due ~~2020~~2025 (the ~~“Convertible~~“2025 Notes”) in cash upon conversion with any excess conversion value to be settled in shares of our common stock. ~~Therefore, only~~The Company elected, upon adoption, to utilize the ~~amount in excess~~modified retrospective approach, negating the required restatement of EPS for periods prior to adoption. The effect of 3.4 million and 3.3 million potentially dilutive shares issuable on the conversion of the ~~par value of the Convertible~~2025 Notes, ~~will be~~if-converted, were not included in our calculation of diluted net income per share using the treasury stock method. As such, the Convertible Notes have no impact on diluted net income per share until the price of our common stock exceeds the current conversion price of $68.76. The average price of our common stock duringfor the three and nine months ended September 30, ~~2017 and 2016 did~~2023, respectively, as the effect would be antidilutive. The effect of 3.1 million potentially dilutive 2025 Notes, if-converted, were not ~~exceed the conversion price which resulted in no additional diluted outstanding shares.~~

~~NOTE 11. TREASURY STOCK~~

In the fourth quarter of 2015, the Company announced a $10 million stock repurchase program (the “$10 Million Repurchase Program”). As of March 29, 2017, the $10 Million Repurchase Program had been completed. In the first quarter of 2017, the Company announced a new $10 million stock repurchase program (the “New $10 Million Repurchase Program”) under which approximately $4.5 million of the Company’s common stock had been repurchased as of September 30, 2017. In the aggregate, duringincluded for the nine months ended September 30, ~~2017, under both programs,~~2022, as the effect would be antidilutive.

NOTE 14. SHARE REPURCHASES

COMMON STOCK REPURCHASE PROGRAM

In February 2020, the Company’s Board approved a $10.0 million common stock repurchase program (the “$10.0 Million Common Stock Repurchase Program”). During the year ended December 31, 2020, the Company repurchased ~~134,049~~265,695 shares of its common stock on the open market for a total cost of ~~approximately $7.1~~$4.1 million, or an average price per share of ~~$53.24,~~$15.43. During the year ended December 31, 2021, the Company repurchased 121,659 shares of its common stock on the open market for a total cost of $2.2 million, or an average price per share of $18.16. During the year ended December 31, 2022, the Company repurchased 145,724 shares of its common stock on the open market for a total cost of $2.8 million, or an average price per share of $19.15.

On February 16, 2023, the Company’s Board of Directors approved a common stock repurchase program (the “February $5.0 Million Common Stock Repurchase Program”). Pursuant to the February $5.0 Million Common Stock Repurchase Program, the Company was authorized to repurchase shares of its common stock for a total purchase price of up to $5.0 million. During the three months ended March 31, 2023, the Company repurchased 303,354 shares of its common stock on the open market for a total cost of $5.0 million, or an average price per share of $16.48. Accordingly, as of March 31, 2023, no shares of the Company’s common stock remained available for repurchase under the February $5.0 Million Common Stock Repurchase Program.

On April 25, 2023, the Company’s Board of Directors approved a common stock repurchase program, which is expected to be in effect until the approved dollar amount has been used to repurchase shares (the “April $5.0 Million Common Stock Repurchase Program”). Pursuant to the April $5.0 Million Common Stock Repurchase Program, the Company may repurchase shares of its common stock for a total purchase price of up to $5.0 million. Shares may be purchased under the April $5.0 Million Common Stock Repurchase Program in open market transactions, including through block purchases, through privately negotiated transactions or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The April $5.0 Million Common Stock Repurchase Program does not obligate the Company to acquire any particular amount of shares of its common stock and ~~placed those~~may be modified or suspended. During the three months ended June 30, 2023, the Company repurchased 3,931 shares of its common stock on the open market for a total cost of less than $0.1 million, or an average price per share of $15.73. There were no repurchases of common stock during the three months ended September 30, 2023.

SERIES A PREFERRED STOCK REPURCHASE PROGRAM

On February 16, 2023, the Company’s Board of Directors approved a Series A Preferred Stock repurchase program, which is expected to be in ~~treasury.~~effect until the approved dollar amount has been used to repurchase shares (the “Series A Preferred Stock Repurchase Program”). Pursuant to the Series A Preferred Stock Repurchase Program, the Company may repurchase shares of its Series A Preferred Stock for a total purchase price of up to $3.0 million. Shares may be purchased under the Series A Preferred Stock Repurchase Program in open market transactions, including through block purchases, through privately negotiated transactions or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 under the Exchange Act. The Series A Preferred Stock Repurchase Program does not obligate the Company to acquire any particular amount of shares of its Series A Preferred Stock and may be modified or suspended. During the three months ended September 30, 2023, the Company repurchased 6,048 shares of Series A Preferred Stock on the open market for a total cost of $0.1 million, or an average price per share of $18.52. During the nine months ended September 30, 2023, the Company repurchased 6,794 shares of Series A Preferred Stock on the open market for a total cost of $0.1 million, or an average price per share of $18.55.

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NOTE ~~12.~~15. LONG-TERM DEBT

As of September 30, ~~2017,~~2023, the Company’s outstanding indebtedness, at face value, was as ~~follows:~~follows (in thousands):


	Face Value Debt		Maturity Date	Interest Rate
Credit Facility ⁽¹⁾	$	216,000	January 2027		SOFR + 0.10% + [1.25% - 2.20%]
2026 Term Loan ⁽²⁾		65,000	March 2026		SOFR + 0.10% + [1.25% - 2.20%]
2027 Term Loan ⁽³⁾		100,000	January 2027		SOFR + 0.10% + [1.25% - 2.20%]
2028 Term Loan ⁽⁴⁾		100,000	January 2028		SOFR + 0.10% + [1.20% - 2.15%]
3.875% Convertible Senior Notes due 2025		51,034	April 2025		3.875%
Mortgage Note Payable		17,800	August 2026		4.060%
Total Long-Term Face Value Debt	$	549,834

Face

Maturity

Interest

Value Debt

Date

Rate
Credit Facility

$
41,000,000

September 2021

30 ‑day LIBOR
plus 1.50% -2.20%
Mortgage Note Payable (originated with UBS) (1)

7,300,000

February 2018

3.655%
Mortgage Note Payable (originated with Wells Fargo) (2)

30,000,000

October 2034

4.330%
Mortgage Note Payable (originated with Wells Fargo) (3)

25,000,000

April 2021

30 ‑day LIBOR
plus 1.90%
4.50% Convertible Senior Notes due 2020, net of discount

75,000,000

March 2020

4.500%
Total Long-Term Face Value Debt

$
178,300,000

⁽¹⁾	The Company utilized interest rate swaps on $100.0 million of the Credit Facility balance to fix SOFR and achieve a weighted average fixed swap rate of 3.28% plus the 10 bps SOFR adjustment plus the applicable spread.

~~(1)Secured by~~⁽²⁾ The Company utilized interest rate swaps on the ~~Company’s interest in the two-building office complex leased~~$65.0 million 2026 Term Loan balance to ~~Hilton Resorts Corporation.~~

~~(2)Secured by the Company’s interest in six income properties. The mortgage loan carries~~fix SOFR and achieve a weighted average fixed swap rate of ~~4.33% per annum during~~0.26% plus the ~~first ten years of~~10 bps SOFR adjustment plus the term, and requires payments of interest only during the first ten years of the loan. After the tenth anniversary of the effective date of the loan, the cash flows, as defined in the related loan agreement, generated by the underlying six income properties must be used to pay down the principal balance of the loan until paid off or until the loan matures. applicable spread.

⁽³⁾	The Company utilized interest rate swaps on the $100.0 million 2027 Term Loan balance to fix SOFR and achieve a fixed swap rate of 0.64% plus the 10 bps SOFR adjustment plus the applicable spread.

⁽⁴⁾	The Company utilized interest rate swaps on the $100.0 million 2028 Term Loan balance to fix SOFR and achieve a weighted average fixed swap rate of 3.78% plus the 10 bps SOFR adjustment plus the applicable spread.

Credit Facility. The ~~loan is fully pre-payable after the tenth anniversary of the effective date of the loan.~~

~~(3)Secured by the Company’s income property leased to Wells Fargo located in Raleigh, North Carolina. The mortgage loan has a 5-year term~~Credit Facility, with two years interest only, and interest and a 25-year amortization for the balance of the term. The mortgage loan bears a variable rate of interest based on the 30-day LIBOR plus a rate of 190 basis points. The interest rate for this mortgage loan has been fixed through the use of an interest rate swap that fixed the rate at 3.17%. The mortgage loan can be prepaid at any time subject to the termination of the interest rate swap.

~~The Company’s revolving credit facility (the “Credit Facility”), with~~ Bank of Montreal (“BMO”) ~~serving~~ as the administrative agent for the lenders thereunder, is unsecured with regard to our income property portfolio but is guaranteed by certain ~~wholly-owned~~wholly owned subsidiaries of the Company. The Credit Facility bank group is led by BMO and also includes Truist Bank and Wells ~~Fargo and Branch Banking & Trust Company.~~Fargo. On September 7, 2017, the Company executed the second amendment and restatement of the Credit Facility (the ~~“Revolver~~“2017 Amended Credit Facility” and, as amended, the “Credit Agreement”). As a result of the March 2021 Revolver Amendment and the Eighth Amendment, both as defined below, The Huntington National Bank, PNC Bank, National Association, and Regions Bank, were added as lenders to the Company’s Credit Facility.

On May 24, 2019, the Company executed the second amendment to the 2017 Amended Credit Facility (the “May 2019 Revolver Amendment”). ~~Pursuant to~~As a result of the May 2019 Revolver Amendment, the Credit Facility ~~matures on September 7, 2021, with the ability to extend the term for 1 year.~~

~~As a result of the Revolver Amendment, the Credit Facility has~~had a total borrowing capacity of ~~$100.0~~$200.0 million with the ability to increase that capacity up to ~~$150.0~~$300.0 million during the ~~term.~~term, subject to lender approval. The Credit Facility provides the lenders with a ~~secured~~security interest in the equity of the Company subsidiaries that own the properties included in the borrowing base. The indebtedness outstanding under the Credit Facility accrues interest at a rate ranging from ~~the 30-day LIBOR~~SOFR plus ~~150~~0.10% plus 125 basis points to ~~the 30-day LIBOR~~SOFR plus 0.10% plus 220 basis points based on the total balance outstanding under the Credit Facility as a percentage of the total asset value of the Company, as defined in the 2017 Amended Credit ~~Facility.~~Facility, as amended by the Eighth Amendment. The Credit Facility also accrues a fee of 15 to 25 basis points for any unused portion of the borrowing capacity based on whether the unused portion is greater or less than 50% of the total borrowing capacity. Pursuant to the Eighth Amendment, the Credit Facility matures on January 31, 2027, with the ability to extend the term for 1 year.

On November 26, 2019, the Company entered into the third amendment to the 2017 Amended Credit Facility (the “November 2019 Revolver Amendment”), which further amends the 2017 Amended Credit Facility. The November 2019 Revolver Amendment included, among other things, an adjustment of certain financial maintenance covenants, including a temporary reduction of the minimum fixed charge coverage ratio to allow the Company to redeploy the proceeds received from the sale of certain income properties to PINE, and an increase in the maximum amount the Company may invest in stock and stock equivalents of real estate investment trusts to allow the Company to invest in PINE’s common stock and OP Units.

On July 1, 2020, the Company entered into the fourth amendment to the 2017 Amended Credit Facility (the “July 2020 Revolver Amendment”) whereby the tangible net worth covenant was adjusted to be more reflective of market terms. The July 2020 Revolver Amendment was effective as of March 31, 2020.

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On November 12, 2020, the Company entered into the fifth amendment to the 2017 Amended Credit Facility (the “November 2020 Revolver Amendment”). The November 2020 Revolver Amendment provided that, among other things, (i) the Company must comply with certain adjusted additional financial maintenance requirements, including (x) a new restricted payments covenant which limits the type and amount of cash distributions that may be made by the Company and (y) an adjusted fix charges ratio, which now excludes certain onetime expenses for purposes of calculation and (ii) the Company must, from and after the date that the Company elects to qualify as a REIT, maintain its status as a REIT.

On March 10, 2021, the Company entered into the sixth amendment to the 2017 Amended Credit Facility (the “March 2021 Revolver Amendment”). The March 2021 Revolver Amendment included, among other things, (i) increase of the revolving credit commitment from $200.0 million to $210.0 million, (ii) addition of a term loan in the aggregate amount of $50.0 million (the “2026 Term Loan”), (iii) updates to certain financing rate provisions provided therein, and (iv) joinder of The Huntington National Bank as a 2026 Term Loan lender and Credit Facility lender. The March 2021 Revolver Amendment also includes accordion options that allow the Company to request additional 2026 Term Loan lender commitments up to a total of $150.0 million and additional Credit Facility lender commitments up to a total of $300.0 million. During the six months ended June 30, 2021, the Company exercised the 2026 Term Loan accordion option for $15.0 million, increasing total lender commitments to $65.0 million.

On November 5, 2021, the Company entered into the seventh amendment to the 2017 Amended Credit Facility (the “November 2021 Revolver Amendment”). The November 2021 Revolver Amendment included, among other things, (i) addition of a term loan in the aggregate amount of $100.0 million (the “2027 Term Loan”) and (ii) joinder of KeyBank National Association, Raymond James Bank, and Synovus Bank as 2027 Term Loan lenders. The November 2021 Revolver Amendment also includes an accordion option that allows the Company to request additional term loan lender commitments up to a total of $400.0 million in the aggregate.

On September 20, 2022, the Company entered into the eighth amendment to the 2017 Amended Credit Facility (the “Eighth Amendment”), which includes among other things: (i) the origination of a term loan, in the amount of $100.0 million (the “2028 Term Loan”), (ii) the increase of the revolving credit commitment from up to $210.0 million to up to $300.0 million, (iii) an accordion option that allows the Company to request additional revolving loan commitments and additional term loan commitments, provided, (a) the aggregate amount of revolving loan commitments shall not exceed $750,000,000 and (b) the aggregate amount of term loan commitments shall not exceed $500,000,000, (iv) an extension of the maturity date to January 31, 2027, (v) a sustainability-linked pricing component pursuant to which the Company will receive interest rate reductions based on its performance against certain sustainability performance targets, (vi) the release of the Pledge Collateral, as defined in the Eighth Amendment, and (vii) the joinder of PNC Bank, National Association (“PNC”) as a Term Loan Lender, as defined in the Credit Agreement, and PNC and Regions Bank as Revolving Lenders, as defined in the Credit Agreement.

At September 30, ~~2017,~~2023, the current commitment level under the Credit Facility was ~~$100.0~~$300.0 million. The ~~available borrowing capacity~~undrawn commitment under the Credit Facility ~~was approximately $59.0 million, based on the level of borrowing base assets.~~totaled $84.0 million. As of September 30, ~~2017,~~2023, the Credit Facility had a ~~$41.0~~$216.0 million balance. As a result of the income property acquisition completed on October 27, 2017 (as described in Note 21, “Subsequent Events”), the amount outstanding on the Credit Facility was approximately $60.5 million and the available borrowing capacity was approximately $39.5 million.balance outstanding.

The Credit Facility is subject to customary restrictive covenants including, but not limited to, limitations on the Company’s ability to: (a) incur indebtedness; (b) make certain investments; (c) incur certain liens; (d) engage in certain affiliate transactions; and (e) engage in certain major transactions such as mergers. In addition, the Company is subject to various financial maintenance covenants including, but not limited to, a maximum indebtedness ratio, a maximum secured indebtedness ratio, and a minimum fixed charge coverage ratio. The Credit Facility also contains affirmative covenants and events of default including, but not limited to, a cross default to the Company’s other indebtedness and upon the occurrence of a change ofin control. The Company’s failure to comply with these covenants or the occurrence of

~~Table of Contents~~

an event of default could result in acceleration of the Company’s debt and other financial obligations under the Credit Facility.

~~In addition to~~

Mortgage Notes Payable. On March 3, 2022, in connection with the ~~Credit Facility,~~acquisition of Price Plaza Shopping Center, the Company ~~has certain other borrowings, as noted~~assumed an existing $17.8 million secured fixed-rate mortgage note payable, which bears interest at a fixed rate of 4.06% and matures in August 2026.

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Convertible Debt. The Company had an initial aggregate principal amount of $75.0 million of 3.875% Convertible Notes (the “2025 Notes”). During the ~~table above, all of which are non-recourse.~~

~~The Company’s $75.0~~year ended December 31, 2020, the Company repurchased $12.5 million aggregate principal amount of ~~4.50% Convertible~~2025 Notes ~~will~~at a $2.6 million discount, resulting in a gain on extinguishment of debt of $1.1 million. During the year ended December 31, 2021, the Company repurchased $11.4 million aggregate principal amount of 2025 Notes at a $1.6 million premium, resulting in a loss on extinguishment of debt of $2.9 million. Following these repurchases, $51.0 million aggregate principal amount of the 2025 Notes remains outstanding at September 30, 2023.

On February 16, 2023, the Company’s Board of Directors approved a 2025 Notes repurchase program, which is expected to be in effect until the approved dollar amount has been used to repurchase 2025 Notes (the “2025 Notes Repurchase Program”). Pursuant to the 2025 Notes Repurchase Program, the Company may repurchase, in one or more transactions, 2025 Notes in the aggregate principal amount of not more than $4.74 million. The 2025 Notes Repurchase Program does not obligate the Company to acquire any particular amount of 2025 Notes and may be modified or suspended. The Company was not active under the 2025 Notes Repurchase Program during the nine months ended September 30, 2023.

The 2025 Notes represent senior unsecured obligations of the Company and pay interest semi-annually in arrears on each April 15th and October 15th, commencing on April 15, 2020, at a rate of 3.875% per annum. The 2025 Notes mature on ~~March~~April 15, ~~2020, unless earlier purchased or converted.~~2025 and may not be redeemed by the Company prior to the maturity date. The conversion rate for the 2025 Notes was initially 12.7910 shares of the Company’s common stock per $1,000 of principal of the 2025 Notes (equivalent to an initial conversion price of $78.18 per share of the Company’s common stock). The initial conversion price of the 2025 Notes represented a premium of 20% to the $65.15 closing sale price of the Company’s common stock on the NYSE American on January 29, 2020. If the Company’s Board increases the quarterly dividend above the $0.13 per share in place at issuance, the conversion rate ~~was 14.5136~~is adjusted with each such increase in the quarterly dividend amount. After the third quarter 2023 dividend, the conversion rate is equal to 66.0051 shares of common stock for each $1,000 principal amount of Convertible Notes, which represented an initial conversion price of approximately $68.90 per share of common stock. Since July of 2016, when the Company’s Board of Directors implemented a quarterly dividend in place of the previous semi-annual dividend, the conversion rate has been adjusted with each successive quarterly dividend and is currently, after the third quarter 2017 dividend, equal to 14.5439 shares of common stock for each $1,000 principal amount of Convertible2025 Notes, which represents an adjusted conversion price of ~~approximately $68.76~~$15.15 per share of common stock. At the maturity date, the 2025 Notes are convertible into cash, common stock or a combination thereof, subject to various conditions, at the Company’s option. Should certain corporate transactions or events occur prior to the stated maturity date, the Company will increase the conversion rate for a holder that elects to convert its 2025 Notes in connection with such corporate transaction or event.

The conversion rate is subject to adjustment in certain circumstances. Holders may not surrender their ~~Convertible~~2025 Notes for conversion prior to ~~December~~January 15, ~~2019~~2025 except upon the occurrence of certain conditions relating to the closing sale price of the Company’s common stock, the trading price per $1,000 principal amount of ~~Convertible~~2025 Notes, or specified corporate events including a change in control of the Company. The Company may not redeem the ~~Convertible~~2025 Notes prior to the stated maturity date and no sinking fund is provided for the ~~Convertible~~2025 Notes. The ~~Convertible~~2025 Notes are convertible, at the election of the Company, into solely cash, solely shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock. The Company intends to settle the ~~Convertible~~2025 Notes in cash upon conversion, with any excess conversion value to be settled in shares of our common stock. InAt time of issuance, in accordance with U.S. GAAP, the ~~Convertible~~2025 Notes ~~are~~were accounted for as a liability with a separate equity component recorded for the conversion option. ~~A liability~~The equity component was ~~recorded for~~eliminated on January 1, 2022 with the ~~Convertible~~2025 Notes on the issuance date at fair value based on a discounted cash flow analysis using current market rates for debt instruments with similar terms. The difference between the initial proceeds from the Convertible Notes and the estimated fair value of the debt instruments resulted in a debt discount, with an offset recorded to additional paid-in capital representing the equity component. The discount on the Convertible Notes was approximately $6.1 million at issuance, which represents the cash discount paid of approximately $2.6 million and the approximate $3.5 million attributable to the value of the conversion option recorded in equity, which is being amortized into interest expense through the maturity date of the Convertible Notes. Adjustment.

As of September 30, ~~2017,~~ 2023, the unamortized debt discount of our ~~Convertible~~2025 Notes was ~~approximately $3.2 million.~~$0.2 million, which represents the cash component of the discount.

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Long-term debt ~~as of September 30, 2017 and December 31, 2016~~ consisted of the ~~following:~~ following (in thousands):

September 30, 2017

December 31, 2016

Due Within

Due Within


Total

One Year

Total

One Year
Credit Facility

$
41,000,000

$
—

$
34,300,000

$
—
Mortgage Note Payable (originated with UBS)

7,300,000

7,300,000

7,300,000

—
Mortgage Note Payable (originated with Wells Fargo)

30,000,000

—

30,000,000

—
Mortgage Note Payable (originated with Wells Fargo)

25,000,000

—

25,000,000

—
4.50% Convertible Senior Notes due 2020, net of discount

71,769,432

—

70,880,581

—
Loan Costs, net of accumulated amortization

(1,417,902)

—

(1,235,380)

—
Total Long-Term Debt

$
173,651,530

$
7,300,000

$
166,245,201

$
—


	September 30, 2023				December 31, 2022
	Total		Due Within One Year		Total		Due Within One Year
Credit Facility	$	216,000	$	—	$	113,750	$	—
2026 Term Loan		65,000		—		65,000		—
2027 Term Loan		100,000		—		100,000		—
2028 Term Loan		100,000		—		100,000		—
3.875% Convertible Senior Notes, net of Discount		50,789		—		50,670		—
Mortgage Note Payable		17,800		—		17,800		—
Financing Costs, net of Accumulated Amortization		(1,370)		—		(1,637)		—
Total Long-Term Debt	$	548,219	$	—	$	445,583	$	—

Payments applicable to reduction of principal amounts as of September 30, ~~2017~~2023 will be required as ~~follows:~~follows (in thousands):

Year Ending December 31,

Amount

2018

7,300,000

2019

—

2020

75,000,000

2021

66,000,000

2022

—

Thereafter

30,000,000

Total Long-Term Debt - Face Value

$
178,300,000


As of September 30, 2023	Amount
Remainder of 2023	$	—
2024		—
2025		51,034
2026		82,800
2027		316,000
2028		100,000
2029 and Thereafter		—
Total Long-Term Debt - Face Value	$	549,834

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The Company intends to repay the $7.3 million Mortgage Note Payable originated with UBS at or prior to its maturity in February 2018 and expects to add the related Hilton income property assets to the borrowing base of the Credit Facility.

The carrying value of long-term debt as of September 30, ~~2017~~2023 consisted of the ~~following:~~following (in thousands):


	Total
Current Face Amount	$	549,834
Unamortized Discount on Convertible Debt		(245)
Financing Costs, net of Accumulated Amortization		(1,370)
Total Long-Term Debt	$	548,219

In addition to the $1.4 million of financing costs, net of accumulated amortization included in the table above, as of September 30, 2023, the Company also had financing costs, net of accumulated amortization related to the Credit Facility of $1.8 million which is included in other assets on the consolidated balance sheets. These costs are amortized on a straight-line basis over the term of the Credit Facility and are included in interest expense in the Company’s accompanying consolidated statements of operations.

Total

Current Face Amount

$
178,300,000

Unamortized Discount on Convertible Debt

(3,230,568)

Loan Costs, net of accumulated amortization

(1,417,902)

Total Long-Term Debt

$
173,651,530

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The following table reflects a summary of interest expense incurred and paid during the three and nine months ended September 30, ~~2017~~2023 and ~~2016:~~2022 (in thousands):

Three Months

Three Months

Nine Months

Nine Months

Ended

Ended

Ended

Ended

9/30/2017

9/30/2016

9/30/2017

9/30/2016


($000's)

($000's)

($000's)

($000's)

Interest Expense

$
1,771

$
1,684

$
5,164

$
5,151

Amortization of Loan Costs

125

488
(1)

350

716
(1)
Amortization of Discount on Convertible Notes

301

282

889

834

Capitalized Interest

(124)

—

(124)

—

Total Interest Expense

$
2,073

$
2,454

$
6,279

$
6,701

Total Interest Paid

$
2,588

$
2,589

$
6,026

$
6,048

~~(1)~~Includes approximately $367,000 of unamortized loan costs which were written off and included in interest expense related to the $23.1 million mortgage loan assumed by the buyer upon closing the Portfolio Sale on September 16, 2016.


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Interest Expense	$	6,036	$	2,819	$	15,318	$	6,552
Amortization of Deferred Financing Costs		242		178		724		515
Amortization of Discount on Convertible Notes		40		40		119		149
Total Interest Expense	$	6,318	$	3,037	$	16,161	$	7,216

Total Interest Paid	$	5,589	$	2,107	$	15,178	$	5,785

The Company was in compliance with all of its debt covenants as of September 30, ~~2017~~2023 and December 31, ~~2016.~~2022.

NOTE ~~13.~~16. INTEREST RATE ~~SWAP~~SWAPS

~~During April 2016, the~~The Company has entered into an interest rate swap ~~agreement~~agreements to hedge against changes in future cash flows ~~tied~~resulting from fluctuating interest rates related to ~~changes in~~ the ~~underlying floating~~below noted borrowings. The interest rate ~~tied to LIBOR for the $25.0 million mortgage note payable as discussed in Note 12, “Long-Term Debt.” During~~agreements were 100% effective during the three and nine months ended September 30, ~~2017, the interest rate swap agreement was 100% effective.~~2023 and 2022. Accordingly, the ~~change~~changes in fair value on the interest rate ~~swap has~~swaps have been classified in accumulated other comprehensive income. ~~As of September 30, 2017, the~~The fair value of ~~our~~the interest rate swap ~~agreement, which was a gain of approximately $410,000, was~~agreements are included in other assets and accrued and other liabilities, respectively, on the consolidated balance sheets. ~~The~~Information related to the Company’s interest rate swap ~~was effective on April 7, 2016 and matures on April 7, 2021. The interest rate swap fixed the variable rate debt on the notional amount~~agreements as of ~~related debt~~September 30, 2023 is presented below (in thousands):


Hedged Item ⁽¹⁾	Effective Date	Maturity Date	Rate	Amount		Fair Value as of September 30, 2023
2026 Term Loan	3/10/2021	3/29/2024	0.12% + 0.10% + applicable spread	$	50,000	$	1,308
2026 Term Loan	3/29/2024	3/10/2026	1.44% + 0.10% + applicable spread	$	50,000	$	2,808
2026 Term Loan	8/31/2021	3/10/2026	0.70% + 0.10% + applicable spread	$	15,000	$	1,390
2026 Term Loan⁽²⁾	3/10/2026	3/10/2031	3.80% + 0.10% + applicable spread	$	40,000	$	193
2027 Term Loan	11/5/2021	3/29/2024	0.64% + 0.10% + applicable spread	$	100,000	$	2,360
2027 Term Loan	3/29/2024	1/31/2027	1.35% + 0.10% + applicable spread	$	100,000	$	7,714
2027 Term Loan⁽²⁾	1/31/2027	1/30/2032	3.75% + 0.10% + applicable spread	$	60,000	$	502
2028 Term Loan	9/30/2022	1/31/2028	3.78% + 0.10% + applicable spread	$	50,000	$	1,131
2028 Term Loan	9/30/2022	1/31/2028	3.78% + 0.10% + applicable spread	$	50,000	$	1,117
2028 Term Loan ⁽²⁾	1/31/2028	1/31/2033	3.81% + 0.10% + applicable spread	$	60,000	$	467
Credit Facility	1/31/2023	1/31/2030	3.27% + 0.10% + applicable spread	$	50,000	$	2,597
Credit Facility	1/31/2023	1/31/2030	3.26% + 0.10% + applicable spread	$	33,000	$	1,750
Credit Facility	1/31/2023	1/31/2030	3.36% + 0.10% + applicable spread	$	17,000	$	813

⁽¹⁾	On September 30, 2022, the Company converted its existing interest rate swaps from 1-month LIBOR to SOFR.

⁽²⁾	During the three months ended September 30, 2023, the Company entered into forward swaps to further fix interest rates through periods that the Company reasonably expects to extend its current term loans.

Table of ~~$25.0 million to a rate of 3.17%.~~Contents

NOTE ~~14.~~17. ACCRUED AND OTHER LIABILITIES

Accrued and other liabilities consisted of the ~~following:~~ following (in thousands):

As of

September 30,
2017

December 31,
2016

Golf Course Lease

$
—

$
2,226,527

Accrued Property Taxes

1,570,995

28,973

Golf $1 Round Surcharge

700,000

—

Reserve for Tenant Improvements

419,302

398,621

Accrued Construction Costs

967,153

856,947

Accrued Interest

358,837

1,220,990

Environmental Reserve and Restoration Cost Accrual

969,005

1,505,757

Other

2,397,606

2,430,082

Total Accrued and Other Liabilities

$
7,382,898

$
8,667,897


	As of
	September 30, 2023		December 31, 2022
Accrued Property Taxes	$	6,211	$	716
Reserve for Tenant Improvements		2,331		6,186
Tenant Security Deposits		2,885		2,719
Accrued Construction Costs		—		903
Accrued Interest		1,183		872
Environmental Reserve		61		67
Cash Flow Hedge - Interest Rate Swaps		—		397
Operating Leases - Liability		448		64
Other		5,541		6,104
Total Accrued and Other Liabilities	$	18,660	$	18,028

~~Table of Contents~~

~~Golf Course Lease.~~ In July 2012, the Company entered into an agreement with the City to, among other things, amend the lease payments under its golf course lease (the “Lease Amendment”). Under the Lease Amendment, the base rent payment, which was scheduled to increase from $250,000 to $500,000 as of September 1, 2012, remained at $250,000 for the remainder of the lease term and any extensions would have been subject to an annual rate increase of 1.75% beginning September 1, 2013. On January 24, 2017, the Company acquired the land and improvements comprising the golf courses, previously leased from the City, for approximately $1.5 million (the “Golf Course Land Purchase”). In conjunction with the Golf Course Land Purchase, the lease between the Company and the City was terminated. Therefore, during the first quarter of 2017, the Company eliminated the remaining accrued liability of approximately $2.2 million, resulting in the recognition of approximately $0.40 per share in non-cash earnings, or $0.24 per share after tax, which comprises the land lease termination in the consolidated statements of operations. The $2.2 million consisted of approximately $1.7 million which reflects the acceleration of the remaining amount of accrued rent that was no longer owed to the City as a result of the Lease Amendment, which prior to the Golf Course Land Purchase was being recognized into income over the remaining lease term which was originally to expire in 2022. The remaining approximately $500,000 reflects the amount of rent accrued pursuant to the lease, as amended, which will no longer be owed to the City due to the lease termination on January 24, 2017.

~~Golf $1 Round Surcharge.~~ In connection with the Golf Course Land Purchase, each year the Company is obligated to pay the City additional consideration in the amount of an annual surcharge of $1 per golf round played (the “Per-Round Surcharge”) with an annual minimum Per-Round Surcharge of $70,000 and a maximum aggregate amount of the Per-Round Surcharges paid equal to $700,000. The maximum amount of $700,000 represents contingent consideration and has been recorded as an increase in Golf Buildings, Improvements, and Equipment and Accrued and Other Liabilities in the accompany consolidated balance sheets as of September 30, 2017.

Reserve for Tenant Improvements. In connection with the acquisition on April 22, 2014 of the property in Katy, Texas leased to Lowe’s, the Company was credited approximately $651,000 at closing for certain required tenant improvements, some of which were not required to be completed until December 2016. Through December 31, 2016, approximately $100,000 of these tenant improvements had been completed and funded, leaving approximately $551,000 remaining to be funded. The remaining commitment as of December 31, 2016, totaled approximately $381,000, which was equal to the amount of the final reimbursement requestrecent acquisitions, the Company received an aggregate of $8.0 million from ~~Lowe’s and was paid during~~ the ~~nine months ended September 30, 2017, leaving no remaining commitment related to the Lowe’s property. In connection with the acquisition on April 28, 2017~~sellers of ~~the property in Tampa, Florida leased to LA Fitness, the Company was credited approximately $400,000 at closing for~~ certain ~~tenant improvements. As of September 30, 2017, no amounts have been completed and funded related to the LA Fitness property, which comprises the majority of the approximately $419,000 reserve~~properties for tenant improvement allowances, leasing commissions and other capital improvements.

~~Environmental Reserve.~~ ~~During the year ended December 31, 2014, the Company~~ These amounts are included in accrued an environmental reserve of approximately $110,000 in connection with an estimate of additional costs required to monitor a parcel of less than one acre of land owned by the Company in Highlands County, Florida on which environmental remediation work had previously been performed. The Company engaged legal counsel who, in turn, engaged environmental engineers to review the site and the prior monitoring test results. During the year ended December 31, 2015, their review was completed, and the Company made an additional accrual of approximately $500,000, representing the low end of the range of possible costs estimated by the engineers to be between approximately $500,000 and $1.0 million to resolve this matter subject to the approval of the state department of environmental protection (the “FDEP”). The FDEP issued a Remedial Action Plan Modification Approval Order (the “FDEP Approval”) in August 2016 which supports the approximate $500,000 accrual made in 2015. The Company is implementing the remediation plan pursuant to the FDEP Approval. Since the total accrual of approximately $610,000 was made, approximately $482,000 in costs have been incurred through September 30, 2017, leaving a remaining accrual of approximately $129,000.

~~Restoration Accrual.~~ As part of the resolution of a regulatory matter pertaining to the Company’s prior agricultural activities on certain of the Company’s land located in Daytona Beach, Florida, as of December 31, 2015, the Company accrued an obligation of approximately $1.7 million, representing the low end of the estimated range of possible wetlands restoration costs for approximately 148.4 acres within such land, and such estimated costs were includedother liabilities on the consolidated balance sheets as an increase in the basis of our land and development costs associated with those and benefitting surrounding acres. The final proposal for restoration work was received during the second quarter of 2016 which totaled approximately $2.0 million. Accordingly, an increase in the accrual of approximately $300,000 was recorded during the second quarter of 2016. The Company funded approximately $1.2 million of the total $2.0 million of

~~Table of Contents~~

~~estimated costs through the period ended~~sheets. Through September 30, ~~2017,~~2023, payments totaling $3.4 million were made and a $2.3 million contingent obligation to fund certain tenant improvements was extinguished, leaving a remaining ~~accrual~~reserve for tenant improvements of ~~approximately $840,000. This matter is more fully described in Note 18 “Commitments and Contingencies.”~~$2.3 million.

NOTE ~~15.~~18. DEFERRED REVENUE

Deferred revenue consisted of the ~~following:~~following (in thousands):


	As of
	September 30, 2017		December 31, 2016
Deferred Oil Exploration Lease Revenue	$	—	$	585,674

					As of
					September 30, 2023		December 31, 2022
Prepaid Rent		978,160		1,068,972	$	4,882	$	3,951
Other Deferred Revenue		334,865		337,020
Interest Reserve from Commercial Loans and Investments						790		1,262
Tenant Contributions						579		522
Total Deferred Revenue	$	1,313,025	$	1,991,666	$	6,251	$	5,735

~~On September 20, 2016, the Company received an approximate $807,000 rent payment for the sixth year~~

Interest Reserve fromCommercial Loans and Investments. In connection with three of the Company’s ~~thirteen-year oil exploration lease, which was being recognized ratably over~~commercial loan investments, the ~~twelve-month lease period ending~~borrower has deposited interest and/or real estate tax reserves in ~~September 2017. During~~accounts held by the ~~three months ended September 30, 2017,~~Company. Those accounts balances are included in restricted cash on the ~~oil exploration lease was extended to September 22, 2018, however,~~Company’s consolidated balance sheets with the ~~related lease payment of approximately $807,000 for the seventh year of the lease was not received until October 11, 2017, for which a receivable and revenue were~~corresponding liability recorded ~~for the portion earned during the three months ended September 30, 2017, leaving no~~in deferred revenue as seen above. Pursuant to each respective agreement, interest reserves are either (i) utilized to fund the monthly interest due on the loan or (ii) maintained throughout the term of ~~September 30, 2017. The oil exploration lease is more fully described in Note 4 “Land and Subsurface Interests.”~~the loan.

NOTE ~~16.~~19. STOCK-BASED COMPENSATION

SUMMARY OF STOCK-BASED COMPENSATION

A summary of share activity for all equity ~~and liability~~ classified stock compensation during the nine months ended September 30, ~~2017,~~2023 is presented ~~below:~~below.


Type of Award	Shares Outstanding at 1/1/2023		Granted Shares		Vested / Exercised Shares		Expired Shares		Forfeited Shares		Shares Outstanding at 9/30/2023
Equity Classified - Performance Share Awards - Peer Group Market Condition Vesting		230,247		88,754		(72,141)		—		(9,485)		237,375
Equity Classified - Three Year Vest Restricted Shares		212,079		96,453		(74,229)		—		(17,879)		216,424
Total Shares		442,326		185,207		(146,370)		—		(27,364)		453,799

Shares

Vested /

Shares

Outstanding

Granted

Exercised

Expired

Forfeited

Outstanding
Type of Award

at 1/1/2017

Shares

Shares

Shares

Shares

at 9/30/2017
Equity Classified - Performance Share Awards - Peer Group Market Condition Vesting

—

12,635

—

—

—

12,635
Equity Classified - Market Condition Restricted Shares - Stock Price Vesting

69,500

—

—

(32,000)

—

37,500
Equity Classified - Three Year Vest Restricted Shares

37,504

17,451

(17,298)

—

(267)

37,390
Equity Classified - Non-Qualified Stock Option Awards

113,500

—

(23,500)

—

—

90,000
Liability Classified - Stock Options and Stock Appreciation Rights

11,000

—

—

(5,000)

—

6,000
Total Shares

231,504

30,086

(40,798)

(37,000)

(267)

183,525

Table of Contents

Amounts recognized in the financial statements for stock-based compensation are as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Total Cost of Share-Based Plans Charged Against Income	$	868	$	812	$	2,802	$	2,423

EQUITY-CLASSIFIED STOCK COMPENSATION

Performance Share Awards – Peer Group Market Condition Vesting

~~On February 3, 2017, the Company awarded~~Performance shares have been granted to certain employees ~~12,635 Performance Shares~~ under the ~~Amended and Restated~~ 2010 ~~Equity Incentive Plan (the “2010 Plan”).~~Plan. The ~~Performance Shares~~performance share awards entitle the recipient to receive, upon the vesting thereof, shares of common stock of the Company equal to between 0% and 150% of the number of ~~Performance Shares~~performance shares awarded. The number of shares of common stock ~~so vesting will be~~ultimately received by the award recipient is determined based on the Company’s total ~~shareholder~~stockholder return as compared to the total ~~shareholder~~stockholder return of a certain peer group during a three-year performance ~~period commencing on January 1, 2017 and ending on December 31, 2019.~~period. The Company granted a total of 88,754 performance shares during the nine months ended September 30, 2023.

The Company used a Monte Carlo simulation pricing model to determine the fair value of its awards that are based on market conditions. The determination of the fair value of market condition-based awards is affected by the Company’s stock price as well as assumptions regarding a number of other variables. These variables include expected stock price volatility over the requisite performance term of the awards, the relative performance of the Company’s stock price and ~~shareholder~~stockholder returns to companies in its peer group, annual dividends, and a risk-free interest rate assumption. Compensation cost is recognized regardless of the achievement of the market conditions, provided the requisite service period is met.

~~Table of Contents~~

~~A summary of activity during the nine months ended September 30, 2017, is presented below:~~

Wtd. Avg.
Performance Shares with Market Conditions

Shares

Fair Value
Outstanding at January 1, 2017

—

$
—
Granted

12,635

55.66
Vested

—

—
Expired

—

—
Forfeited

—

—
Outstanding at September 30, 2017

12,635

$
55.66

As of September 30, ~~2017,~~2023, there was ~~approximately $527,000~~$1.8 million of unrecognized compensation cost, adjusted for estimated forfeitures, related to ~~Performance Share~~the non-vested performance share awards, which will be recognized over a remaining weighted average period of ~~2.3~~1.8 years.

Effective as of August 4, 2017, the Company entered into amendments to the employment agreements and certain stock option award agreements and restricted share award agreements whereby such awards will fully vest following a change in control (as defined in the executive’s employment agreement) only if the executive’s employment is terminated without cause or if the executive resigns for good reason (as such terms are defined in the executive’s employment agreement), in each case, at any time during the 24-month period following the change in control.

~~Market Condition Restricted Shares – Stock Price Vesting~~

“Inducement” grants of 96,000 and 17,000 shares of restricted Company common stock were awarded to Mr. Albright and Mr. Patten in 2011 and 2012, respectively. Mr. Albright’s restricted shares were granted outside of the 2010 Plan while Mr. Patten’s restricted shares were awarded under the 2010 Plan. The Company filed a registration statement with the Securities and Exchange Commission on Form S-8 to register the resale of Mr. Albright’s restricted stock under this award. The restricted shares vest in six increments based upon the price per share of the Company’s common stock during the term of their employment (or within sixty days after termination of employment by the Company without cause) meeting or exceeding the target trailing sixty-day average closing prices ranging from $36 per share for the first increment to $65 per share for the final increment. If any increment of the restricted shares fails to satisfy the applicable stock price condition prior to six years from the grant date, that increment of the restricted shares will be forfeited. As of September 30, 2017, four increments of Mr. Albright’s and Mr. Patten’s awards had vested. On August 1, 2017, the remaining 32,000 unvested “inducement” grant restricted shares, for the $60 and $65 price increments, awarded to Mr. Albright in 2011 expired without vesting.

Additional grants of 2,500 and 3,000 shares of restricted Company common stock were awarded to Mr. Smith and another officer under the 2010 Plan, during the fourth quarter of 2014 and the first quarter of 2015, respectively. The restricted stock will vest in two increments based upon the price per share of Company common stock during the term of their employment (or within sixty days after termination of employment by the Company without cause), meeting or exceeding the target trailing sixty-day average closing prices of $60 per share and $65 per share for the two increments. If any increment of the restricted shares fails to satisfy the applicable stock price condition prior to six years from the grant date, that increment of the restricted shares will be forfeited. As of September 30, 2017, no increments of Mr. Smith’s or the other officer’s awards had vested.

A grant of 94,000 shares of restricted Company common stock was awarded to Mr. Albright under the 2010 Plan during the second quarter of 2015 under a new five-year employment agreement. On February 26, 2016, 72,000 of these shares were surrendered due to an over-grant by the Company, of which 4,000 were re-granted on February 26, 2016 with identical terms of the surrendered restricted stock and 68,000 were permanently surrendered. The 26,000 shares of restricted Company common stock outstanding from these grants will vest in four increments based upon the price per share of Company common stock during the term of his employment (or within sixty days after termination of employment by the Company without cause), meeting or exceeding the target trailing thirty-day average closing prices ranging from $60 and $65 per share for the first two increments of 2,000 shares each, $70 per share for the third increment of 18,000 shares, and $75 per share for the fourth increment of 4,000 shares. If any increment of the restricted shares fails to satisfy the applicable stock price condition prior to January 28, 2021, that increment of the restricted shares will be forfeited. As of September 30, 2017, no increments of this award had vested.

~~Table of Contents~~

Pursuant to amendments to the employment agreements and certain restricted share award agreements entered into by the Company on February 26, 2016 and August 4, 2017, the restricted shares granted thereunder, if they are subject to performance-based vesting conditions, will fully vest following a change in control only if the executive’s employment is terminated without cause or if the executive resigns for good reason (as such terms are defined in the executive’s employment agreement), in each case, at any time during the 24-month period following the change in control (as defined in the executive’s employment agreement).

The Company used a Monte Carlo simulation pricing model to determine the fair value of its awards that are based on market conditions. The determination of the fair value of market condition-based awards is affected by the Company’s stock price as well as assumptions regarding a number of other variables. These variables include expected stock price volatility over the requisite performance term of the awards, the relative performance of the Company’s stock price and shareholder returns to companies in its peer group, annual dividends, and a risk-free interest rate assumption. Compensation cost is recognized regardless of the achievement of the market conditions, provided the requisite service period is met.

A summary of the activity for these awards during the nine months ended September 30, ~~2017,~~2023 is presented below:

Wtd. Avg.

Market Condition Non-Vested Restricted Shares

Shares

Fair Value

Outstanding at January 1, 2017

69,500

$
27.03

Granted

—

—

Vested

—

—

Expired

(32,000)

14.08

Forfeited

—

—

Outstanding at September 30, 2017

37,500

$
38.09

~~As of September 30, 2017, there is no unrecognized compensation cost related to market condition restricted stock.~~

~~Three Year Vest~~


Performance Shares With Market Conditions	Shares		Wtd. Avg. Fair Value Per Share
Non-Vested at January 1, 2023		230,247	$	16.85
Granted		88,754	$	18.10
Vested		(72,141)	$	14.17
Expired		—		—
Forfeited		(9,485)	$	18.10
Non-Vested at September 30, 2023		237,375	$	18.08

Restricted Shares

~~On January 22, 2014, the Company~~Restricted shares have been granted to certain employees ~~14,500 shares of restricted Company common stock~~ under the 2010 Plan. ~~One-third~~Certain of the restricted shares vest on each of the first, second, and third anniversaries of January 28 of the ~~grant date,~~applicable year provided the grantee is an employee of the Company on those dates. Certain other restricted share awards, granted on July 1, 2022, vest entirely on the third anniversary of the grant date, or July 1, 2025, provided the grantee is an employee of the Company on that date. In addition, any unvested portion of the restricted shares will vest upon a change in control.

~~On January 28, 2015, the~~ The Company granted ~~to certain employees, which did not include Mr. Albright, 11,700~~a total of 96,453 shares of restricted Company common stock under the 2010 Plan. Additionally, on February 9, 2015, the Company granted 8,000 shares of restricted Company common stock to Mr. Albright under the 2010 Plan. One-third of both awards of restricted shares will vest on each of the first, second, and third anniversaries of the January 28, 2015 grant date, provided the grantee is an employee of the Company on those dates. In addition, any unvested portion of the restricted shares will vest upon a change in control.

On January 27, 2016, the Company granted to certain employees 21,100 shares of restricted Company common stock under the 2010 Plan. One-third of the restricted shares will vest on each of the first, second, and third anniversaries of January 28, 2016, provided the grantee is an employee of the Company on those dates. In addition, any unvested portion of the restricted shares will vest upon a change in control.

On January 25, 2017, the Company granted to certain employees 17,451 shares of restricted Company common stock under the 2010 Plan. One-third of the restricted shares will vest on each of the first, second, and third anniversaries of January 28, 2017 provided the grantee is an employee of the Company on those dates. In addition, any unvested portion of the restricted shares will vest upon a change in control.

~~Table of Contents~~

nine months ended September 30, 2023.

The Company’s determination of the fair value of the ~~three year vest~~ restricted stock awards was calculated by multiplying the number of shares issued by the Company’s stock price at the grant ~~date, less the present value of expected dividends during the vesting period.~~date. Compensation cost is recognized on a straight-line basis over the applicable vesting period.

~~A summary~~34

Table of ~~activity during the nine months ended September 30, 2017, is presented below:~~Contents

Wtd. Avg.

Fair Value

Three Year Vest Non-Vested Restricted Shares

Shares

Per Share

Outstanding at January 1, 2017

37,504

$
47.53

Granted

17,451

55.06

Vested

(17,298)

46.70

Expired

—

—

Forfeited

(267)

52.51

Outstanding at September 30, 2017

37,390

$
51.39

As of September 30, ~~2017,~~2023, there was ~~approximately $1.3~~$2.7 million of unrecognized compensation cost, adjusted for estimated forfeitures, related to the ~~three year vest~~ non-vested restricted ~~shares, which will be recognized over a remaining weighted average period of 1.8 years.~~

~~Non-Qualified Stock Option Awards~~

Pursuant to the Non-Qualified Stock Option Award Agreements between the Company and Messrs. Albright, Patten, and Smith, each of these Company employees was granted an option to purchase 50,000, 10,000, and 10,000 shares of Company common stock, in 2011, 2012, and 2014, respectively, under the 2010 Plan, with an exercise price per share equal to the fair market value on their respective grant dates. One-third of the options will vest on each of the first, second, and third anniversaries of their respective grant dates, provided the recipient is an employee of the Company on those dates. In addition, any unvested portion of the options will vest upon a change in control. The options expire on the earliest of: (a) the tenth anniversary of the grant date; (b) twelve months after the employee’s death or termination for disability; or (c) thirty days after the termination of employment for any reason other than death or disability.

On January 23, 2013, the Company granted options to purchase 51,000 shares of the Company’s common stock under the 2010 Plan to certain employees of the Company, including 10,000 shares to Mr. Patten, with an exercise price per share equal to the fair market value at the date of grant. One-third of these options vested on each of the first, second, and third anniversaries of the grant date, provided the recipient was an employee of the Company on those dates. The options expire on the earliest of: (a) the fifth anniversary of the grant date; (b) twelve months after the employee’s death or termination for disability; or (c) thirty days after the termination of employment for any reason other than death or disability.

On February 9, 2015, the Company granted to Mr. Albright an option to purchase 20,000 shares of the Company’s common stock under the 2010 Plan with an exercise price of $57.50. The option vested on January 28, 2016. The option expires on the earliest of: (a) January 28, 2025; (b) twelve months after the employee’s death or termination for disability; or (c) thirty days after the termination of employment for any reason other than death or disability.

On May 20, 2015, the Company granted to Mr. Albright an option to purchase 40,000 shares of the Company’s common stock under the 2010 Plan, with an exercise price of $55.62. On February 26, 2016, this option was surrendered and an option to purchase 40,000 shares was granted on February 26, 2016 with identical terms. One-third of the option vested immediately and the remaining two-thirds will vest on January 28, 2017 and January 28, 2018, provided he is an employee of the Company on such dates. In addition, any unvested portion of the option will vest upon a change in control. The option expires on the earliest of: (a) January 28, 2025; (b) twelve months after the employee’s death or termination for disability; or (c) thirty days after the termination of employment for any reason other than death or disability.

On June 29, 2015, the Company granted to an officer of the Company an option to purchase 10,000 shares of the Company’s common stock under the 2010 Plan, with an exercise price of $57.54. One-third of the option will vest on each of the first, second, and third anniversaries of the grant date, provided the recipient is an employee of the Company on such dates. In addition, any unvested portion of the option will vest upon a change in control. The option expires on

~~Table of Contents~~

the earliest of: (a) June 29, 2025; (b) twelve months after the employee’s death or termination for disability; or (c) thirty days after the termination of employment for any reason other than death or disability.

The Company used the Black-Scholes valuation pricing model to determine the fair value of its non-qualified stock option awards. The determination of the fair value of the awards is affected by the stock price as well as assumptions regarding a number of other variables. These variables include expected stock price volatility over the term of the awards, annual dividends, and a risk-free interest rate assumption.

~~A summary of the activity for the awards during the nine months ended September 30, 2017, is presented below:~~

Wtd. Avg.

Remaining

Contractual

Aggregate

Wtd. Avg.

Term

Intrinsic

Non-Qualified Stock Option Awards

Shares

Ex. Price

(Years)


Value

Outstanding at January 1, 2017

113,500

$
49.03

Granted

—

—

Exercised

(23,500)

34.95

Expired

—

—

Forfeited

—

—

Outstanding at September 30, 2017

90,000

$
52.71

7.23

$
662,700

Exercisable at January 1, 2017

76,600

$
45.94

5.75

$
573,181

Exercisable at September 30, 2017

69,600

$
52.03

7.13

$
559,340

~~A summary of the non-vested options for these awards during the nine months ended September 30, 2017, is presented below:~~

Fair Value

of Shares

Non-Qualified Stock Option Awards

Shares

Vested

Non-Vested at January 1, 2017

36,900

Granted

—

Vested

(16,500)

$
924,066

Expired

—

Forfeited

—

Non-Vested at September 30, 2017

20,400

No options were granted during the nine months ended September 30, 2017. The total intrinsic value of options exercised during the nine months ended September 30, 2017 was approximately $451,000. As of September 30, 2017, there was approximately $141,000 of unrecognized compensation related to non-qualified, non-vested stock option awards, which will be recognized over a remaining weighted average period of ~~0.6~~1.9 years.

~~LIABILITY-CLASSIFIED~~A summary of the activity for these awards during the nine months ended September 30, 2023 is presented below:


Non-Vested Restricted Shares	Shares		Wtd. Avg. Fair Value Per Share
Non-Vested at January 1, 2023		212,079	$	17.97
Granted		96,453	$	19.12
Vested		(74,229)	$	16.00
Expired		—		—
Forfeited		(17,879)	$	19.12
Non-Vested at September 30, 2023		216,424	$	19.07

NON-EMPLOYEE DIRECTOR STOCK COMPENSATION

Each member of the Company’s Board of Directors has the option to receive his or her annual retainer and meeting fees in shares of Company common stock rather than cash. The ~~Company previously had a stock option plan (the “2001 Plan”) pursuant~~number of shares awarded to ~~which 500,000 shares~~the directors making such election is calculated quarterly by dividing (i) the sum of (A) the amount of the quarterly retainer payment due to such director plus (B) meeting fees earned by such director during the quarter, by (ii) the trailing 20-day average price of the Company’s common stock ~~were eligible for issuance. The 2001 Plan expired in 2010, and no new stock options may be issued under~~as of the ~~2001 Plan. Under~~date two business days prior to the ~~2001 Plan, both stock options and stock appreciation rights were issued in prior years and such issuances were deemed to be liability-classified awards under the Share-Based Payment Topic~~date of ~~FASB ASC, which are required to be remeasured at fair value at each balance sheet date until~~ the award, ~~is settled.~~ rounded down to the nearest whole number of shares.

~~Table~~Each non-employee director serving as of ~~Contents~~

~~A summary~~the beginning of ~~share option activity under~~each calendar year shall receive an annual award of the ~~2001 Plan~~Company’s common stock. The value of such award totaled $35,000 for the nine months ended September 30, ~~2017~~2023 and 2022 (the “Annual Award”). The number of shares awarded is ~~presented below:~~

~~Stock Options~~

Wtd. Avg.

Remaining

Contractual

Aggregate

Wtd. Avg.

Term

Intrinsic

Liability-Classified Stock Options

Shares

Ex. Price

(Years)

Value

Outstanding at January 1, 2017

11,000

63.87

Granted

—

—

Exercised

—

—

Expired

(5,000)

77.25

Forfeited

—

—

Outstanding at September 30, 2017

6,000

$
52.73

0.32

$
44,040

Exercisable at September 30, 2017

6,000

$
52.73

0.32

$
44,040

~~In connection with~~calculated based on the ~~grant~~trailing 20-day average price of ~~non-qualified stock options, a stock appreciation right for each share covered by~~ the ~~option was also granted. The stock appreciation right entitles the optionee to receive a supplemental payment, which may be paid in whole or in part in cash or in shares of~~Company’s common stock ~~equal to a portion~~as of the ~~spread between~~date two business days prior to the ~~exercise price and the fair market value~~date of the ~~underlying shares at~~award, rounded down to the ~~time~~nearest whole number of ~~exercise. No options were exercised during~~shares. Non-employee directors do not receive meeting fees, but will receive additional retainers for service on Board committees, as set forth in the Company’s Non-Employee Director Compensation Policy available on the Company’s website (www.ctoreit.com).

During the nine months ended September 30, ~~2017.~~

~~Stock Appreciation Rights~~

Wtd. Avg.

Remaining

Contractual

Aggregate

Wtd. Avg.

Term

Intrinsic

Liability-Classified Stock Appreciation Rights

Shares

Fair Value

(Years)

Value

Outstanding at January 1, 2017

11,000

1.33

Granted

—

—

Exercised

—

—

Expired

(5,000)

—

Forfeited

—

—

Outstanding at September 30, 2017

6,000

$
4.08

0.32

$
23,714

Exercisable at September 30, 2017

6,000

$
4.08

0.32

$
23,714

No2023 and 2022, the expense recognized for the value of the Company’s common stock ~~appreciation rights were exercised~~received by non-employee directors totaled $0.4 million, or 21,247 shares, and $0.4 million, or 21,400 shares, respectively. The expense recognized includes the Annual Award received during the first quarter of each respective year, which totaled $0.2 million during each of the nine months ended September 30, ~~2017.~~2023 and 2022.

NOTE 20. INCOME TAXES

The ~~fair value~~Company elected to be taxed as a REIT for U.S. federal income tax purposes, commencing with its taxable year ended December 31, 2020. The Company believes that, commencing with such taxable year, it has been organized and has operated in such a manner as to qualify for taxation as a REIT under the U.S. federal income tax laws. The Company intends to continue to operate in such a manner. As a REIT, the Company will be subject to U.S. federal and state income taxation at corporate rates on its net taxable income; the Company, however, may claim a deduction for the amount of ~~each share option~~dividends paid to its stockholders. Amounts distributed as dividends by the Company will be subject to taxation at the stockholder level only. While the Company must distribute at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction and ~~stock appreciation right~~excluding any net capital gain, to qualify as a REIT, the Company intends to distribute all of its net taxable income. The Company is ~~estimated~~allowed certain other non-cash deductions or adjustments, such as depreciation expense, when computing its REIT taxable income and distribution requirement. These deductions permit the Company to reduce its dividend payout requirement under U.S. federal income tax laws. Certain states may impose minimum franchise taxes. To comply with certain REIT requirements, the Company holds certain of its non-REIT assets and operations through TRSs and subsidiaries of TRSs, which will be subject to applicable U.S. federal, state and local corporate income tax on their taxable income. For the ~~measurement date using~~periods presented, the ~~Black-Scholes option pricing model based on assumptions noted in the following table. Expected volatility is based on the historical volatility~~Company held a total of two TRSs subject to taxation. The Company’s TRSs will file tax returns separately as C-Corporations.

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As a result of the Company’s ~~share price and other factors. The Company has elected to use the simplified method of estimating the expected term of the options and stock appreciation rights.~~

Due to the small number of employees included in the 2001 Plan, the Company uses the specific identification method to estimate forfeitures and includes all participants in one group. The risk-free rate for periods within the contractual term of the share option is based on the United States Treasury rates in effect at the time of measurement. The Company issues new, previously unissued, shares as options are exercised.

~~Following are assumptions used in determining the fair value of stock options and stock appreciation rights:~~

Assumptions at:

September 30,
2017


December 31,
2016


Expected Volatility

14.70
%

14.13
%

Expected Dividends

0.27
%

0.22
%

Expected Term

0.32
years

0.61
years

Risk-Free Rate

1.06
%

0.66
%

~~Table of Contents~~

There were no stock options or stock appreciation rights granted under the 2001 Plan during the nine months ended September 30, 2017 or 2016. The liability for stock options and stock appreciation rights, valued at fair value, reflected on the consolidated balance sheets at September 30, 2017 and December 31, 2016, was approximately $70,000 and $42,000, respectively. These fair value measurements are based on Level 2 inputs based on Black-Scholes and market implied volatility. The Black-Scholes determination of fair value is affected by variables including stock price, expected stock price volatility over the term of the awards, annual dividends, and a risk-free interest rate assumption.

~~Amounts recognized in the consolidated financial statements for stock options, stock appreciation rights, and restricted stock are as follows:~~

Three Months Ended

Nine Months Ended


September 30,
2017

September 30,
2016

September 30,
2017

September 30,
2016
Accelerated Charge for Stock-Based Compensation

$
—

$
—

$
—

$
1,649,513
Recurring Charge for Stock-Based Compensation

398,925

401,967

1,142,090

1,244,076
Total Cost of Share-Based Plans Charged Against Income Before Tax Effect

$
398,925

$
401,967

$
1,142,090

$
2,893,589

Income Tax Expense Recognized in Income

$
(150,283)

$
(155,059)

$
(286,676)

$
(1,116,202)

~~NOTE 17. INCOME TAXES~~

The Company’s effective income tax rate was 38.7% and 43.7% for the nine months ended September 30, 2017 and 2016, respectively. The provision for income taxes reflects the Company’s estimate of the effective rate expectedelection to be ~~applicable for the full fiscal year, adjusted for any discrete events, which are reported in the period that they occur.~~

~~During the third quarter of 2017, 32,000 shares of restricted Company common stock expired, which constituted~~taxed as a discrete event in which the total related stock compensation expense charged to earnings under GAAP of approximately $451,000, became permanently non-deductible for tax purposes as the expired shares will not vest. Accordingly, no income tax benefit was recorded related to the $451,000 of stock compensation expense.

During the first quarter of 2016, 68,000 shares of restricted Company common stock were permanently surrendered, which constituted a discrete event in which the total related stock compensation expense charged to earnings under GAAP of approximately $2.3 million, of which approximately $1.6 million was recognized during the first quarter of 2016 and approximately $676,000 was recognizedREIT, during the year ended December 31, ~~2015, became permanently non-deductible for tax purposes as the surrendered shares will not vest. Accordingly, no income~~2020, an $82.5 million deferred tax benefit was recorded to de-recognize the deferred tax assets and liabilities associated with the entities included in the REIT. A significant portion of the deferred tax benefit recognized related to the ~~approximately $2.3 million~~de-recognition of ~~stock compensation expense.~~

deferred tax liabilities resulting from Internal Revenue Code Section 1031 like-kind exchanges (“1031 Exchanges”). The Company ~~files~~will be subject to corporate income taxes related to assets held by it that are sold during the 5-year period following the date of conversion to the extent such sold assets had a ~~consolidated income tax return in the United States Federal jurisdiction and the states~~built-in gain as of Arizona, Colorado, California, Florida, Illinois, Georgia, Maryland, Massachusetts, North Carolina, Texas, and Washington. The Internal Revenue Service has audited the federal tax returns through the year 2012, with all proposed adjustments settled. The Florida Department of Revenue has audited the Florida tax returns through the year 2014, with all proposed adjustments settled.January 1, 2020. The Company ~~recognizes all potential accrued interest and penalties~~has disposed of certain, primarily single-tenant, REIT assets after the REIT conversion within the 5-year period. All such sales were completed using 1031 Exchanges or other deferred tax structures to ~~unrecognized~~mitigate the built-in gain tax ~~benefits in income tax expense.~~liability of conversion.

NOTE ~~18.~~21. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time, the Company may be a party to certain legal proceedings, incidental to the normal course of its business. While the outcome of the legal proceedings cannot be predicted with certainty, the Company does not expect that these proceedings will have a material effect upon our financial condition or results of operations.

On November 21, 2011, the Company, Indigo Mallard Creek LLC and Indigo Development LLC, as owners of the property leased to Harris Teeter, Inc. (“Harris Teeter”) in Charlotte, North Carolina, were served with pleadings filed in the General Court of Justice, Superior Court Division for Mecklenburg County, North Carolina, for a highway condemnation action involving this property. The proposed road modifications would impact access to the property. The Company does not believe the road modifications provided a basis for Harris Teeter to terminate the Lease. Regardless, in January 2013, the North Carolina Department of Transportation (“NCDOT”) proposed to redesign the road

~~Table of Contents~~

modifications to keep the all access intersection open for ingress with no change to the planned limitation on egress to the right-in/right-out only. Additionally, NCDOT and the City of Charlotte proposed to build and maintain a new access road/point into the property. Construction has begun and is not expected to be completed before mid-2018. Harris Teeter has expressed satisfaction with the redesigned project and indicated that it will not attempt to terminate its lease if this project is built as currently redesigned. Because the redesigned project will not be completed until late 2017 to mid-2018, the condemnation case has been placed in administrative closure. As a result, the trial and mediation will not likely be scheduled until requested by the parties, most likely in late 2018.

Contractual Commitments – Expenditures

~~In conjunction with the Company’s sale of approximately 3.4 acres of land to RaceTrac in December 2013, the~~

The Company agreed to reimburse RaceTrac for a portion of the costs for road improvements and the other costs associated with bringing multiple ingress/egress points to the entire 23-acre Williamson Crossing site, including the Company’s remaining 19.6 acres. The estimated cost for the improvements equals approximately $1.26 million and the Company’s commitment is to reimburse RaceTrac in an amount equal to the lesser of 77.5% of the actual costs or $976,500. The Company’s commitmenthas committed to fund the improvement costs benefiting the remaining acres of Company land can be paid over five years from sales of the remaining land or at the end of the fifth year. In 2013 the Company deposited $283,500 of cash in escrowfollowing capital improvements. The improvements, which are related to ~~the improvements, which is classified as restricted cash in the consolidated balance sheets. The total amount in escrow~~several properties, are estimated to be generally completed within twelve months. These commitments, as of September 30, ~~2017 was approximately $287,000, including accrued interest. Accordingly,~~2023, are as ~~of September 30, 2017, the remaining maximum commitment is approximately $689,000.~~follows (in thousands):

In conjunction with the Company’s sale of approximately 18.1 acres of land to an affiliate of Sam’s Club (“Sam’s”) in December 2015, the Company agreed to reimburse Sam’s for a portion of their construction costs applicable to adjacent outparcels retained by the Company. As a result, in December 2015, the Company deposited $125,000 of cash in escrow related to construction work which is classified as restricted cash in the consolidated balance sheets. The total amount in escrow as of September 30, 2017 was approximately $125,000, including accrued interest. Accordingly, the Company’s maximum commitment related to the construction work benefitting the outparcels adjacent to Sam’s land parcel is approximately $125,000, to be paid from escrow upon completion.

~~The Company’s total construction estimate related to the capital expenditures to renovate The Grove at Winter Park property in Winter Park, Florida, which~~


	As of September 30, 2023
Total Commitment ⁽¹⁾	$	13,150
Less Amount Funded		(2,215)
Remaining Commitment	$	10,935

⁽¹⁾ Commitment includes ~~increases for~~ tenant improvements, pursuant to leases as they are executed, totaled approximately $4.2 million as of September 30, 2017. The Company has incurred approximately $3.9 million of the total construction estimate as of September 30, 2017, leaving a remaining commitment of approximately $315,000.

The Company executed an agreement for improvements at the grocery-anchored shopping center situated on approximately 10.3 acres in Fort Worth, Texas, known as the Westcliff property, during the three months ended June 30, 2017. Pursuant to the agreement, the total expected cost of the improvements is approximately $654,000, of which approximately $281,000 has been incurred as of September 30, 2017, leaving a remaining commitment of approximately $373,000.

The Company leased space for its corporate offices at 1530 Cornerstone Blvd., Suite 100, Daytona Beach, Florida subject to a lease that expired on September 30, 2017. The Company elected to allow the lease to expire and relocate its corporate offices to the vacant approximately 7,700 square feet at 1140 N. Williamson Blvd., Suite 140, Daytona Beach, Florida, known as the Williamson Business Park, an income property owned by the Company. The Company completed the build-out of the new office space and has relocated its corporate offices as of September 30, 2017. The Company incurred a total of approximately $761,000 to complete the build-out which was comprised of approximately $233,000 to build-out the shell and approximately $528,000 in tenant improvements. The Company’s savings in base rent that will no longer be paid totals approximately $128,000 per year.

In conjunction with the Company’s development of two income properties, both restaurants, on the beach parcel as described in Note 4, “Land and Subsurface Interests,” the Company has executed multiple contracts with third-parties to perform the work necessary to prepare the site, construct the restaurants, and acquire the related furniture and equipment. Pursuant to the leases with the tenants of the two restaurant properties, LandShark Bar & Grill and Cocina 214 Restaurant & Bar, and based on the Company’s current cost estimates, the total estimated cost to improve the land and develop the income properties is approximately $6.9 million. Through September 30, 2017, the Company has incurred approximately $2.2 million of the total estimated cost which is included in Construction in Progress on the Company’s consolidated balance sheet, leaving a remaining commitment of approximately $4.8 million. The Company expects the

~~Table of Contents~~

development of the two restaurant properties to be completed in time for the tenants to commence operations during January of 2018. Upon completion of the construction of the two income properties and commencement of the tenant leases, the total investment in the beach parcel will be classified as Income Properties, Land, Building, and Improvements, within the Property, Plant, and Equipment classification on the Company’s consolidated balance sheet.

~~Contractual Commitments – Land Pipeline~~

As of October 30, 2017, the Company’s pipeline of potential land sales transactions, including the terms of an executed non-binding term sheet to form a joint venture with an institutional investor to establish a mitigation bank on a parcel of our land (the “Mitigation Bank”), included the following twelve potential transactions with eleven different buyers, representing more than 5,800 acres or approximately 72% of our land holdings:

No. of

Amount

Price

Estimated


Transaction (Buyer)

Acres

($000's)

per Acre

Timing
1

Commercial/Retail - East of I-95 (2)

123

$
29,250

$
238,000

'18 - '19
2

Residential (AR) - Minto II - West of I-95

1,614

26,500

16,000

'18
3

Residential (SF) - ICI Homes II - West of I-95

1,016

21,000

21,000

'19
4

Mixed-Use Retail - North American - East of I-95

62

16,963

273,000

'17 - '18
5

Mitigation Bank - Term Sheet - West of I-95 (1)

2,492

15,000

6,000

'18
6

Commercial/Retail - Buc'ees - East of I-95(2)

35

14,000

400,000

'18
7

Commercial/Retail - East of I-95

21

5,777

275,000

'17 - '18
8

Distribution/Warehouse - East of I-95

71

5,000

70,000

'18 - '19
9

Residential (Multi-Family) - East of I-95 (3)

45

5,200

116,000

'18 - '19
10

Residential (SF) - West of I-95 (4)

200

3,324

17,000

'18
11

Commercial/Retail - Specialty Grocer - East of I-95

9

2,700

300,000

'18
12

Residential (SF) - ICI Homes - West of I-95

146

1,400

10,000

'19

Total (Average)

5,834

$
146,114

$
25,000

~~(1)~~The amount for the Mitigation Bank represents the amount in the term sheet for buyer’s acquisition of approximately 70% of the joint venture that owns the Mitigation Bank, with the Company retaining 30%.

~~(2)~~Land sales transactions which require the Company to incur the cost to provide the requisite mitigation credits necessary for obtaining the applicable regulatory permits for the buyer, with such costs representing either our basis in the credits that we own, or potentially up to 5% - 10% of the contract amount noted.

~~(3)~~The acres and amount include the buyer’s option to acquire approximately 19 acres for approximately $2.0 million, in addition to the base contract of approximately 26 acres for approximately $3.2 million.

~~(4)~~The acres and amount include the buyer’s option to acquire approximately 71 acres for approximately $574,000, in addition to the base contract of approximately 129 acres for approximately $2.75 million.

As noted above, these agreements contemplate closing dates ranging from the fourth quarter of 2017 through fiscal year 2019, and although some of the transactions may close in 2017, the buyers are not contractually obligated to close until after 2017. Each of the transactions are in varying stages of due diligence by the various buyers including, in some instances, having made submissions to the planning and development departments of the City of Daytona Beach,leasing commissions, rebranding, facility expansion and other permitting activities with other applicable governmental authorities including wetlands permits from the St. John’s River Water Management District and the U.S. Army Corps of Engineers and traffic analysis with the Florida Department of Transportation and Volusia County. In addition to other customary closing conditions, the majority of these transactions are conditioned upon the receipt of approvals or permits from those various governmental authorities, as well as other matters that are beyond our control. If such approvals are not obtained, the prospective buyers may have the ability to terminate their respective agreements prior to closing. As a result, there can be no assurances regarding the likelihood or timing of any one of these potential land transactions being completed or the final terms thereof, including the sales price.capital improvements.

~~Other Matters~~

~~Table of Contents~~

during the quarter ended September 30, 2016. Also during the fourth quarter of 2015, the agency advised the Company that the resolution to the inquiry would likely require the Company to incur costs associated with wetlands restoration relating to approximately 148.4 acres of the Company’s land. At December 31, 2015, the Company’s third-party environmental engineers estimated the cost for such restoration activities to range from approximately $1.7 million to approximately $1.9 million. Accordingly, as of December 31, 2015, the Company accrued an obligation of approximately $1.7 million, representing the low end of the estimated range of possible restoration costs, and included such estimated costs on the consolidated balance sheets as an increase in the basis of our land and development costs associated with those and benefitting surrounding acres. As of June 30, 2016, the final proposal from the Company’s third-party environmental engineer was received reflecting a total cost of approximately $2.0 million. Accordingly, an increase in the accrual of approximately $300,000 was made during the second quarter of 2016. The Company has funded approximately $1.2 million of the total $2.0 million of estimated costs through September 30, 2017. The Company believes there is at least a reasonable possibility that the estimated remaining liability of approximately $840,000 could change within one year of the date of the consolidated financial statements, which in turn could have a material impact on the Company’s consolidated balance sheets and future cash flows. The Company evaluates its estimates on an ongoing basis; however, actual results may differ from those estimates. During the first quarter of 2017, the Company completed the sale of approximately 1,581 acres of land to Minto Communities LLC which acreage represents a portion of the Company’s remaining $840,000 obligation. Accordingly, the Company deposited $423,000 of cash in escrow to secure performance on the obligation. The funds in escrow can be drawn upon completion of certain milestones including completion of restoration and annual required monitoring. Additionally, resolution of the regulatory matter required the Company to apply for an additional permit pertaining to an additional approximately 54.66 acres, which permit may require mitigation activities which the Company anticipates could be satisfied through the utilization of existing mitigation credits owned by the Company or the acquisition of mitigation credits. Resolution of this matter allowed the Company to obtain certain permits from the applicable federal or state regulatory agencies needed in connection with the closing of the land sale contract that gave rise to this matter. As of June 30, 2017, the Company determined approximately 36 mitigation credits were required to be utilized, which represents approximately $298,000 in cost basis of the Company’s mitigation credits. Accordingly, the Company transferred the mitigation credits through a charge to direct cost of revenues of real estate operations during the three months ended June 30, 2017, thereby resolving the required mitigation activities related to the approximately 54.66 acres. In addition, in connection with other land sale contracts to which the Company is or may become a party, the pursuit of customary development entitlements by the potential purchasers may require the Company to utilize or acquire mitigation credits for the purpose of obtaining certain permits from the applicable federal or state regulatory agencies. Any costs incurred in connection with utilizing or acquiring such credits would be incorporated into the basis of the land under contract and, accordingly, no amounts related to such potential future costs have been accrued as of September 30, 2017.

During the period from the fourth quarter of 2015 through the first quarter of 2017, the Company received communications from Wintergreen Advisers, LLC (“Wintergreen”), some of which have been filed publicly. In investigating Wintergreen’s allegations contained in certain communications, pursuing the strategic alternatives process suggested by Wintergreen, and engaging in a proxy contest, the Company has incurred costs of approximately $3.0 million, to date, through September 30, 2017. Approximately $1.6 million of the approximately $3.0 million was incurred during the nine months ended September 30, 2017, of which approximately $1.2 million is specifically for legal representation and third party costs related to the proxy contest. None of Wintergreen’s allegations regarding inadequate disclosure or other wrong-doings by the Company or its directors or officers were found to have any basis or merit.

NOTE ~~19.~~22. BUSINESS SEGMENT DATA

The Company operates in four primary business segments: income properties, management services, commercial ~~loan~~loans and investments, and real estate ~~operations, and golf~~ operations. Our income property operations consist ~~primarily~~ of income-producing properties, and our business plan is focused on investing in additional income-producing properties. Our income property operations accounted for ~~78.7%~~89% and ~~70.3%~~91% of our identifiable assets as of September 30, ~~2017~~2023 and December 31, ~~2016, respectively,~~2022, and ~~30.5%~~88.8% and ~~42.6%~~82.3% of our consolidated revenues for the nine months ended September 30, ~~2017~~2023 and ~~2016,~~2022, respectively. The management services segment consists of the revenue generated from managing PINE. As of September 30, ~~2017, we have four~~2023, our commercial loans and investments portfolio consisted of three commercial loan investments ~~including one fixed-rate~~ and one ~~variable–rate mezzanine commercial mortgage loan, a variable-rate B-Note representing a secondary tranche in~~preferred equity investment which is classified as a commercial ~~mortgage~~ loan ~~and a fixed-rate first mortgage loan.~~investment. Our real estate operations ~~primarily~~ consist of revenues generated from ~~land transactions~~the sale of and ~~leasing,~~ royalty income related to our interests in subsurface oil, gas, and ~~revenue from~~mineral rights, and the ~~release~~sale of surface entry rights from our Subsurface Interests. Our golf operations consist of a single property located in the City, with two 18-hole championship golf courses, a practice facility, and clubhouse facilities, including a restaurant and bar operation, fitness facility, and pro-shop with retail merchandise. The majority of the revenues generated by our golf operations are derived from members and public customers playing golf, club memberships, and food and beverage operations.

~~Table of Contents~~

mitigation credits.

The Company ~~reports~~evaluates segment performance based on ~~profit or loss from operations before income taxes.~~operating income. The Company’s reportable segments are strategic business units that offer different products. They are managed separately because each segment requires different management techniques, knowledge, and skills.

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Information about the Company’s operations in ~~the~~ different segments for the three and nine months ended September 30, ~~2017~~2023 and ~~2016~~2022 is as ~~follows:~~ follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016

									Three Months Ended				Nine Months Ended
									September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Revenues:
Income Properties	$	7,928,258	$	6,021,331	$	22,566,505	$	18,483,654	$	25,183	$	17,694	$	70,373	$	49,229
Commercial Loan Investments		637,801		534,212		1,727,449		2,050,507
Management Fee Income										1,094		951		3,294		2,835
Interest Income From Commercial Loans and Investments										1,114		1,323		2,965		3,331
Real Estate Operations		2,926,406		4,643,646		45,658,221		18,979,164		1,079		3,149		2,602		4,395
Golf Operations		797,420		1,001,368		3,655,877		3,877,923
Agriculture and Other Income		90,717		10,388		323,617		48,070
Total Revenues	$	12,380,602	$	12,210,945	$	73,931,669	$	43,439,318	$	28,470	$	23,117	$	79,234	$	59,790
Operating Income:
Income Properties	$	6,212,742	$	4,590,689	$	17,809,761	$	14,672,265	$	18,123	$	12,579	$	49,490	$	35,286
Commercial Loan Investments		637,801		534,212		1,727,449		2,050,507
Management Fee Income										1,094		951		3,294		2,835
Interest Income From Commercial Loans and Investments										1,114		1,323		2,965		3,331
Real Estate Operations		2,467,237		3,386,463		30,249,674		14,340,299		927		1,488		1,726		2,455
Golf Operations		(475,227)		(301,552)		(517,367)		(276,761)
Agriculture and Other Income		71,843		(42,506)		233,770		(105,529)
General and Corporate Expense		(5,156,947)		7,712,203		(14,856,020)		(3,675,088)		(15,108)		(10,558)		(43,307)		(29,373)
Provision for Impairment										(929)		—		(1,408)		—
Gain on Disposition of Assets										2,464		4,973		3,565		4,728
Total Operating Income	$	3,757,449	$	15,879,509	$	34,647,267	$	27,005,693	$	7,685	$	10,756	$	16,325	$	19,262
Depreciation and Amortization:
Income Properties	$	3,053,295	$	1,866,162	$	8,848,101	$	5,571,785	$	11,651	$	7,283	$	32,769	$	20,359
Golf Operations		97,959		64,676		258,649		201,944
Agriculture and Other		9,915		14,622		32,684		44,657
Corporate and Other										18		22		45		42
Total Depreciation and Amortization	$	3,161,169	$	1,945,460	$	9,139,434	$	5,818,386	$	11,669	$	7,305	$	32,814	$	20,401
Capital Expenditures:
Income Properties	$	2,829,567	$	49,751,977	$	47,515,911	$	52,604,951	$	11,010	$	83,240	$	100,333	$	130,674
Golf Operations		237,560		4,500		2,112,060		17,661
Agriculture and Other		10,558		2,465		61,586		18,332
Commercial Loans and Investments										50		3,254		17,477		50,130
Corporate and Other										4		160		255		195
Total Capital Expenditures	$	3,077,685	$	49,758,942	$	49,689,557	$	52,640,944	$	11,064	$	86,654	$	118,065	$	180,999

Identifiable assets of each segment as of September 30, 2023 and December 31, 2022 are as follows (in thousands):

As of

September 30,
2017

December 31,
2016

Identifiable Assets:

Income Properties

$
343,740,067

$
302,757,565

Commercial Loan Investments

26,984,350

24,032,885

Real Estate Operations

44,753,918

58,868,298

Golf Operations

5,877,837

3,675,842

Agriculture and Other

15,354,629

19,288,836

Total Assets

$
436,710,801

$
408,623,426


	As of
	September 30, 2023		December 31, 2022
Identifiable Assets:
Income Properties	$	950,157	$	902,427
Management Services		1,565		1,370
Commercial Loans and Investments		46,828		32,269
Real Estate Operations		3,367		4,041
Corporate and Other		64,456		46,438
Total Assets	$	1,066,373	$	986,545

Operating income represents income from ~~continuing~~ operations before ~~loss on early extinguishment of debt,~~ interest expense, investment income, and income taxes. General and corporate expenses are an aggregate of general and administrative expenses ~~impairment charges,~~and depreciation and amortization ~~expense, land lease termination, and gains (losses) on the disposition of assets.~~expense. Identifiable assets by segment are those assets that are used in the Company’s operations in each segment. ~~Other~~Real Estate Operations primarily includes the identifiable assets of the Company’s Subsurface Interests and mitigation credits. Corporate and other assets consist primarily of cash and restricted cash, property, plant, and equipment related to the other operations, as well as the general and corporate operations. The management services and real estate operations segments had no capital expenditures during the nine months ended September 30, 2023 or 2022.

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NOTE 23. ASSETS HELD FOR SALE

~~NOTE 20. RECENTLY ISSUED ACCOUNTING POLICIES~~

~~In May 2014, the FASB issued ASU 2014-09, which amends its guidance on the recognition~~Assets held for sale as of September 30, 2023 are summarized below (in thousands) and ~~reporting of revenue from contracts with customers. The amendments in this update~~ are ~~effective for annual reporting periods beginning after December 15, 2017. The Company completed its evaluation~~solely comprised of the ~~provisions~~Westcliff Property. There were no assets held for sale as of December 31, 2022.



	As of September 30, 2023
Plant, Property, and Equipment—Net	$	15,854
Other Assets		399
Accrued and Other Liabilities		(795)
Intangible Lease Liabilities—Net		(25)
Provision for Impairment		(929)
Total Assets Held for Sale	$	14,504

NOTE 24. SUBSEQUENT EVENTS

Subsequent events and transactions were evaluated through October 26, 2023, the date the consolidated financial statements were issued.

On October 12, 2023, the Company sold the Westcliff Property, located in Fort Worth, Texas, for a sales price of $14.8 million, generating a loss on sale of $0.9 million which was recognized as an impairment charge during the three months ended September 30, 2017 and has determined there will be no material impact on the Company’s revenue recognition within the consolidated financial statements. All required disclosures relating to ASU 2014-09 will be implemented as required by the standard. The Company will be adopting ASU 2014-09 effective January 1, 2018 utilizing the modified retrospective method.

In January 2016, the FASB issued ASU 2016-01, relating to the recognition and measurement of financial assets and financial liabilities. The amendments in this update are effective for annual reporting periods beginning after December 15, 2017. The Company is currently evaluating the provisions to determine the potential impact, if any, the adoption will have on its consolidated financial statements. The Company plans to implement ASU 2016-01 effective January 1, 2018.

In February 2016, the FASB issued ASU 2016-02, which requires entities to recognize assets and liabilities that arise from financing and operating leases and to classify those finance and operating lease payments in the financing or operating sections, respectively, of the statement of cash flows. The amendments in this update are effective for annual reporting periods beginning after December 15, 2018. The Company is currently evaluating the provisions to determine the potential impact, if any, the adoption will have on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, which amends certain aspects of the stock-based compensation guidance. The amendments in this update are effective for annual reporting periods beginning after December 15, 2016. The Company adopted ASU 2016-09 effective January 1, 2017.

In August 2016, the FASB issued ASU 2016-15, which clarifies the appropriate classification of certain cash receipts and payments in the statement of cash flows. The amendments in this update are effective for annual reporting periods beginning after December 15, 2017. The Company is currently evaluating the provisions to determine the potential impact, if any, the adoption will have on its consolidated statements of cash flows. The Company plans to implement ASU 2016-15 effective January 1, 2018.

In November 2016, the FASB issued ASU 2016-18, which addresses diversity in the classification and presentation of changes in restricted cash in the statement of cash flows as operating, investing, or financing activities. The Company is currently evaluating the provisions to determine the potential impact, if any, the adoption will have on its consolidated statements of cash flows. The amendments in this update are effective for annual reporting periods beginning after December 15, 2017. The Company plans to implement ASU 2016-18 effective January 1, 2018 and will classify the changes in restricted cash between operating, investing, and financing in the consolidated statements of cash flows as applicable per the new guidance.

~~NOTE 21. SUBSEQUENT EVENTS~~

On October 13, 2017, the Company completed the sale of approximately 5.1 acres located west of Interstate 95 for approximately $275,000, or approximately $54,000 per acre, resulting in an estimated gain of approximately $239,000, or $0.03 per share, after tax.

On October 23, 2017, the Company sold two of its commercial loan investments secured by hotel properties in Atlanta, Georgia and Dallas, Texas. The Company sold these investments at a premium to par for proceeds of approximately $15.1 million on an aggregate principal value of $15.0 million. These loans were classified as held for sale on the Company’s consolidated balance sheet as of September 30, 2017. The Company utilized these proceeds to pay down the Credit Facility.

On October 27, 2017, the Company acquired an approximately 212,000 square-foot building situated on approximately 18.9 acres in Hillsboro, Oregon which is approximately 100% leased to Wells Fargo Bank, N.A. under a triple-net lease. The purchase price was approximately $39.8 million, which was funded with the proceeds from certain 1031 transactions as well as cash from the Credit Facility. As of the acquisition date, the remaining term of the lease was approximately 8.2 years. As a result of this acquisition, the amount outstanding on the Credit Facility was approximately $60.5 million and the available borrowing capacity was approximately $39.5 million as of October 30, 2017.

2023.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

When we refer to “we,” “us,” “our,” or “the Company,” we mean CTO Realty Growth, Inc. and its consolidated subsidiaries. References to “Notes to Financial Statements” refer to the Notes to the Consolidated Financial Statements of CTO Realty Growth, Inc. included in this Quarterly Report on Form 10-Q.

Forward-Looking Statements

~~When~~

Statements contained in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Also, when the Company uses any of the words “anticipate,” “assume,” “believe,” “estimate,” “expect,” “intend,” or similar expressions, the Company is making forward-looking statements. ~~Although management~~Management believes ~~that~~ the expectations reflected in such forward-looking statements are based upon present expectations and reasonable ~~assumptions,~~assumptions. However, the Company’s actual results could differ materially from those set forth in the forward-looking statements. ~~Certain factors~~Further, forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise such forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law. The risks and uncertainties that could cause our actual results to differ materially from those presented in our forward-looking statements, include, but are not limited to, the following:

●

we are subject to risks related to the ownership of commercial real estate that could affect the performance and value of our properties;

●

our business is dependent upon our tenants successfully operating their businesses, and their failure to do so could materially and adversely affect us;

●

competition that traditional retail tenants face from e-commerce retail sales, or the integration of brick and mortar stores with e-commerce retail operators, could adversely affect our business;

●

we operate in a highly competitive market for the acquisition of income properties and more established entities or other investors may be able to compete more effectively for acquisition opportunities than we can;

●

we may be unable to successfully execute on asset acquisitions or dispositions;

●

the loss of revenues from our income property portfolio or certain tenants would adversely impact our results of operations and cash flows;

●

our revenues include receipt of management fees and potentially incentive fees derived from our provision of management services to Alpine Income Property Trust, Inc. (“PINE”) and the loss or failure, or decline in the business or assets, of PINE could substantially reduce our revenues;

●

there are various potential conflicts of interest in our relationship with PINE, including our executive officers and/or directors who are also officers and/or directors of PINE, which could result in decisions that are not in the best interest of our stockholders;

●

a prolonged downturn in economic conditions could adversely impact our business, particularly with regard to our ability to maintain revenues from our income-producing assets;

●

a part of our investment strategy is focused on investing in commercial loans and investments which may involve credit risk;

●

we may suffer losses when a borrower defaults on a loan and the value of the underlying collateral is less than the amount due;

●

the Company’s real estate investments are generally illiquid;

●

if we are not successful in utilizing the like-kind exchange structure in deploying the proceeds from dispositions of income properties, or our like-kind exchange transactions are disqualified, we could incur significant taxes and our results of operations and cash flows could be adversely impacted;

●

the Company may be unable to obtain debt or equity capital on favorable terms, if at all, or additional borrowings may impact our liquidity or ability to monetize any assets securing such borrowings;

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servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to service or pay our debt;

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our operations and properties could be adversely affected in the event of natural disasters, pandemics, or other significant disruptions;

●

we may encounter environmental problems which require remediation or the incurrence of significant costs to resolve, which could adversely impact our financial condition, results of operations, and cash flows;

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●

failure to remain qualified as real estate investment trust (“REIT”) for U.S. federal income tax purposes would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distribution to stockholders;

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the risk that the REIT requirements could limit our financial flexibility;

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our limited experience operating as a REIT;

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our ability to pay dividends consistent with the REIT requirements, and expectations as to timing and amounts of such dividends;

●

the ability of our board of directors (the “Board”) to revoke our REIT status without stockholder approval;

●

our exposure to changes in U.S. federal and state income tax laws, including changes to the REIT requirements;

●

general business and economic conditions, including unstable macroeconomic conditions due to, among other things, political unrest and economic uncertainty due to terrorism or war, inflation, rising interest rates and distress in the banking sector; and

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an epidemic or pandemic (such as the COVID-19 pandemic), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, may precipitate or materially exacerbate one or more of the above-mentioned and/or other risks and may significantly disrupt or prevent us from operating our business in the ordinary course for an extended period.

The Company describes the risks and uncertainties that could cause actual results orand events to differ materially ~~from those the Company anticipates or projects are described~~ in ~~“Item 1A. Risk~~“Risk Factors” of the Company’s Annual Report on Form 10-K, for year ended December 31, 2016. Given these uncertainties, readers are cautioned not to place undue reliance on such statements, which speak only as of the date(Part II, Item 1A of this Quarterly Report on Form 10-Q or any document incorporated herein by reference. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements that may be made to reflect events or circumstances afterand Part I, Item 1A of our Annual Report on Form 10-K for the ~~date~~year ended December 31, 2022), “Quantitative and Qualitative Disclosures about Market Risk” (Part I, Item 3 of this Quarterly Report on Form ~~10-Q, or the aforementioned risk factors. The terms “us,” “we,” “our,”~~10-Q), and ~~“the Company” as used in~~“Management’s Discussion and Analysis of Financial Conditions and Results of Operations” (Part I, Item 2 of this ~~report refer to Consolidated-Tomoka Land Co. together with our consolidated subsidiaries.~~Quarterly Report on Form 10-Q).

~~OVERVIEW~~

OVERVIEW

We are a ~~diversified real estate operating company.~~ publicly traded, self-managed equity REIT that focuses on the ownership, management, and repositioning of high-quality retail and mixed-use properties located primarily in what we believe to be faster growing, business-friendly markets exhibiting accommodative business tax policies, outsized relative job and population growth, and retail demand that exceeds supply. We have pursued our investment strategy by investing primarily through fee simple ownership of our properties, commercial loans and preferred equity.

In addition to our income property portfolio, as of September 30, 2023, our business included the following:

Management Services:

●

A fee-based management business that is engaged in managing PINE, see Note 5, “Related Party Management Services Business”.

Commercial Loans and Investments:

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A portfolio of three commercial loan investments and one preferred equity investment which is classified as a commercial loan investment.

Real Estate Operations:

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A portfolio of subsurface mineral interests associated with approximately 352,000 surface acres in 19 counties in the State of Florida (“Subsurface Interests”); and

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An inventory of mitigation credits produced by the Company’s formerly owned mitigation bank.

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will occur, the amount by which ~~is managed by a third party. We also lease some of~~ our land for nineteen billboards, have agricultural operations that are managed by a third party, which consist of leasing land for hay production, timber harvesting, and hunting leases, and own and manage Subsurface Interests (hereinafter defined). The results of our agricultural and subsurface leasing operationsinvestment will increase in value, or the timing thereof. Any dividends received from PINE are included in ~~Agriculture~~investment and ~~Other Income and Real Estate Operations, respectively, in our~~other income (loss) on the accompanying consolidated statements of operations.

~~Income Property Operations.~~ We have pursued a strategy of investing in income-producing properties, when possible by utilizing the proceeds from real estate transactions qualifying for income tax deferral through like-kind exchange treatment for tax purposes.

Our strategy for investing in income-producing properties is focused on factors including, but not limited to, long-term real estate fundamentals and target markets, ~~experiencing significant economic~~including markets we believe to be faster growing, business-friendly markets exhibiting accommodative business tax policies, outsized relative job and population growth. We employ a methodology for evaluating targeted investments in income-producing properties which includes an evaluation of: (i) the attributes of the real estate (e.g. location, market demographics, comparable properties in the market, etc.); (ii) an evaluation of the existing ~~tenant~~tenant(s) (e.g. ~~credit-worthiness,~~creditworthiness, property level sales, tenant rent levels compared to the market, etc.); (iii) other ~~market~~market-specific conditions (e.g. tenant industry, job and population growth in the market, local economy, etc.); and (iv) considerations relating to the Company’s business and strategy (e.g. strategic fit of the asset type, property management needs, ~~alignment with the Company’s~~ability to use a Section 1031 like-kind exchange structure, etc.).

During the nine months ended September 30, 2017, the Company acquired three single-tenant income properties and two multi-tenant income properties, for an aggregate purchase price of approximately $40.0 million, or an aggregate acquisition cost of approximately $40.7 million including capitalized acquisition costs.

Our current portfolio of twenty-four single-tenant income properties generates approximately $14.8 million of revenues from lease payments on an annualized basis and had an average remaining lease term of 9.1 years as of September 30, 2017. Our current portfolio of twelve multi-tenant properties generates approximately $10.5 million of revenue from lease payments on an annualized basis and has a weighted average remaining lease term of 4.2 years as of September 30, 2017. We expect to continue to focus on acquiring additional income-producing properties during fiscal year 2017, and in the near term thereafter, maintaining our use of the aforementioned tax deferral structure whenever possible.

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~~As part of our overall strategy for investing~~believe investment in income-producing investments, we have self-developed five of our multi-tenant properties which are located in Daytona Beach, Florida, four of which we still own as of September 30, 2017. The first self-developed property, located atassets provides attractive opportunities for generally stable cash flows and increased returns over the northeast corner of LPGA and Williamson Boulevards in Daytona Beach, Florida, is an approximately 22,000 square foot, two-story, building, known as the Concierge Office Building, which was approximately 91% leased as of September 30, 2017. The second two properties, known as the Mason Commerce Center, consists of two buildings totaling approximately 31,000 square-feet (15,360 each), which were 100% leased as of September 30, 2017. During the year ended December 31, 2014, construction was completed on two additional properties, known as the Williamson Business Park, which are adjacent to the Mason Commerce Center. One of the two 15,360 square-foot Williamson Business Park buildings was sold in April 2016. The remaining Williamson Business Park building was approximately 50% leased and 100% occupied as of September 30, 2017 as the Company now occupies the remaining 50% of the property as its new corporate office.

As part of our strategy for investing in income-producing investments, we are also self-developing two restaurant properties on a 6-acre beachfront parcel in Daytona Beach, Florida. At the completion of this development, which we expect will occur in January of 2018, we will add these two properties to our single-tenant income property portfolio. On a limited basis, we may continue to selectively acquire other real estate, either vacant land or land with existing structures that we would demolish and develop into additional income properties, particularly in the downtown and beach side areas of Daytona Beach, Florida. Specifically our investments in the Daytona Beach area would target opportunistic acquisitions of select catalyst sites, which are typically distressed, with an objective of having shorter term investment horizons. Should we pursue such acquisitions we may seek to partner with developers to develop these sites rather than self-develop the properties.

long run through potential capital appreciation. Our focus on acquiring income-producing investments includes a continual review of our existing income property portfolio to identify opportunities to recycle our capital through the sale of income properties based on, among other possible factors, the current or expected performance of the property and favorable market conditions. ~~No income-producing properties were disposed of during the nine months ended September 30, 2017.~~

~~Real Estate Operations~~. As of September 30, 2017, the Company owned approximately 8,100 acres of undeveloped land in Daytona Beach, Florida, along six miles of the west and east sides of Interstate 95. Currently, the majority of this land is used for agricultural purposes. Approximately 1,100 acres of our land holdings are located on the east side of Interstate 95 and are generally well suited for commercial development. Approximately 7,000 acres of our land holdings are located on the west side of Interstate 95 and the majority of this land is generally well suited for residential development. Included in the western land is approximately 1,100 acres, primarily an 850-acre parcel and three smaller parcels, which are located further west of Interstate 95 and a few miles north of Interstate 4 that is generally well suited for industrial purposes.

~~Real estate operations revenue consisted of the following for the three and nine months ended September 30, 2017 and 2016, respectively:~~

The Tomoka Town Center consists of approximately 235 acres of which approximately 180 acres are developable. During 2015 and 2016, land sales with a gross sales price totaling approximately $21.4 million within the Tomoka Town Center consisted of sales of approximately 99 acres to Tanger Outlets, Sam’s Club, and North American Development Group (“NADG”) (the “Tomoka Town Center Sales Agreements”). The Company performed certain infrastructure work, beginning in the fourth quarter of 2015 through completion in the fourth quarter of 2016, which required the sales price on the Tomoka Town Center Sales Agreements to be recognized on the percentage-of-completion basis. As the infrastructure work was completed in the fourth quarter of 2016, all revenue related to the Tomoka Town Center Sales

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Agreements had been recognized as of December 31, 2016. The timing of the remaining reimbursements for the cost of the infrastructure work which totals approximately $2.4 million is more fully described in Note 9, “Other Assets.”

During the nine months ended September 30, ~~2017,~~2023, the Company ~~completed~~sold three income properties for an aggregate sales price of $22.9 million and aggregate gains on sales of $3.3 million. The sales consisted of (i) an outparcel of the ~~sale of approximately 19 acres to NADG (the “Third NADG Land Sale”). The remaining developable acreage of approximately 62 acres is currently under contract with NADG~~multi-tenant property known as ~~described~~Eastern Commons, located in ~~the land pipeline~~Henderson, Nevada, for $2.1 million, resulting in ~~Note 18, “Commitment and Contingencies.”~~

~~Land Sales.~~ ~~No land sales were completed during the three months ended September 30, 2017. During the nine months ended September 30, 2017,~~ a ~~total of approximately 1,669 acres were sold for approximately $39.6 million, as described below:~~

~~(1)The~~ gain of ~~approximately $3.3~~$0.8 million, ~~on the Third NADG Land Sale includes~~(ii) an ~~infrastructure reimbursement payment of approximately $955,000 received in conjunction with the closing on June 27, 2017.~~

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~~(1)The amount for the Mitigation Bank represents the amount in the term sheet for buyer’s acquisition of approximately 70%~~outparcel of the ~~joint venture that owns the Mitigation Bank, with the Company retaining 30%.~~

~~(2)Land sales transactions which require the Company~~multi-tenant property known as Crossroads Towne Center, located in Chandler, Arizona, for $2.3 million, resulting in a gain of $1.2 million, and (iii) a single tenant office property located in Reston, Virginia leased to ~~incur the cost to provide the requisite mitigation credits necessary~~General Dynamics for ~~obtaining the applicable regulatory permits for the buyer, with such costs representing either our basis~~$18.5 million, resulting in ~~the credits that we own, or potentially up to 5% - 10%~~a gain of ~~the contract amount noted.~~

~~(3)The acres and amount include the buyer’s option to acquire approximately 19 acres for approximately $2.0 million, in addition to the base contract of approximately 26 acres for approximately $3.2~~$1.3 million.

As noted above, these agreements contemplate closing dates ranging from the fourth quarter of 2017 through fiscal year 2019, and although some of the transactions may close in 2017, the buyers are not contractually obligated to close until after 2017. Each of the transactions are in varying stages of due diligence by the various buyers including, in some instances, having made submissions to the planning and development departments of the City of Daytona Beach, and other permitting activities with other applicable governmental authorities including wetlands permits from the St. John’s River Water Management District and the U.S. Army Corps of Engineers and traffic analysis with the Florida Department of Transportation and Volusia County. In addition to other customary closing conditions, the majority of these transactions are conditioned upon the receipt of approvals or permits from those various governmental authorities, as well as other matters that are beyond our control. If such approvals are not obtained, the prospective buyers may have the ability to terminate their respective agreements prior to closing. As a result ~~there can be no assurances regarding~~of entering into the ~~likelihood or timing~~Exclusivity and Right of ~~any one~~First Offer Agreement with PINE (the “ROFO Agreement”) which generally prevents us from investing in single-tenant net lease income properties, our income property investment strategy is focused on multi-tenant, primarily retail-oriented, properties. We may pursue this strategy by monetizing certain of ~~these potential land transactions being completed or~~our single-tenant properties, and should we do so, we would seek to utilize the ~~final terms thereof, including~~1031 like-kind exchange structure to preserve the ~~sales price.~~

~~Land Impairments.~~ ~~There were no impairment charges related~~tax-deferred gain on the original transaction(s) that pertains to the ~~Company’s undeveloped land during the nine months ended September 30, 2017.~~replacement asset.

~~Beachfront Development.~~ ~~During the year ended December 31, 2015, the Company acquired, through a real estate venture with an unaffiliated third party institutional investor, an interest in approximately six acres~~Our current portfolio of ~~vacant beachfront property located in Daytona Beach, Florida. The property was acquired for approximately $11.3~~16 multi-tenant properties generates $71.8 million of ~~which the Company contributed approximately $5.7 million. As~~revenue from annualized straight-line base lease payments and had a weighted average remaining lease term of December 31, 2015, the real estate venture was fully consolidated as the Company determined that it was the primary beneficiary of the variable interest entity. On November 17, 2016, the Company acquired the unaffiliated third party’s 50% interest for approximately $4.8 million, a discount of approximately $879,000. The discount was recorded through equity on the consolidated balance sheet during the year ended December 31, 2016. The Company evaluated its interest in the six-acre vacant beachfront property for impairment and determined that no impairment was necessary as of December 31, 2016. As the Company owns the entire real estate venture4.3 years as of September 30, ~~2017, there is no longer~~2023. Our current portfolio of 7 single-tenant income properties generates $7.7 million of revenues from annualized straight-line base lease payments and had a ~~consolidated VIE.~~

~~Table~~weighted average remaining lease term of ~~Contents~~

~~The cost basis of the six-acre vacant beachfront property asset totaled approximately $11.7 million~~5.3 years as of September 30, 2017 which includes costs for entitlement. The beachfront property received approval of the rezoning and entitlement of the site to allow for the development of two restaurants and also for the future potential development of up to approximately 1.2 million square feet of vertical density. In the first quarter of 2017, the Company executed a 15-year lease agreement with the operator of LandShark Bar & Grill, for an approximately 6,264 square foot restaurant property the Company will develop on the parcel. The annual rent under the lease is based on a percentage of the tenant’s net operating income (“NOI”) until the Company has received its investment basis in the property and thereafter, the Company will receive a lower percentage of the tenant’s NOI during the remaining lease term. In the second quarter of 2017, the Company executed a 15-year lease agreement with the tenant, Cocina 214 Restaurant & Bar, for the second restaurant property to be developed on the parcel. The annual rent is equal to the greater of $360,000 per year or a certain percentage of gross sales. The lease also provides for additional percentage rent upon the achievement of certain gross sales thresholds. The Company completed the design phase and commenced construction on the two restaurants during the three months ended September 30, 2017. As of September 30, 2017, the Company has incurred approximately $2.2 million of design and construction costs. See Note 18, “Commitment and Contingencies” for the total expected cost to be incurred for the development of the site and both restaurants. The Company expects the development of the two restaurant properties to be completed in time for the tenants to commence operations during January of 2018.2023.

~~Subsurface Interests.~~ As of September 30, 2017, the Company owns full or fractional subsurface oil, gas, and mineral interests underlying approximately 462,000 “surface” acres of land owned by others in 20 counties in Florida (the “Subsurface Interests”). The Company leases certain of the Subsurface Interests to mineral exploration firms for exploration. Our subsurface operations consist of revenue from the leasing of exploration rights and in some instances, additional revenues from royalties applicable to production from the leased acreage.

~~During the three months ended September 30, 2017, the Company sold~~ approximately 38,750 acres of subsurface interests in Osceola County, Florida for approximately $2.1 million (the “Osceola Subsurface Sale”). The gain from the Osceola Subsurface Sale totaled approximately $2.08 million, or $0.23 per share, after tax. ~~The Company expects to utilize the proceeds from this sale to acquire an income property through the 1031 like-kind exchange structure.~~

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~~Lease payments on the respective acreages and drilling penalties received through lease year seven are as follows:~~

Lease income generated by the annual lease payments is recognized on a straight-line basis over the guaranteed lease term. For the three months ended September 30, 2017 and 2016, lease income of approximately $203,000 and $297,000, respectively, was recognized. For the nine months ended September 30, 2017 and 2016, lease income of approximately $603,000 and $904,000, respectively, was recognized. There can be no assurance that the oil exploration lease will be extended beyond the expiration of the current term of September 22, 2018 or, if extended, the terms or conditions of such extension.

During the nine months ended September 30, 2017 and 2016, the Company also received oil royalties from operating oil wells on 800 acres under a separate lease with a separate operator. Revenues received from oil royalties totaled approximately $19,000 and $16,000, during the three months ended September 30, 2017 and 2016, respectively. Revenues received from oil royalties totaled approximately $69,000 and $32,000, during the nine months ended September 30, 2017 and 2016, respectively.

The Company is not prohibited from the disposition of any or all of its Subsurface Interests. Should the Company complete a transaction to sell all or a portion of its Subsurface Interests, the Company may utilize the like-kind exchange structure in acquiring one or more replacement investments including income-producing properties. The Company may release surface entry rights or other rights upon request of a surface owner for a negotiated release fee typically based on a percentage of the surface value. There were no releases of surface entry rights during the nine months ended September 30, 2017. Cash payments for the release of surface entry rights totaled approximately $450,000 during the nine months ended September 30, 2016, which is included in revenue from real estate operations.

~~Golf Operations.~~ Golf operations, which are managed by a third party, consist of the LPGA International Golf Club, a semi-private golf club consisting of two 18-hole championship golf courses, one designed by Rees Jones and the other designed by Arthur Hills, with a three-hole practice facility also designed by Rees Jones, a clubhouse facility, food and beverage operations, and a fitness facility located within the LPGA International mixed-use residential community on the west side of Interstate 95 in the City.

In July 2012, the Company entered into an agreement with the City to, among other things, amend the lease payments under its golf course lease (the “Lease Amendment”). Under the Lease Amendment, the base rent payment, which was scheduled to increase from $250,000 to $500,000 as of September 1, 2012, remained at $250,000 for the remainder of the lease term and any extensions would have been subject to an annual rate increase of 1.75% beginning September 1, 2013. On January 24, 2017, the Company acquired the land and improvements comprising the golf courses, previously leased from the City, for approximately $1.5 million (the “Golf Course Land Purchase”). In conjunction with the Golf Course Land Purchase, the lease between the Company and the City was terminated. Therefore, during the first quarter of 2017, the Company eliminated the remaining accrued liability of approximately $2.2 million, resulting in the

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recognition of approximately $0.40 per share in non-cash earnings, or $0.24 per share after tax, which comprises the land lease termination in the consolidated statements of operations. The $2.2 million consisted of approximately $1.7 million which reflects the acceleration of the remaining amount of accrued rent that was no longer owed to the City as a result of the Lease Amendment, which prior to the Golf Course Land Purchase was being recognized into income over the remaining lease term which was originally to expire in 2022. The remaining approximately $500,000 reflects the amount of rent accrued pursuant to the lease, as amended, which will no longer be owed to the City due to the lease termination on January 24, 2017.

On January 24, 2017, the Company acquired the land and improvements comprising the golf courses, previously leased from the City for approximately $1.5 million (the “Golf Course Land Purchase”). As a part of the Golf Course Land Purchase, the Company donated to the City three land parcels totaling approximately 14.3 acres located on the west side of Interstate 95 that are adjacent to the City’s Municipal Stadium. The Company had a cost basis of $0 in the donated land and paid approximately $100,000 to satisfy the community development district bonds associated with the acreage. Other terms of the Golf Course Land Purchase include the following:

The Company is obligated to pay the City additional consideration in the form of an annual surcharge of $1 per golf round played each year (the “Per-Round Surcharge”) with an annual minimum Per-Round Surcharge of $70,000 and a maximum aggregate amount of the Per-Round Surcharges paid equal to $700,000;

Within one year following the date of the closing of the Golf Course Land Purchase, unless extended due to weather related delays outside the Company’s control, the Company is obligated to renovate the greens on the Jones Course; and

If the Company sells the LPGA International Golf Club within six years of the closing of the Golf Course Land Purchase, the Company is obligated to pay the City an amount equal to 10% of the difference between the sales price, less closing costs and any other costs required to be incurred in connection with the sale, and $4.0 million.

~~Commercial Loan Investments.~~ Our investments in commercial loans or similar structured finance investments, such as mezzanine loans or other subordinated debt, have been and are expected to continue to be secured by commercial or residential real estate or the borrower’s pledge of its ownership interest in the entity that owns the real estate. The first mortgage loans we invest in or originate are for commercial real estate located in the United States and its territories, and are current or performing with either a fixed or floating rate. Some of these loans may be syndicated in either a pari-passu or senior/subordinated structure. Commercial first mortgage loans generally provide for a higher recovery rate due to their senior position in the underlying collateral. Commercial mezzanine loans are typically secured by a pledge of the borrower’s equity ownership in the underlying commercial real estate. Unlike a mortgage, a mezzanine loan is not secured by a lien on the property. An investor’s rights in a mezzanine loan are usually governed by an intercreditor agreement that provides holders with the rights to cure defaults and exercise control on certain decisions of any senior debt secured by the same commercial property.

On July 31, 2017, the Company originated a $3.0 million first mortgage loan secured by a parcel of beachfront land in the City of Daytona Beach Shores, Florida which the borrower intends to develop as a residential condominium (the “Beach Loan”). The Beach Loan matures on August 1, 2018, includes a one-year extension option, bears a fixed interest rate of 11.00%, and requires payments of interest only prior to maturity. At closing, a loan origination fee of $60,000 was received by the Company. Should the borrower seek to obtain financing for the development of the project the Beach Loan would likely be paid off in connection with that financing.

As of September 30, 2017, the Company owned four performing commercial loan investments which have an aggregate outstanding principal balance of approximately $27.0 million. These loans are secured by real estate, or the borrower’s equity interest in real estate, located in Daytona Beach Shores, Florida, Sarasota, Florida, Dallas, Texas, and Atlanta, Georgia, and have an average remaining maturity of approximately 0.9 years and a weighted average interest rate of 9.6%.

The Company sold its two commercial loan investments secured by hotel properties in Atlanta, Georgia and Dallas, Texas which have an aggregate principal value of $15.0 million at a slight premium to par. See Note 21, “Subsequent Events.” These two loans have been classified as held for sale on the accompanying consolidated balance sheets as of September 30, 2017.

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~~Agriculture and Other Income~~. Effectively all of our agriculture and other income consists of revenues generated by our agricultural operations. The Company’s agricultural lands encompass approximately 7,100 acres on the west side of Daytona Beach, Florida. Our agricultural operations are managed by a third-party and consist of leasing land for hay production and timber harvesting, as well as hunting leases.

~~SUMMARY~~COMPARISON OF ~~OPERATING RESULTS FOR~~ THE ~~QUARTER~~THREE MONTHS ENDED SEPTEMBER 30, ~~2017 COMPARED TO SEPTEMBER 30, 2016~~2023 AND 2022

~~REVENUE~~Revenue

Total revenue for the three months ended September 30, ~~2017 and 2016~~2023 is presented in the following summary and indicates the changes as compared to the three months ended September 30, ~~2016:~~2022 (in thousands):


	Three Months Ended
Operating Segment	September 30, 2023		September 30, 2022		$ Variance		% Variance
Income Properties	$	25,183	$	17,694	$	7,489	42.3%
Management Services		1,094		951		143	15.0%
Commercial Loans and Investments		1,114		1,323		(209)	(15.8)%
Real Estate Operations		1,079		3,149		(2,070)	(65.7)%
Total Revenue	$	28,470	$	23,117	$	5,353	23.2%

Revenue for

Revenue for

Three Months

Three Months

Increase (Decrease)

Ended

Ended

Vs. Same Period

Vs. Same Period
Operating Segment

9/30/2017

9/30/2016

in 2016

in 2016 (%)
Income Properties

$
7,928,258

$
6,021,331

$
1,906,927

32%
Interest Income from Commercial Loan Investments

637,801

534,212

103,589

19%
Real Estate Operations

2,926,406

4,643,646

(1,717,240)

-37%
Golf Operations

797,420

1,001,368

(203,948)

-20%
Agriculture & Other Income

90,717

10,388

80,329

773%
Total Revenue

$
12,380,602

$
12,210,945

$
169,657

1%

Table of Contents

Total revenue for the ~~quarter~~three months ended September 30, ~~2017~~2023 increased ~~slightly~~ to ~~approximately $12.4~~$28.5 million, compared to ~~approximately $12.2~~$23.1 million during the same period in 2016, an increase of approximately $170,000, or 1%. This increase was primarily the result of the following elements of the decrease in Real Estate Operations Revenue offset by the increase in the Income Property Operations Revenue, respectively:

Revenue for

Revenue for

Three Months

Three Months

Increase (Decrease)

Ended

Ended

Vs. Same Period

Vs. Same Period

9/30/2017

9/30/2016

in 2016

in 2016
Real Estate Operations Revenue

($000's)

($000's)

($000's)

(%)
Land Sales Revenue

$
—

$
318

$
(318)

-100%
Tomoka Town Center - Percentage of Completion Revenue

—

3,654

(3,654)

-100%
Impact Fee and Mitigation Credit Sales

548

209

339

162%
Subsurface Revenue

2,374

463

1,911

413%
Fill Dirt and Other Revenue

4

—

4

100%
Total Real Estate Operations Revenue

$
2,926

$
4,644

$
(1,718)

-37%

Revenue for

Revenue for

Three Months

Three Months

Increase (Decrease)

Ended

Ended

Vs. Same Period

Vs. Same Period

9/30/2017

9/30/2016

in 2016

in 2016
Income Property Operations Revenue

($000's)

($000's)

($000's)

(%)
Revenue from Q4 2016 and YTD 2017 Acquisitions

$
1,659

$
—

$
1,659

100%
Revenue from The Grove at Winter Park

147

24

123

513%
Revenue from Remaining Portfolio

5,570

5,438

132

2%
Accretion of Above Market/Below Market Intangibles

552

559

(7)

-1%
Total Income Property Operations Revenue

$
7,928

$
6,021

$
1,907

32%

~~NET INCOME~~

~~Net income and basic net income per share for the quarter~~three months ended September 30, ~~2017, compared~~2022. The $5.4 million increase in total revenue is primarily attributable to $7.5 million of increased income produced by the ~~same~~Company’s recent income property acquisitions versus that of properties disposed of by the Company during the comparative period, partially offset by a $2.1 million decrease in ~~2016, was as follows:~~

Three Months

Three Months

Increase (Decrease)

Ended

Ended

Vs. Same Period

Vs. Same Period

9/30/2017

9/30/2016

in 2016

in 2016
Net Income

$
966,900

$
8,161,014

$
(7,194,114)

-88%
Basic Earnings Per Share

$
0.18

$
1.44

$
(1.26)

-88%

~~Table of Contents~~

revenue from real estate operations.

The above results for the third quarter of 2017, compared to the same period in 2016, reflected the following significant operating elements in addition to the impacts on revenues as described above:

A decrease in direct cost of revenues of nearly $0.6 million primarily related to the decrease in the direct cost of revenues for the real estate operations of approximately $0.8 million, which primarily reflects that we did not close any land transactions during the third quarter of 2017, and an increase of approximately $0.3 million in the operating costs of the Income Property Operations segment;

~~An increase in depreciation and amortization of approximately $1.2 million resulting from the growth in our income property portfolio; and~~

~~The gain of approximately $11.5 million recognized in the third quarter of 2016 in connection with the Company’s disposition of a portfolio of fourteen single-tenant income properties.~~

~~INCOME PROPERTIES~~

~~Revenues~~Income Properties

Revenue and operating income from our income property operations totaled ~~approximately $7.9~~$25.2 million and ~~$6.2~~$18.1 million, respectively, during the ~~quarter~~three months ended September 30, ~~2017,~~2023, compared to total revenue and operating income of ~~approximately $6.0~~$17.7 million and ~~$4.6~~$12.6 million, respectively, for the ~~quarter~~three months ended September 30, ~~2016.~~2022. The direct costs of revenues for our income property operations totaled ~~approximately $1.7~~$7.1 million and ~~$1.4~~$5.1 million for the ~~quarter~~three months ended September 30, ~~2017~~2023 and ~~2016,~~2022, respectively. The increase in revenues of ~~approximately $1.9~~$7.5 million, or ~~32%~~42.3%, during the ~~quarter~~three months ended September 30, ~~2017 reflects our expanded portfolio of income properties including increases of approximately $1.7 million due~~2023 is primarily related to ~~our recent acquisitions in~~ the fourth quarter of 2016 and the first nine months of 2017, and an increase of approximately $123,000 in revenue generated by our multi-tenant property, the Grove at Winter Park in Winter Park, Florida, and a slight increase of approximately $132,000 from our in-place portfolio. Revenue from our income properties during the quarters ended September 30, 2017 and 2016 also includes approximately $552,000 and $559,000, respectively, in revenue from the accretionoverall growth of the ~~below-market lease intangible, which is primarily attributable to~~Company’s income property portfolio, as well as the ~~Wells Fargo property. Our increased~~timing of acquisitions versus dispositions. The increase in operating income of $5.5 million from our income property operations reflects increased rent revenues, offset by an increase of ~~approximately $285,000~~$2.0 million in our direct costs of revenues which ~~was primarily comprised of approximately $321,000 in increased operating expenses~~is also related to the overall growth of the Company’s income property portfolio.

Management Services

Revenue from our ~~recent acquisitions mentioned previously~~management services from PINE totaled $1.1 million and $1.0 million during the three months ended September 30, 2023 and 2022, respectively, due to the increase in ~~late 2016~~PINE’s total equity.

Commercial Loans and ~~year-to-date in 2017.~~Investments

~~REAL ESTATE OPERATIONS~~

Interest income from our commercial loans and investments totaled $1.1 million and $1.3 million during the three months ended September 30, 2023 and 2022, respectively. The decrease is primarily due to decreased income as a result of the timing of investments made and principal repayments during the previous fiscal year ended December 31, 2022, and during the nine months ended September 30, 2023.

Real Estate Operations

During the ~~quarter~~three months ended September 30, ~~2017,~~2023 and 2022, operating income from real estate operations was ~~approximately $2.5~~$0.9 million and $1.5 million on revenues totaling ~~approximately $2.9 million.~~$1.1 million and $3.1 million, respectively. During the ~~quarter~~three months ended September 30, ~~2016, operating income~~2022, there was ~~approximately $3.4~~$2.2 million ~~on revenues totaling approximately $4.6 million. The decrease in revenue of approximately $1.7 million and operating income of approximately $919,000 is primarily attributable~~more mitigation credit sales as compared to the ~~revenue recognized utilizing percentage~~same period in 2023, which led to $1.5 million more in the cost of ~~completion~~sales on mitigation credit sales during the ~~quarter~~three months ended September 30, 2016 of approximately $3.7 million on the sales within the Town Center which closed during the fourth quarter of 2015 and the first quarter of 2016 with no land sales revenue during the quarter ended September 30, 2017. The decrease in land sales revenue was partially offset by approximately $2.1 million in revenue from a sale of subsurface interests which closed during the quarter ended September 30, 2017. The decrease of approximately $798,000 in direct costs of real estate operations is primarily the result of the decrease of approximately $777,000 in the cost basis recognized during the third quarter of 2016 related2022, as compared to the ~~percentage of completion land sales.~~same period in 2023.

~~GOLF OPERATIONS~~General and Administrative Expenses

~~Revenues from golf operations totaled approximately $797,000~~Total general and ~~$1.0 million~~administrative expenses for the three months ended September 30, 2017 and 2016, respectively. The total direct cost of golf operations revenues totaled approximately $1.3 million for the three months ended September 30, 2017 and 2016. The Company’s golf operations had a net operating loss of approximately $475,000 and approximately $302,000 during the three months ended September 30, 2017 and 2016, respectively, reflecting a decline in operating results of approximately $174,000. The primary reason for the decline in revenues and related operating results was that one of the two 18-hole golf courses was closed during the entire third quarter of 2017 for the renovation of the greens.

~~INTEREST INCOME FROM COMMERCIAL LOAN INVESTMENTS~~

Interest income from our commercial loan investments totaled approximately $638,000 and $534,000 during the three months ended September 30, 2017 and 2016, respectively. The increase is primarily attributable to approximately

~~Table of Contents~~

$67,000 in revenue generated by the $3.0 million first mortgage loan originated in July 2017 as well as an increase in interest from our variable rate loans due to the increase in LIBOR during the third quarter of 2017.

~~AGRICULTURE AND OTHER INCOME~~

For the three months ended September 30, 2017 and 2016, revenues from agriculture and other income totaled approximately $90,000 and $10,000, respectively, with the increase due to a timber harvesting contract that generated approximately $80,000 of revenue in the third quarter of 2017. For the three months ended September 30, 2017 and 2016, the direct cost of revenues totaled approximately $19,000 and $53,000, respectively, an improvement of approximately $34,000 which reflects reduced payroll for this segment.

~~GENERAL AND ADMINISTRATIVE EXPENSES~~

General and administrative expenses totaled approximately $2.0 million and $1.8 million for the three months ended September 30, 2017 and 2016, respectively, an increase of approximately $174,000. The increase is primarily related to the costs incurred for the Company’s evaluation of a possible conversion to a real estate investment trust (“REIT”) as well as other professional fees.

~~GAINS ON DISPOSITION OF ASSETS AND IMPAIRMENT CHARGES~~

~~No income properties were disposed of during the three months ended September 30, 2017. There were no impairment charges during the three months ended September 30, 2017 or 2016.~~

Fifteen income properties were disposed of during the three months ended September 30, 2016, of which fourteen were part of the Portfolio Sale which generated a gain totaling approximately $11.4 million. The other sale during the quarter ended September 30, 2016 was for a loss of approximately $922,000 of which approximately $942,000 was recognized as an impairment charge during the second quarter of 2016.

~~INTEREST EXPENSE~~

Interest expense totaled approximately $2.1 million and $2.5 million for the three months ended September 30, 2017 and 2016, respectively. The decrease of approximately $381,000 is primarily the result of the write-off of approximately $367,000 of loan costs in 2016 for the $23.1 million secured loan that was assumed by the buyer of the Portfolio Sale offset by the capitalization of approximately $124,000 of interest in the third quarter of 2017 relating to our development activities at the Grove, the beach parcel, and our new corporate office space.

~~SUMMARY OF OPERATING RESULTS FOR THE NINE MONTHS ENDED SEPTMEBER 30, 2017 COMPARED TO SEPTEMBER 30, 2016~~

~~REVENUE~~

~~Total revenue for the nine months ended September 30, 2017 and 2016~~2023 is presented in the following summary and indicates the changes as compared to ~~nine~~the three months ended September 30, ~~2016:~~2022 (in thousands):


	Three Months Ended
General and Administrative Expenses	September 30, 2023		September 30, 2022		$ Variance		% Variance
Recurring General and Administrative Expenses	$	2,571	$	2,441	$	130	5.3%
Non-Cash Stock Compensation		868		812		56	6.9%
Total General and Administrative Expenses	$	3,439	$	3,253	$	186	5.7%

The primary reason for the increase in total general and administrative expenses is the overall higher employee count as a result of the increased operating activity from the significant increase in managed income property assets.

Revenue for

Revenue for

Nine Months

Nine Months

Increase (Decrease)

Ended

Ended

Vs. Same Period

Vs. Same Period
Operating Segment

9/30/2017

9/30/2016

in 2016

in 2016 (%)
Income Properties

$
22,566,505

$
18,483,654

$
4,082,851

22%
Interest Income from Commercial Loan Investments

1,727,449

2,050,507

(323,058)

-16%
Real Estate Operations

45,658,221

18,979,164

26,679,057

141%
Golf Operations

3,655,877

3,877,923

(222,046)

-6%
Agriculture & Other Income

323,617

48,070

275,547

573%
Total Revenue

$
73,931,669

$
43,439,318

$
30,492,351

70%

Table of Contents

Depreciation and Amortization

Depreciation and amortization totaled $11.7 million and $7.3 million during the three months ended September 30, 2023 and 2022, respectively. The increase of $4.4 million is due to the overall growth in the Company’s income property portfolio.

Gain on Disposition of Assets and Provision for Impairment

2023 Dispositions. During the three months ended September 30, 2023, the Company sold two income properties, including (i) an outparcel of the multi-tenant property known as Crossroads Towne Center, located in Chandler, Arizona, for $2.3 million and (ii) a single tenant office property located in Reston, Virginia leased to General Dynamics for $18.5 million. The sale of these two properties reflect a total disposition volume of $20.9 million, resulting in aggregate gains of $2.5 million.

2022 Dispositions. During the three months ended September 30, 2022, the Company sold four income properties, including (i) the multi-tenant Westland Gateway Plaza located in Hialeah, Florida, which was recorded as a commercial loan investment prior to its disposition, for $22.2 million, (ii) Chuy’s, a single-tenant property, located in Jacksonville, Florida for $5.8 million, (iii) Firebirds, a single-tenant property, located in Jacksonville, Florida for $5.5 million, and (iv) 245 Riverside, a multi-tenant office income property located in Jacksonville, Florida for $23.6 million. The sale of these four properties reflect a total disposition volume of $57.0 million, resulting in aggregate gains of $5.0 million.

Provision for Impairment. During the three months ended September 30, 2023, the Company recorded a $0.9 million impairment charge on the sale of the Westcliff Property which represents the sales price, less the book value of the asset as of September 30, 2023, less costs to sell. There were no impairment charges on the Company’s income property portfolio or other assets during the three months ended September 30, 2022.

Investment and Other Income (Loss)

During the three months ended September 30, 2023, the closing stock price of PINE increased by $0.11 per share, with a closing price of $16.36 on September 30, 2023. During the three months ended September 30, 2022, the closing stock price of PINE decreased by $1.70 per share, with a closing price of $16.22 on September 30, 2022. The change in stock price resulted in an unrealized non-cash gain and unrealized non-cash loss on the Company’s investment in PINE in the amount of $0.3 million and $(3.7) million which is included in investment and other income (loss) in the consolidated statements of operations for the three months ended September 30, 2023 and 2022, respectively.

The Company earned dividend income from the investment in PINE of $0.6 million during each of the three months ended September 30, 2023 and 2022, respectively.

Interest Expense

Interest expense totaled $6.3 million and $3.0 million for the three months ended September 30, 2023 and 2022, respectively. The increase of $3.3 million resulted primarily from (i) the higher balance outstanding on the Company’s Credit Facility as well as the increase in the variable interest rate under the Credit Facility during the three months ended September 30, 2023, prior to fixing the rate on $100.0 million of outstanding principal effective January 31, 2023, and (ii) the increase in debt related to the $100.0 million 2028 Term Loan.

Net Income Attributable to the Company

Net income attributable to the Company totaled $2.7 million and $4.8 million during the three months ended September 30, 2023 and 2022, respectively. The $2.1 million decrease in net income is attributable to the factors described above.

Table of Contents

COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Revenue

Total revenue for the nine months ended September 30, ~~2017 increased to approximately $73.9 million from approximately $43.4 million during the same period~~2023 is presented in ~~2016, an increase of approximately $30.5 million, or 70%. This increase was primarily the result of~~ the following ~~elements of~~summary and indicates the ~~increases in Real Estate Operations Revenue and Income Property Operations Revenue, respectively:~~changes as compared to the nine months September 30, 2022 (in thousands):


	Nine Months Ended
Operating Segment	September 30, 2023		September 30, 2022		$ Variance		% Variance
Income Properties	$	70,373	$	49,229	$	21,144	43.0%
Management Services		3,294		2,835		459	16.2%
Commercial Loans and Investments		2,965		3,331		(366)	(11.0)%
Real Estate Operations		2,602		4,395		(1,793)	(40.8)%
Total Revenue	$	79,234	$	59,790	$	19,444	32.5%

~~Table of Contents~~

Revenue for

Revenue for

Nine Months

Nine Months

Increase (Decrease)

Ended

Ended

Vs. Same Period

Vs. Same Period

9/30/2017

9/30/2016

in 2016

in 2016
Real Estate Operations Revenue

($000's)

($000's)

($000's)

(%)
Land Sales Revenue

$
39,564

$
508

$
39,056

7688%
Tomoka Town Center - Percentage of Completion Revenue

—

16,455

(16,455)

-100%
Revenue from Reimbursement of Infrastructure Costs

1,276

—

1,276

100%
Impact Fee and Mitigation Credit Sales

1,987

481

1,506

313%
Subsurface Revenue

2,827

1,535

1,292

84%
Fill Dirt and Other Revenue

4

—

4

100%
Total Real Estate Operations Revenue

$
45,658
��
$
18,979

$
26,679

141%

Revenue for

Revenue for

Nine Months

Nine Months

Increase (Decrease)

Ended

Ended

Vs. Same Period

Vs. Same Period

9/30/2017

9/30/2016

in 2016

in 2016
Income Property Operations Revenue

($000's)

($000's)

($000's)

(%)
Revenue from Q4 2016 and YTD 2017 Acquisitions

$
3,989

$
—

$
3,989

100%
Revenue from The Grove at Winter Park

284

78

206

264%
Revenue from Remaining Portfolio

16,660

16,683

(23)

0%
Accretion of Above Market/Below Market Intangibles

1,633

1,722

(89)

-5%
Total Income Property Operations Revenue

$
22,566

$
18,483

$
4,083

22%

~~NET INCOME~~

~~Net income and basic net income per share~~Total revenue for the nine months ended September 30, ~~2017,~~2023 increased to $79.2 million, compared to ~~the same period in 2016, was as follows:~~

Nine Months

Nine Months

Increase (Decrease)

Ended

Ended

Vs. Same Period

Vs. Same Period

9/30/2017

9/30/2016

in 2016

in 2016
Net Income

$
17,392,200

$
11,156,175

$
6,236,025

56%
Basic Earnings Per Share

$
3.13
(1)
$
1.96

$
1.17

60%

~~(1)~~Includes $0.24 in non-cash earnings for the elimination of the accrued liability associated with the straight-line accounting for the land lease which was terminated as part of the acquisition of the LPGA International golf course land.

~~The above results for~~$59.8 million during the nine months ended September 30, ~~2017, compared~~2022. The $19.4 million increase in total revenue is primarily attributable to increased income produced by the ~~same~~Company’s recent income property acquisitions versus that of properties disposed of by the Company during the comparative period, partially offset by a $1.8 million decrease in ~~2016, reflected the following significant operating elements in addition to the impacts on revenues described above:~~

An increase in direct cost of revenues of approximately $11.7 million primarily related to the increase in the direct cost of revenues for the real estate operations of approximately $10.8 million, which primarily reflects an increase of approximately $8.7 million in cost basis related to the increased land sales during the quarter and associated transaction costs of approximately $1.3 million;

~~An increase in depreciation and amortization of approximately $3.3 million resulting from the growth in our income property portfolio;~~

~~Non-cash earnings of approximately $2.2 million related to the transaction to acquire the land underlying our golf operations; and~~

Income of approximately $12.8 million recognized in 2016 in connection with the Company’s disposition of a portfolio of 14 income properties and other dispositions of income properties offset by the recognition of approximately $2.2 million in impairment charges during the nine months ended September 30, 2016.

~~INCOME PROPERTIES~~revenue from real estate operations.

~~Revenues~~

Income Properties

Revenue and operating income from our income property operations totaled ~~approximately $22.6~~$70.4 million and ~~$17.8~~$49.5 million, respectively, during the nine months ended September 30, ~~2017,~~2023, compared to total revenue and operating income of ~~approximately $18.5~~$49.2 million and ~~$14.7~~$35.3 million, respectively, for the nine months ended September 30, ~~2016.~~2022. The direct costs of revenues for our income property operations totaled ~~approximately $4.8~~$20.9. million and ~~$3.8~~$13.9 million for

~~Table of Contents~~

the nine months ended September 30, ~~2017~~2023 and ~~2016,~~2022, respectively. The increase in revenues of ~~approximately $4.1~~$21.1 million, or ~~22%~~43.0%, during the nine months ended September 30, ~~2017 reflects our expanded portfolio of income properties including increases of approximately $4.0 million due~~2023 is primarily related to ~~our recent acquisitions in~~ the last quarter of 2016 and the first nine months of 2017 and an increase of approximately $206,000 from our multi-tenant property, the Grove at Winter Park in Winter Park, Florida. Revenue from our income properties during the nine months ended September 30, 2017 and 2016 also includes approximately $1.6 million and $1.7 million, respectively, in revenue from the accretionoverall growth of the ~~below-market lease intangible, which is primarily attributable to~~Company’s income property portfolio, as well as the ~~Wells Fargo property. Our increased~~timing of acquisitions versus dispositions. The increase in operating income of $14.2 million from our income property operations reflects ~~the aforementioned~~ increased rent revenues, offset by an increase of ~~approximately $945,000~~$7.0 million in our direct costs of revenues ~~largely~~which is also related to the overall growth of the Company’s income property portfolio.

Management Services

Revenue from our ~~recent acquisitions mentioned previously~~management services from PINE totaled $3.3 million and $2.8 million during the nine months ended September 30, 2023 and 2022, respectively, due to the increase in ~~late 2016~~PINE’s total equity.

Commercial Loans and ~~year-to-date in 2017.~~Investments

~~REAL ESTATE OPERATIONS~~

Interest income from our commercial loans and investments totaled $3.0 million and $3.3 million during the nine months ended September 30, 2023 and 2022, respectively. The decrease is primarily due to decreased income as a result of the timing of investments made and principal repayments during the previous fiscal year ended December 31, 2022, and during the nine months ended September 30, 2023.

Real Estate Operations

During the nine months ended September 30, ~~2017,~~2023 and 2022, operating income from real estate operations was ~~approximately $30.2~~$1.7 million and $2.5 million on revenues totaling ~~approximately $45.7 million.~~$2.6 million and $4.4 million, respectively. During the nine months ended September 30, ~~2016, operating income~~2022, there was ~~approximately $14.3~~$1.5 million ~~on revenues totaling approximately $19.0 million. The increase in revenue of approximately $26.7 million and operating income of approximately $15.9 million is primarily attributable~~more mitigation credit sales as compared to the ~~revenue totaling approximately $39.6~~same period in 2023, which led to $1.0 million ~~recognized for the land sales completed~~more in the ~~first nine months~~cost of 2017 including the sale of approximately 1,581 acres to Minto Communities for approximately $27.2 million which closed in the first quarter of 2017, the third land sale transaction completed with NADG for approximately $3.5 million which closed in the second quarter of 2017, the land sale to VanTrust of approximately 28 acres for approximately $3.2 million which also closed in the second quarter of 2017, as well as the $2.1 million sale of subsurface interests that closed during the third quarter of 2017. The increased revenues in 2017 reflect the impact of the 2017 land sales ~~offset by the revenue recognized utilizing percentage of completion~~on mitigation credit sales during the nine months ended September 30, ~~2016 on~~2022, as compared to the same period in 2023. Additionally, Subsurface Interest sales ~~within~~and cash payments for the ~~Town Center which closed~~release of surface entry rights decreased by $0.3 million, in the aggregate, during the ~~fourth quarter~~nine months ended September 30, 2023, as compared to the same period in 2022.

Table of ~~2015~~Contents

General and Administrative Expenses

Total general and administrative expenses for the ~~first quarter~~nine months ended September 30, 2023 is presented in the following summary and indicates the changes as compared to the nine months ended September 30, 2022 (in thousands):


	Nine Months Ended
General and Administrative Expenses	September 30, 2023		September 30, 2022		$ Variance		% Variance
Recurring General and Administrative Expenses	$	7,691	$	6,549	$	1,142	17.4%
Non-Cash Stock Compensation		2,802		2,423		379	15.6%
Total General and Administrative Expenses	$	10,493	$	8,972	$	1,521	17.0%

The primary reason for the increase in total general and administrative expenses is the overall higher employee count as a result of ~~2016, of approximately $16.5 million.~~the increased operating activity from the significant increase in managed income property assets.

Depreciation and Amortization

Depreciation and amortization totaled $32.8 million and $20.4 million during the nine months ended September 30, 2023 and 2022, respectively. The increase of ~~approximately $10.8~~$12.4 million is due to the overall growth in ~~direct costs~~the Company’s income property portfolio.

Gain on Disposition of ~~real estate operations is primarily~~Assets and Provision for Impairment

2023 Dispositions. During the ~~result~~nine months ended September 30, 2023, the Company sold three income properties, including (i) an outparcel of the ~~increase~~multi-tenant property known as Eastern Commons, located in Henderson, Nevada, for $2.1 million, (ii) an outparcel of ~~approximately $8.7~~the multi-tenant property known as Crossroads Towne Center, located in Chandler, Arizona, for $2.3 million, and (iii) a single tenant office property located in Reston, Virginia leased to General Dynamics for $18.5 million. The sale of these three properties reflect a total disposition volume of $22.9 million, resulting in aggregate gains of $3.3 million.

2022 Dispositions. During the nine months ended September 30, 2022, the Company sold six income properties, including (i) Party City, a single-tenant income property located in Oceanside, New York for $6.9 million, (ii) the Carpenter Hotel ground lease, a single-tenant income property located in Austin, Texas, which was recorded as a commercial loan investment prior to its disposition, for $17.1 million, (iii) the multi-tenant Westland Gateway Plaza located in Hialeah, Florida, which was recorded as a commercial loan investment prior to its disposition, for $22.2 million, (iv) Chuy’s, a single-tenant property, located in Jacksonville, Florida for $5.8 million, (v) Firebirds, a single-tenant property, located in Jacksonville, Florida for $5.5 million, and (vi) 245 Riverside, a multi-tenant office income property located in Jacksonville, Florida for $23.6 million. The sale of these six properties reflect a total disposition volume of $81.1 million, resulting in aggregate gains of $4.7 million.

Provision for Impairment. In the aggregate, $1.4 million of impairment charges were recorded during the nine months ended September 30, 2023, with no such charges during the nine months ended September 30, 2022, as described below.

During the nine months ended September 30, 2023, the Company recorded a $0.9 million impairment charge on the sale of the Westcliff Property which represents the sales price, less the book value of the asset as of September 30, 2023, less costs to sell.

The Company recorded a $0.5 million impairment charge representing the provision for credit losses related to our commercial loans and investments, during the nine months ended September 30, 2023.

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Investment and Other Income (Loss)

During the nine months ended September 30, 2023, the closing stock price of PINE decreased by $2.72 per share, with a closing price of $16.36 on September 30, 2023. During the nine months ended September 30, 2022, the closing stock price of PINE decreased by $3.82 per share, with a closing price of $16.22 on September 30, 2022. The change in stock price resulted in unrealized, non-cash losses on the Company’s investment in PINE of $(6.0) million and $(8.1) million which is included in investment and other income (loss) in the ~~cost basis~~consolidated statements of operations for the nine months ended September 30, 2023 and ~~approximately $1.3~~2022, respectively.

The Company earned dividend income from the investment in PINE of $1.9 million and $1.7 million during the nine months ended September 30, 2023 and 2022, respectively.

The Company derecognized a contingent obligation through a $2.3 million increase in ~~closing~~investment and other ~~costs recognized~~income (loss) during the ~~first~~ nine months ~~of 2017 related~~ended September 30, 2023, pursuant to a lease amendment whereby the ~~land sales closed during that period.~~Company’s obligation to fund certain tenant improvements was eliminated. The liability was previously included in Accrued and Other Liabilities on the Company’s consolidated balance sheets.

~~GOLF OPERATIONS~~

~~Revenues from golf operations~~Interest Expense

Interest expense totaled ~~approximately $3.7~~$16.1 million and ~~$3.9~~$7.2 million for the nine months ended September 30, ~~2017~~2023 and ~~2016,~~2022, respectively. The ~~total direct cost~~increase of ~~golf operations revenues totaled approximately $4.2~~$8.9 million ~~for~~resulted primarily from (i) the higher balance outstanding on the Company’s Credit Facility as well as the increase in the variable interest rate under the Credit Facility during the nine months ended September 30, ~~2017~~2023 prior to fixing the rate on $100.0 million of outstanding principal effective January 31, 2023, (ii) the increase in debt related to the $17.8 million mortgage loan assumed in connection with the acquisition of Price Plaza, and ~~2016. The Company’s golf operations had a net operating~~(iii) the increase in debt related to the $100.0 million 2028 Term Loan.

Net Income (Loss) Attributable to the Company

Net loss ~~of approximately $517,000 and approximately $277,000 during~~attributable to the nine months ended September 30, 2017 and 2016, respectively, a decrease in operating results of approximately $241,000. The primary reason for the decline in revenues and related operating results was that one of the two 18-hole golf courses was closed during the entire third quarter of 2017 for the renovation of the greens.

~~INTEREST INCOME FROM COMMERCIAL LOAN INVESTMENTS~~

~~Interest income from our commercial loan investments~~Company totaled ~~approximately $1.7 million and $2.0~~$1.5 million during the nine months ended September 30, ~~2017 and 2016, respectively. The decrease is attributable~~2023, as compared to ~~approximately $466,000~~$6.2 million of revenue generated in the first six months of 2016 from the San Juan loan that was repaid during the latter part of the second quarter of 2016, which is partially offset by the increase of approximately $67,000 in revenue generated by the $3.0 million first mortgage loan originated in July 2017 as well as an increase in interest from our variable rate loans due to the increase in LIBOR during the third quarter of 2017.

~~AGRICULTURE AND OTHER INCOME~~

~~For the nine months ended September 30, 2017 and 2016, revenues from agriculture and other~~net income totaled approximately $324,000 and $48,000, respectively, with the increase due to a timber harvesting contract during the first nine months of 2017 that generated approximately $290,000 in revenue. For the nine months ended September 30, 2017 and 2016, the direct cost of revenues totaled approximately $90,000 and $154,000, respectively an improvement of approximately $64,000 which reflects reduced payroll for this segment.

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~~GENERAL AND ADMINISTRATIVE EXPENSES~~

General and administrative expenses totaled approximately $7.9 million and $8.5 million for the nine months ended September 30, 2017 and 2016, respectively, a decrease of approximately $576,000. Non-cash stock compensation expense decreased by approximately $1.8 million, which in part, is due to the accelerated stock compensation expense of approximately $1.6 million recognized in the first quarter of 2016 relating to certain stock awards that were forfeited. The decreased stock compensation expenses were offset by an increase in legal and other costs of approximately $1.2 million which were specifically related to the Company’s proxy contest in connection with the 2017 Annual Meeting of Shareholders offset by the decrease in legal costs of approximately $750,000 related to the investigations conducted in connection with certain claims made by Wintergreen that were determined to be without merit.

~~GAINS ON DISPOSITION OF ASSETS AND IMPAIRMENT CHARGES~~

~~No income properties were disposed of~~ during the nine months ended September 30, ~~2017. There were no impairment charges during~~2022. The $7.7 million decrease in net income is attributable to the ~~nine months ended~~factors described above, and most notably the increases in non-cash depreciation and amortization, non-cash unrealized loss on the investment in PINE, and interest expense, which are partially offset by increases in the operating income generated by the income property portfolio operations as well as the $2.3 million extinguishment of a contingent obligation.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents totaled $7.0 million at September 30, ~~2017.~~

~~Nineteen income properties were disposed~~2023, while restricted cash totaled $22.6 million, see Note 2, “Summary of ~~during~~Significant Accounting Policies” under the ~~nine months ended~~heading Restricted Cash for the Company’s disclosure related to its restricted cash balance at September 30, 2016, of which seventeen of the sales generated gains totaling approximately $12.8 million, which includes the $11.4 million gain related to the fourteen property Portfolio Sale. The two other sales during the nine months ended September 30, 2016 was for an aggregate loss of approximately $1.2 million which was recognized as an impairment charge during the nine months ended September 30, 2016. The impairment charges totaling approximately $2.22023.

Our cash flows provided by operating activities totaled $40.0 million during the nine months ended September 30, ~~2016 included a charge of approximately $210,000 which was recognized on an income property in Sebring, Florida leased~~2023, as compared to a subsidiary of CVS which was sold in April 2016 and the impairment charges related to the sale of a vacant income property of approximately $942,000 and the Repurchased Land totaling approximately $2.0 million.

~~INTEREST EXPENSE~~

~~Interest expense totaled approximately $6.3~~$34.1 million ~~and $6.7 million for~~during the nine months ended September 30, ~~2017 and 2016, respectively.~~2022, an increase of $5.9 million. The ~~decrease of approximately $421,000~~primary reason for the increase is ~~primarily~~from increased cash flows provided by income properties, which is the result of the ~~write-off of approximately $367,000 of loan costs in 2016 for the $23.1 million secured loan that was assumed by the buyer~~overall growth of the ~~Portfolio Sale~~Company’s income property portfolio, which is partially offset by ~~the capitalization of approximately $124,000 of interest~~an increase in ~~the third quarter of 2017 relating to our development activities at the Grove, the beach parcel, and our new corporate office space.~~

~~LIQUIDITY AND CAPITAL RESOURCES~~

~~Cash and equivalents totaled approximately $5.9 million at September 30, 2017, excluding restricted cash. Restricted~~ cash totaled approximately $7.0 million at September 30, 2017 of which approximately $5.5 million of cash is being held in escrow, to be reinvested through the like-kind exchange structure into one or more income properties. Approximately $415,000 is being held in a reserve account primarily for property taxes and insurance escrows in connection with our financing of two properties acquired in January 2013; approximately $836,000 is being held in three separate escrow accounts related to three separate land transactions of which one closed in each of December 2013, December 2015, and February 2017; approximately $127,000 is being held in a reservepaid for interest and property taxes for the $3.0 million first mortgage loan investment originated in July 2017; and approximately $147,000 is being held in a capital replacement reserve account in connection with our financing of six income properties with Wells Fargo.

Our total cash balance at September 30, 2017 benefited from cash flows provided by our operating activities totaling approximately $49.1 million during the nine months then ended, compared to the prior year’s cash flows used in operating activities totaling approximately $4.2 million in the same period in 2016. The increase is primarilyexpense as the result of ~~our increased net income of approximately $6.3 million~~higher overall debt balances and rising variable interest rates on the un-hedged portion of our income tax expense that is deferred pursuant to the 1031 like-kind exchange structure was an increase totaling approximately $3.4 million. In addition, the increase reflects changes in our assets and liabilities during the period including the reduction of our land basis attributable to the land sales in 2017 representing an increase of approximately $17.3 million and a smaller decrease in our deferred revenues representing a difference of approximately $11.0 million which pertains to the percentage of completion of revenue that was recognized largely in 2016 relating to land sales in late 2015 and early 2016.debt.

Our cash flows used in investing activities totaled ~~approximately $49.8~~$98.3 million during the nine months ended September 30, 2023, as compared to $80.4 million during the nine months ended September 30, 2022, an increase in cash outflows of $17.9 million. The increase in cash used in investing activities is primarily the result of an increase in acquisition activity of income properties and commercial loan investments, net of principal repayments received on commercial loan investments and sales of income properties, for an increase in net cash used of $17.3 million during the nine months ended September 30, 2023 as compared to the same period in 2022.

Our cash flows provided by financing activities totaled $66.8 million for the nine months ended September 30, ~~2017,~~2023, compared to the prior year’s cash flows provided by investing activities totaling approximately $24.6 million in the same period, a decrease of approximately $74.4 million. During the nine months ended September 30, 2016, the

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Company received cash proceeds of approximately $49.3 million related to income property dispositions, approximately $14.3 million for the pay-off of one of our loan investments, and approximately $6.3 million from the liquidation of our investment securities, for which there were no similar proceeds during the nine months ended September 30, 2017.

~~Our cash flows used in financing activities totaled approximately $1.1~~$61.8 million for the nine months ended September 30, ~~2017, compared to the same period~~2022, an increase in ~~the prior year totaling approximately $15.4 million, a decrease~~cash inflows of ~~approximately $14.3~~$5.0 million. The ~~decrease in cash used in financing activities~~increase is primarily related to ~~borrowing activities whereby~~a $30.8 million increase in ~~the first nine months~~cash inflows provided by net debt activity offset by (i) an

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increase in cash outflows of $2.4 million related to ~~long-term debt totaled approximately $6.7~~repurchases of the Company’s common and preferred stock, (ii) a decrease in cash inflows of $20.7 million ~~while in~~due to proceeds from the ~~same period in 2016 there were net payments on long-term debt which totaled approximately $9.3 million, a difference year-over-year~~sale of ~~approximately $16.0 million. In addition, the decrease~~shares of Company common stock during the nine months ended September 30, ~~2017 resulted from our increased level of stock buybacks which increased by approximately $1.7 million versus~~2022 with no such activity during the ~~same period in 2016.~~

~~Our long-term debt balance, at face value, totaled approximately $178.3 million at~~ nine months ended September 30, ~~2017, representing~~2023, and (iii) an increase in cash outflows of ~~approximately $6.7~~$5.5 million ~~from the face value balance of approximately $171.6 million at December 31, 2016. The increase was due~~related to the ~~approximately $6.7 million in net draws~~dividend paid on ~~our revolving credit facility.~~

~~As of September 30, 2017, the Company’s outstanding indebtedness, at face value, was~~common stock as ~~follows:~~

~~(1)Secured by the Company’s interest in the two-building office complex leased to Hilton Resorts Corporation.~~

~~(2)~~Secured by the Company’s interest in six income properties. The mortgage loan carries a fixed rate of 4.33% per annum during the first ten years of the term, and requires payments of interest only during the first ten years of the loan. After the tenth anniversary of the effective date of the loan, the cash flows, as defined in the related loan agreement, generated by the underlying six income properties must be used to pay down the principal balance of the loan until paid off or until the loan matures. The loan is fully pre-payable after the tenth anniversary of the effective date of the loan.

~~(3)~~Secured by the Company’s income property leased to Wells Fargo located in Raleigh, North Carolina. The mortgage loan has a 5-year term with two years interest only, and interest and a 25-year amortization for the balance of the term. The mortgage loan bears a variable rate of interest based on the 30-day LIBOR plus a rate of 190 basis points. The interest rate for this mortgage loan has been fixed through the use of an interest rate swap that fixed the rate at 3.17%. The mortgage loan can be prepaid at any time subject to the termination of the interest rate swap.

~~The Company’s revolving credit facility (the “Credit Facility”), with~~ ~~Bank of Montreal~~ (“BMO”) serving as the administrative agent for the lenders thereunder, is unsecured with regard to our income property portfolio but is guaranteed by certain wholly-owned subsidiaries of the Company. The Credit Facility bank group is led by BMO and also includes Wells Fargo and Branch Banking & Trust Company. On September 7, 2017, the Company executed the second amendment and restatement of the Credit Facility (the “Revolver Amendment”). Pursuant to the Revolver Amendment, the Credit Facility matures on September 7, 2021, with the ability to extend the term for 1 year.

As a result of the ~~Revolver Amendment,~~increased common stock outstanding as well as the Credit Facility has a total borrowing capacity of $100.0 million with the ability to increase that capacity up to $150.0 million during the term. The Credit Facility provides the lenders with a secured interest in the equity of the Company subsidiaries that own the properties included in the borrowing base. The indebtedness outstanding under the Credit Facility accrues interest at a rate ranging from the 30-day LIBOR plus 150 basis points to the 30-day LIBOR plus 220 basis points based on the total balance outstanding under the Credit Facility as a percentage of the total asset value of the Company, as defined in the Credit Facility. The Credit Facility also accrues

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~~a fee of 15 to 25 basis points for any unused portion of the borrowing capacity based on whether the unused portion is greater or less than 50% of the total borrowing capacity.~~increased dividend per share.

Long-Term Debt. At September 30, ~~2017,~~2023, the current commitment level under the Credit Facility was ~~$100.0~~$300.0 million. The ~~available borrowing capacity~~undrawn commitment under the Credit Facility ~~was approximately $59.0 million, based on the level of borrowing base assets.~~totaled $84.0 million. As of September 30, ~~2017,~~2023, the Credit Facility had a ~~$41.0~~$216.0 million ~~balance. As a result of the income property acquisition completed on October 27, 2017 (as described in~~balance outstanding.See Note ~~21, “Subsequent Events”), the amount outstanding on the Credit Facility was approximately $60.5 million and the available borrowing capacity was approximately $39.5 million.~~

~~The Credit Facility is subject to customary restrictive covenants including, but not limited to, limitations on~~15, “Long-Term Debt” for the Company’s ability to: (a) incur indebtedness; (b) make certain investments; (c) incur certain liens; (d) engage in certain affiliate transactions; and (e) engage in certain major transactions such as mergers. In addition, the Company is subjectdisclosure related to various financial maintenance covenants including, but not limited to, a maximum indebtedness ratio, a maximum secured indebtedness ratio, and a minimum fixed charge coverage ratio. The Credit Facility also contains affirmative covenants and events of default including, but not limited to, a cross default to the Company’s other indebtedness and upon the occurrence of a change of control. The Company’s failure to comply with these covenants or the occurrence of an event of default could result in acceleration of the Company’sits long-term debt ~~and other financial obligations under the Credit Facility.~~

~~In addition to the Credit Facility, the Company has certain other borrowings, as noted in the table above, all of which are non-recourse.~~

The Company’s $75.0 million aggregate principal amount of 4.50% Convertible Notes will mature on March 15, 2020, unless earlier purchased or converted. The initial conversion rate was 14.5136 shares of common stock for each $1,000 principal amount of Convertible Notes, which represented an initial conversion price of approximately $68.90 per share of common stock. Since July of 2016, when the Company’s Board of Directors implemented a quarterly dividend in place of the previous semi-annual dividend, the conversion rate has been adjusted with each successive quarterly dividend and is currently, after the third quarter 2017 dividend, equal to 14.5439 shares of common stock for each $1,000 principal amount of Convertible Notes, which represents an adjusted conversion price of approximately $68.76 per share of common stock.

The conversion rate is subject to adjustment in certain circumstances. Holders may not surrender their Convertible Notes for conversion prior to December 15, 2019 except upon the occurrence of certain conditions relating to the closing sale price of the Company’s common stock, the trading price per $1,000 principal amount of Convertible Notes, or specified corporate events including a change in control of the Company. The Company may not redeem the Convertible Notes prior to the stated maturity date and no sinking fund is provided for the Convertible Notes. The Convertible Notes are convertible,balance at the election of the Company, into solely cash, solely shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock. The Company intends to settle the Convertible Notes in cash upon conversion, with any excess conversion value to be settled in shares of our common stock. In accordance with GAAP, the Convertible Notes are accounted for as a liability with a separate equity component recorded for the conversion option. A liability was recorded for the Convertible Notes on the issuance date at fair value based on a discounted cash flow analysis using current market rates for debt instruments with similar terms. The difference between the initial proceeds from the Convertible Notes and the estimated fair value of the debt instruments resulted in a debt discount, with an offset recorded to additional paid-in capital representing the equity component. The discount on the Convertible Notes was approximately $6.1 million at issuance, which represents the cash discount paid of approximately $2.6 million and the approximate $3.5 million attributable to the value of the conversion option recorded in equity, which is being amortized into interest expense through the maturity date of the Convertible Notes. As of September 30, ~~2017, the unamortized debt discount of our Convertible Notes was approximately $3.2 million.~~2023.

~~The Company was in compliance with all of its debt covenants as of September 30, 2017 and December 31, 2016.~~

~~Section 1031 Like-Kind Exchange.~~ Our sources of liquidity include the release of restricted cash for Section 1031 like-kind exchange transactions upon completion of the exchange. As of September 30, 2017, approximately $5.5 million of cash was being held in escrow, of which approximately $3.4 million was reinvested through the like-kind exchange structure into an income property in April 2017 and approximately $2.2 million remains to be re-invested into one or more income properties.

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Acquisitions and Investments. During the nine months ended September 30, ~~2017,~~2023, the Company acquired ~~three single-tenant income properties and two~~a vacant land parcel adjacent to the previously acquired Collection at Forsyth property, located in the Forsyth County submarket of Atlanta, Georgia, for a purchase price of $4.3 million. During the nine months ended September 30, 2023, the Company acquired the Plaza at Rockwall, a multi-tenant income property located in Rockwall, Texas for a purchase price of $61.2 million, or a total acquisition cost of $61.3 million including capitalized acquisition costs. The Plaza at Rockwall comprises 446,500 square feet, was 95% occupied at acquisition, and had a weighted average remaining lease term of 4.2 years at acquisition. Also, during the nine months ended September 30, 2023, the Company acquired four properties, totaling 24,100 square feet, within the 28,100 square foot retail portion of Phase II of The Exchange at Gwinnett located in Buford, Georgia (the “Gwinnett Property”), for an aggregate purchase price of ~~approximately $40.0~~$14.6 million, or ~~an aggregate~~a total acquisition cost of ~~approximately $40.7~~$14.7 million including capitalized acquisition costs. ~~On October 27, 2017, we acquired an approximately 212,000 square-foot building~~The four properties are leased to ~~Wells Fargo Bank, N.A.~~six different tenants with a weighted average remaining lease term of 9.9 years at acquisition. The Company is under contract to acquire the remaining 4,000 square-foot property that makes up the remaining retail portion of Phase II of The Exchange at Gwinnett for ~~approximately $39.8~~a purchase price of $2.3 million. The Company previously purchased the Sprouts-anchored Phase I portion of The Exchange at Gwinnett in December 2021. The Company also originated one structured investment, to provide $15.0 million ~~and, as a result, we don’t anticipate any additional~~of funding towards the acquisition of Founders Squarein Dallas, Texas.

The Company’s guidance for 2023 investments in ~~income~~income-producing properties, ~~through December 31, 2017.~~ including structured investments, ranges from $95.0 million to $100.0 million. We ~~generally~~ expect to fund future acquisitions utilizing ~~our~~ cash on ~~hand; the available capacity under the credit facility;~~hand, cash from ~~operations;~~operations, proceeds from ~~land sales transactions,~~ the dispositions of income properties through 1031 like-kind exchanges, and potentially the sale of all or a portion of our ~~subsurface interests, each~~Subsurface Interests, and borrowings on our Credit Facility, if available. We expect dispositions of ~~which we expect~~income properties and Subsurface Interests will qualify under the like-kind exchange deferred-tax ~~structure;~~structure, and ~~may include~~ additional ~~funding sources such as~~financing sources.

Dispositions. During the ~~sale of impact fees and mitigation credits.~~

~~Dispositions.~~ ~~There were no income property dispositions during the three or~~ nine months ended September 30, ~~2017.~~

~~Capital Expenditures.~~ ~~In conjunction with the Company’s sale of approximately 3.4 acres of land to RaceTrac in December 2013,~~2023, the Company ~~agreed to reimburse RaceTrac~~sold three income properties for ~~a portion~~an aggregate sales price of $22.9 million and aggregate gains on sales of $3.3 million. The sales consisted of (i) an outparcel of the ~~costs~~multi-tenant property known as Eastern Commons, located in Henderson, Nevada, for ~~road improvements and~~$2.1 million, resulting in a gain of $0.8 million, (ii) an outparcel of the ~~other costs associated with bringing multiple ingress/egress points to the entire 23-acre Williamson Crossing site, including the Company’s remaining 19.6 acres. The estimated cost~~multi-tenant property known as Crossroads Towne Center, located in Chandler, Arizona, for ~~the improvements equals approximately $1.26~~$2.3 million, resulting in a gain of $1.2 million, and ~~the Company’s commitment is~~(iii) a single tenant office property located in Reston, Virginia leased to ~~reimburse RaceTrac~~General Dynamics for $18.5 million, resulting in ~~an amount equal to the lesser~~a gain of 77.5% of the actual costs or $976,500. The Company’s commitment to fund the improvement costs benefiting the remaining acres of Company land can be paid over five years from sales of the remaining land or at the end of the fifth year. In 2013 the Company deposited $283,500 of cash in escrow related to the improvements, which is classified as restricted cash in the consolidated balance sheets. The total amount in escrow as of September 30, 2017 was approximately $287,000, including accrued interest. Accordingly, as of September 30, 2017, the remaining maximum commitment is approximately $689,000.$1.3 million.

The Company’s total construction estimate related to the capital expenditures to renovate The Grove at Winter Park property in Winter Park, Florida, which includes increases for tenant improvements pursuant to leases as they are executed, totaled approximately $4.2 million as of September 30, 2017.ATM Program. The Company ~~has incurred approximately $3.9 million of~~was not active under the ~~total construction estimate as of September 30, 2017, leaving a remaining commitment of approximately $315,000.~~

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Pursuant to the leases with the tenants of the two restaurant properties, LandShark Bar & Grill and Cocina 214 Restaurant & Bar, and based on the Company’s current cost estimates, the total estimated cost to improve the land and develop the income properties is approximately $6.9 million. Through September 30, 2017, the Company has incurred approximately $2.2 million of the total estimated cost which is included in Construction in Progress on the Company’s consolidated balance sheet, leaving a remaining commitment of approximately $4.8 million. The Company expects the development of the two restaurant properties to be completed in time for the tenants to commence operations during January of 2018. Upon completion of the construction of the two income properties and commencement of the tenant leases, the total investment in the beach parcel will be classified as Income Properties, Land, Building, and Improvements, within the Property, Plant, and Equipment classification on the Company’s consolidated balance sheet.

~~As of September 30, 2017, we have no other contractual requirements to make capital expenditures.~~

In connection with a certain land sale contract to which the Company is a party, the purchaser’s pursuit of customary development entitlements gave rise to an inquiry by federal regulatory agencies regarding prior agricultural activities by the Company on such land. During the second quarter of 2015, we received a written information request regarding such activities. We submitted a written response to the information request along with supporting documentation. During the fourth quarter of 2015, based on discussions with the agency, a penalty related to this matter was deemed probable, and accordingly the estimated penalty of $187,500 was accrued as of December 31, 2015, for which payment was made during the quarter ended September 30, 2016. Also during the fourth quarter of 2015, the agency advised the Company that the resolution to the inquiry would likely require the Company to incur costs associated with wetlands restoration relating to approximately 148.4 acres of the Company’s land. At December 31, 2015, the Company’s third-party environmental engineers estimated the cost for such restoration activities to range from approximately $1.7 million to approximately $1.9 million. Accordingly, as of December 31, 2015, the Company accrued an obligation of approximately $1.7 million, representing the low end of the estimated range of possible restoration costs, and included such estimated costs on the consolidated balance sheets as an increase in the basis of our land and development costs associated with those and benefitting surrounding acres. As of June 30, 2016, the final proposal from the Company’s third-party environmental engineer was received reflecting a total cost of approximately $2.0 million. Accordingly, an increase in the accrual of approximately $300,000 was made during the second quarter of 2016. The Company has funded approximately $1.2 million of the total $2.0 million of estimated costs through September 30, 2017. The Company believes there is at least a reasonable possibility that the estimated remaining liability of approximately $840,000 could change within one year of the date of the consolidated financial statements, which in turn could have a material impact on the Company’s consolidated balance sheets and future cash flows. The Company evaluates its estimates on an ongoing basis; however, actual results may differ from those estimates. During the first quarter of 2017, the Company completed the sale of approximately 1,581 acres of land to Minto Communities LLC which acreage represents a portion of the Company’s remaining $840,000 obligation. Accordingly, the Company deposited $423,000 of cash in escrow to secure performance on the obligation. The funds in escrow can be drawn upon completion of certain milestones including completion of restoration and annual required monitoring. Additionally, resolution of the regulatory matter required the Company to apply for an additional permit pertaining to an additional approximately 54.66 acres, which permit may require mitigation activities which the Company anticipates could be satisfied through the utilization of existing mitigation credits owned by the Company or the acquisition of mitigation credits. Resolution of this matter allowed the Company to obtain certain permits from the applicable federal or state regulatory agencies needed in connection with the closing of the land sale contract that gave rise to this matter. As of June 30, 2017, the Company determined approximately 36 mitigation credits were required to be utilized, which represents approximately $298,000 in cost basis of the Company’s mitigation credits. Accordingly, the Company transferred the mitigation credits through a charge to direct cost of revenues of real estate operations during the three months ended June 30, 2017, thereby resolving the required mitigation activities related to the approximately 54.66 acres. In addition, in connection with other land sale contracts to which the Company is or may become a party, the pursuit of customary development entitlements by the potential purchasers may require the Company to utilize or acquire mitigation credits for the purpose of obtaining certain permits from the applicable federal or state regulatory agencies. Any costs incurred in connection with utilizing or acquiring such credits would be incorporated into the basis of the land under contract and, accordingly, no amounts related to such potential future costs have been accrued as of September 30, 2017.

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~~incurred~~2022 ATM Program during the nine months ended September 30, ~~2017, of~~2023.

Contractual Commitments – Expenditures. The Company has committed to fund the following capital improvements. The improvements, which ~~approximately $1.2 million is specifically for legal representation and third party costs~~are related to ~~the proxy contest. None~~several properties, are estimated to be generally completed within twelve months. These commitments, as of ~~Wintergreen’s allegations regarding inadequate disclosure or~~September 30, 2023, are as follows (in thousands):


	As of September 30, 2023
Total Commitment ⁽¹⁾	$	13,150
Less Amount Funded		(2,215)
Remaining Commitment	$	10,935

⁽¹⁾ Commitment includes tenant improvements, leasing commissions, rebranding, facility expansion and other ~~wrong-doings by the Company or its directors or officers were found to have any basis or merit.~~capital improvements.

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Off-Balance Sheet Arrangements. None.

Other Matters. We believe we will have sufficient liquidity to fund our operations, capital requirements, maintenance, and debt service requirements over the next twelve months and into the foreseeable future, with ~~our~~ cash on hand, cash flow from our operations, ~~cash from the completion~~$137.7 million of ~~1031 like-kind exchanges, and the available borrowing capacity of approximately $59.0 million~~availability remaining under the ATM Program, and $84.0 million undrawn commitment under the existing $300.0 million Credit Facility ~~based on the level of borrowing base assets,~~ as of September 30, ~~2017.~~2023.

Our Board ~~of Directors~~ and management consistently review the allocation of capital with the goal of ~~maximizing~~providing the best long-term return for our ~~shareholders.~~stockholders. These reviews consider various alternatives, including increasing or decreasing regular dividends, repurchasing ~~stock,~~the Company’s securities, and retaining funds for reinvestment.

~~Otherwise, at~~ ~~least annually,~~ Annually, the Board ~~of Directors~~ reviews our business plan and corporate strategies, and makes adjustments as circumstances warrant.

Management’s focus is to continue ~~to execute on~~ our strategy ~~which is~~ to ~~monetize~~diversify our ~~land holdings and redeploy the~~portfolio by redeploying proceeds ~~when possible~~ from like-kind exchange transactions and utilizing ~~leverage including the borrowing capacity available under~~ our Credit Facility ~~and possibly the disposition or payoffs on our commercial loan investments and subsurface transactions~~ to increase ~~and diversify~~ our portfolio of income-producing properties, ~~to provide~~providing stabilized cash flows with ~~good risk adjusted~~strong risk-adjusted returns primarily in ~~major~~larger metropolitan areas and growth markets.

We believe that we currently have a reasonable level of leverage. ~~Proceeds from closed land transactions provide us with investible capital.~~ Our strategy is to utilize leverage, when appropriate and necessary, and proceeds from ~~land transactions,~~ sales of income properties, the disposition or payoffs on our commercial loan and master lease investments, and certain transactions in our ~~subsurface interests,~~Subsurface Interests, to acquire income properties. We may also acquire or originate commercial loan and master lease investments, invest in securities of real estate companies, or make other ~~shorter term~~shorter-term investments. Our targeted investment classes may include the following:

●

Multi-tenant, primarily retail-oriented, properties in major metropolitan areas and growth markets, typically stabilized;

●

Single-tenant retail ~~and office,~~or other commercial, double or triple net leased, properties in major metropolitan areas and growth ~~markets;~~

markets that are compliant with our commitments under the PINE ROFO Agreement;

●

~~Multi-tenant office and retail properties in major metropolitan areas and growth markets, typically stabilized;~~

Ground leases, whether purchased or originated by the Company, that are compliant with our commitments under the ROFO Agreement;

●

~~Purchase~~Self-developed retail or ~~origination of ground leases;~~

other commercial properties;

●

~~Self-developed properties on~~Commercial loan and master lease investments, whether purchased or originated by the Company, ~~owned land including select office, flex, industrial, and retail;~~

~~Joint venture development using Company owned land;~~

~~Origination or purchase~~with loan terms of 1-10 ~~year term loans~~years with strong risk-adjusted yields ~~with~~secured by property types to include hotel, ~~office,~~ retail, residential, land and industrial;

●

Select regional area investments using Company market knowledge and expertise to earn ~~good~~strong risk-adjusted yields; and

●

Real ~~estate related~~estate-related investment securities, including commercial ~~mortgage backed~~mortgage-backed securities, preferred or common stock, and corporate bonds.

Our investments in income-producing properties are typically subject to long-term leases. For multi-tenant properties, each tenant typically pays its proportionate share of the aforementioned operating expenses of the property, although for such properties we typically incur additional costs for property management services. Single-tenant leases are typically in the form of triple or double net leases and ground leases. Triple-net leases generally require the tenant to pay property operating expenses such as real estate taxes, insurance, assessments and other governmental fees, utilities, repairs and maintenance, and capital expenditures.

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Non-U.S. GAAP Financial Measures

Our reported results are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). We also disclose Funds From Operations (“FFO”), Core Funds From Operations (“Core FFO”), and Adjusted Funds From Operations (“AFFO”), each of which are non-U.S. GAAP financial measures. We believe these non-U.S. GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs.

FFO, Core FFO, and AFFO do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operating activities as reported on our statement of cash flows as a liquidity measure and should be considered in addition to, and not in lieu of, U.S. GAAP financial measures.

We compute FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as U.S. GAAP net income or loss adjusted to exclude extraordinary items (as defined by U.S. GAAP), net gain or loss from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets and real estate related depreciation and amortization, including the pro rata share of such adjustments of unconsolidated subsidiaries. The Company also excludes the gains or losses from sales of assets incidental to the primary business of the REIT which specifically include the sales of mitigation credits, impact fee credits, subsurface sales, and land sales, in addition to the mark-to-market of the Company’s investment securities and interest related to the 2025 Notes, if the effect is dilutive. To derive Core FFO, we modify the NAREIT computation of FFO to include other adjustments to U.S. GAAP net income related to gains and losses recognized on the extinguishment of debt, amortization of above- and below-market lease related intangibles, and other unforecastable market- or transaction-driven non-cash items. To derive AFFO, we further modify the NAREIT computation of FFO and Core FFO to include other adjustments to U.S. GAAP net income related to non-cash revenues and expenses such as straight-line rental revenue, non-cash compensation, and other non-cash amortization, as well as adding back the interest related to the 2025 Notes, if the effect is dilutive. Such items may cause short-term fluctuations in net income but have no impact on operating cash flows or long-term operating performance. We use AFFO as one measure of our performance when we formulate corporate goals.

FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers primarily because it excludes the effect of real estate depreciation and amortization and net gains or losses on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. We believe that Core FFO and AFFO are additional useful supplemental measures for investors to consider because they will help them to better assess our operating performance without the distortions created by other non-cash revenues or expenses. FFO, Core FFO, and AFFO may not be comparable to similarly titled measures employed by other companies.

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Reconciliation of Non-U.S. GAAP Measures (in thousands, except share and dividend data):


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Net Income (Loss) Attributable to the Company	$	2,686	$	4,817	$	(1,507)	$	6,237
Add Back: Effect of Dilutive Interest Related to 2025 Notes ⁽¹⁾		—		539		—		—
Net Income (Loss) Attributable to the Company, If-Converted	$	2,686	$	5,356	$	(1,507)	$	6,237
Depreciation and Amortization of Real Estate		11,651		7,283		32,769		20,359
Loss (Gain) on Disposition of Assets, Net of Tax		(2,741)		(4,973)		(3,565)		(4,728)
Gain on Disposition of Other Assets		(926)		(1,509)		(1,739)		(2,473)
Provision for Impairment		929		—		1,408		—
Unrealized Loss (Gain) on Investment Securities		(429)		3,754		5,663		8,102
Extinguishment of Contingent Liability		—		—		(2,300)		—
Funds from Operations	$	11,170	$	9,911	$	30,729	$	27,497
Distributions to Preferred Stockholders		(1,195)		(1,195)		(3,585)		(3,586)
Funds From Operations Attributable to Common Stockholders	$	9,975	$	8,716	$	27,144	$	23,911
Amortization of Intangibles to Lease Income		487		507		1,793		1,485
Less: Effect of Dilutive Interest Related to 2025 Notes⁽¹⁾		—		(539)		—		—
Core Funds From Operations Attributable to Common Stockholders	$	10,462	$	8,684	$	28,937	$	25,396
Adjustments:
Straight-Line Rent Adjustment		(790)		(600)		(919)		(1,645)
COVID-19 Rent Repayments		3		26		46		79
Other Depreciation and Amortization		24		(29)		(92)		(199)
Amortization of Loan Costs, Discount on Convertible Debt, and Capitalized Interest		199		64		636		510
Non-Cash Compensation		868		812		2,802		2,423
Adjusted Funds From Operations Attributable to Common Stockholders	$	10,766	$	8,957	$	31,410	$	26,564

Weighted Average Number of Common Shares:
Basic		22,484,561		18,386,435		22,556,642		18,044,299
Diluted ⁽²⁾		22,484,561		21,505,460		22,556,642		18,044,299

Dividends Declared and Paid - Preferred Stock	$	0.40	$	0.40	$	1.20	$	1.20
Dividends Declared and Paid - Common Stock	$	0.38	$	0.38	$	1.14	$	1.11

⁽¹⁾

⁽²⁾

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Other Data (in thousands, except per share data):


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
FFO Attributable to Common Stockholders	$	9,975	$	8,716	$	27,144	$	23,911
FFO Attributable to Common Stockholders per Common Share - Diluted	$	0.44	$	0.41	$	1.20	$	1.33

Core FFO Attributable to Common Stockholders	$	10,462	$	8,684	$	28,937	$	25,396
Core FFO Attributable to Common Stockholders per Common Share - Diluted⁽¹⁾	$	0.47	$	0.47	$	1.28	$	1.41

AFFO Attributable to Common Stockholders	$	10,766	$	8,957	$	31,410	$	26,564
AFFO Attributable to Common Stockholders per Common Share - Diluted⁽¹⁾	$	0.48	$	0.49	$	1.39	$	1.47

~~CRITICAL ACCOUNTING POLICIES~~

~~The consolidated financial statements are prepared in conformity with United States generally accepted accounting principles (“GAAP”). The preparation~~⁽¹⁾ A total of ~~financial statements in conformity with GAAP requires management to make estimates and assumptions that affect~~3.3 million shares, representing the ~~reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date~~dilutive impact of the ~~financial statements, and the reported amounts~~2025 Notes, upon adoption of ~~revenues and expenses. Actual results could differ from those estimates.~~

~~Our significant accounting policies are described~~ASU 2020-06 effective January 1, 2022, were not included in the ~~notes~~computation of diluted net income (loss) attributable to common stockholders for each of the ~~consolidated financial statements~~three and nine month periods ended September 30, 2023, because they were antidilutive to net income (loss) attributable to common stockholders for the respective periods. A total of 3.1 million shares representing the dilutive impact of the 2025 Notes, upon adoption of ASU 2020-06 effective January 1, 2022, were included in ~~our Annual Report on Form 10-K~~the computation of diluted net income per share attributable to common stockholders for the ~~year-ended December 31, 2016. Judgments and estimates~~three months ended September 30, 2022, because they were dilutive to net income attributable to common stockholders for the period. A total of ~~uncertainties are required~~3.1 million shares representing the dilutive impact of the 2025 Notes, were not included in ~~applying our accounting policies in many areas. During~~the computation of diluted net income per share attributable to common stockholders for the nine months ended September 30, ~~2017, there~~2022 because they were antidilutive to net income attributable to common stockholders for the period.

56CRITICAL ACCOUNTING ESTIMATES

~~Table~~Critical accounting estimates include those estimates made in accordance with U.S. GAAP that involve a significant level of ~~Contents~~

estimation uncertainty and have ~~been no~~had or are reasonably likely to have a material impact on the Company’s financial condition or results of operations. Our most significant estimate is as follows:

Purchase Accounting for Acquisitions of Real Estate Subject to a Lease. As required by U.S. GAAP, the fair value of the real estate acquired with in-place leases is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, the value of in-place leases, and the value of leasing costs, based in each case on their relative fair values. In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded as other assets or liabilities based on the present value. The assumptions underlying the allocation of relative fair values are based on market information including, but not limited to: (i) the estimate of replacement cost of improvements under the cost approach, (ii) the estimate of land values based on comparable sales under the sales comparison approach, and (iii) the estimate of future benefits determined by either a reasonable rate of return over a single year’s net cash flow, or a forecast of net cash flows projected over a reasonable investment horizon under the income capitalization approach. The underlying assumptions are subject to uncertainty and thus any changes to the ~~critical accounting policies affecting~~allocation of fair value to each of the ~~application~~various line items within the Company’s consolidated balance sheets could have an impact on the Company’s financial condition as well as results of ~~those accounting policies~~operations due to resulting changes in depreciation and amortization as ~~noted in our Annual Report on Form 10-K~~a result of the fair value allocation. The acquisitions of real estate subject to this estimate totaled four buildings within an existing multi-tenant income property, one multi-tenant property, and one vacant land parcel adjacent to an existing multi-tenant property for an aggregate purchase price of $80.0 million for the ~~year~~nine months ended ~~December 31, 2016.~~September 30, 2023, and two multi-tenant income properties for a purchase price of $119.3 million for the nine months ended September 30, 2022.

See Note 2, “Summary of Significant Accounting Policies”, for further discussion of the Company’s accounting estimates and policies.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET ~~RISKS~~RISK

The principal market risk (i.e. the risk of loss arising from adverse changes in market rates and prices), to which we are exposed is interest rate risk relating to our debt. We may utilize overnight sweep accounts and short-term investments as a means to minimize the interest rate risk. We do not believe that interest rate risk related to cash equivalents and short-term investments, if any, is material due to the nature of the investments.

We are primarily exposed to interest rate risk relating to our own debt in connection with our ~~credit facility,~~Credit Facility, as this facility carries a variable rate of interest. Our borrowings on the un-hedged portion of our ~~$100.0~~$300.0 million revolving ~~credit facility~~Credit Facility bear a variable rate of interest based on ~~the 30-day LIBOR~~SOFR plus a rate of between ~~150~~125 basis points and 220 basis points plus a 0.10% SOFR adjustment based on our level of borrowing as a percentage of our total asset value. Effective January 31, 2023, the interest rate on $100.0 million of the Credit Facility balance was fixed by virtue of three interest rate swaps. As of September 30, ~~2017,~~2023 and 2022, the outstanding balance on our ~~credit facility was $41.0 million.~~Credit Facility totaled $216.0 million and $38.5 million, of which $116.0 million and $38.5 million, respectively, were not fixed by virtue of an interest rate swap agreement. A hypothetical change in the interest rate of 100 basis points (i.e., 1%) would affect our financial position, results of operations, and cash flows by ~~approximately $410,000.~~$1.2 million and $0.4 million as of September 30, 2023 and 2022, respectively. The $25.0 million mortgage loan which closed on April 15, 2016, bears a variable rate of interest based on the 30-day LIBOR plus a rate of 190 basis points. The interest rate for this mortgage loan has been fixed through the use of anCompany entered into interest rate swap ~~that fixed the rate at 3.17%.~~agreements to hedge against changes in future cash flows resulting from fluctuating interest rates related to certain of its debt borrowings, see Note 16, “Interest Rate Swaps.” By virtue of fixing the variable rate on certain debt borrowings, our exposure to changes in interest rates is minimal but for the impact on ~~Other Comprehensive Income.~~other comprehensive income and loss. Management’s objective is to limit the impact of interest rate changes on earnings and cash flows and to manage our overall borrowing costs.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, an evaluation, as required by Rules 13a-15 and 15d-15 ~~under~~of the Securities Exchange Act of 1934 (the “Exchange Act”), was carried out under the supervision and with the participation of the Company’s management, including ~~our~~the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) ~~under~~of the Exchange Act). Based on that evaluation, ~~our~~the CEO and CFO have concluded that the design and operation of the Company’s disclosure controls and procedures ~~were~~are effective ~~as of September 30, 2017,~~ to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in ~~the~~ Securities and Exchange ~~Commission’s~~Commission rules and forms, and to provide reasonable assurance that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including ~~our~~its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the ~~nine~~three months ended September 30, ~~2017,~~2023, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 1A. RISK FACTORS

For a highway condemnation action involving this property. The proposed road modifications would impact access to the property. The Company does not believe the road modifications provided a basis for Harris Teeter to terminate the Lease. Regardless, in January 2013, the North Carolina Department of Transportation (“NCDOT”) proposed to redesign the road modifications to keep the all access intersection open for ingress with no change to the planned limitation on egress to the right-in/right-out only. Additionally, NCDOT and the City of Charlotte proposed to build and maintain a new access road/point into the property. Construction has begun and is not expected to be completed before mid-2018. Harris Teeter has expressed satisfaction with the redesigned project and indicated that it will not attempt to terminate its lease if this project is built as currently redesigned. Because the redesigned project will not be completed until late 2017 to mid-

~~Table of Contents~~

~~2018, the condemnation case has been placed in administrative closure. As a result, the trial and mediation will not likely be scheduled until requested by the parties, most likely in late 2018.~~

On February 15, 2017, Wintergreen Advisers, LLC (“Wintergreen”) filed a complaint in the Circuit Court of the Seventh Judicial Circuit in Volusia County, Florida (the “Wintergreen Complaint”) against the Company and each of its directors. The Wintergreen Complaint sought an order compelling the Company to either include Wintergreen’s four director nominees, all of whom are employees or hired consultants of Wintergreen, in the Company’s proxy statement as nominees to be voted on at the Company’s 2017 Annual Meeting of Shareholders (the “2017 Annual Meeting”) or permit Wintergreen to bring their proposed nominees before the Company’s shareholders at the 2017 Annual Meeting. Although the Company’s Board of Directors believed that the Wintergreen Complaint had no legal merit, on March 6, 2017, the Company’s Board of Directors approved the Company’s entering into a Settlement Agreement. Pursuant to the terms of the Settlement Agreement, Wintergreen’s nominees were permitted to stand for election at the 2017 Annual Meeting and the Company agreed not to amend its Bylaws prior to the 2017 Annual Meeting. The Wintergreen Complaint was voluntarily dismissed on April 4, 2017~~. At the 2017 Annual Meeting, the Company’s shareholders re-elected all seven~~discussion of the Company’s ~~nominees.~~

~~ITEM 1A. RISK FACTORS~~

Certain statements contained in this report (other than statements of historical fact) are forward-looking statements. The words “believe,” “estimate,” “expect,” “intend,” “anticipate,” “will,” “could,” “may,” “should,” “plan,” “potential,” “predict,” “forecast,” “project,” and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. Forward-looking statements are made based upon management’s expectations and beliefs concerning future developments and their potential ~~effect upon the Company.~~

There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of future developments on the Company will be those anticipated by management.

We wish to caution readers that the assumptions, which form the basis for forward-looking statements with respect to or that may impact earnings for the year-ended December 31, 2017, and thereafter, include many factors that are beyond the Company’s ability to control or estimate precisely. These risks and uncertainties, ~~include, but are not limited to,~~see the ~~strength of~~information under the real estate market in the City and Volusia County, Florida; the impact of a prolonged recession or downturn in economic conditions; our ability to successfully execute acquisition or development strategies; any loss of key management personnel; changes in local, regional, and national economic conditions affecting the real estate development business and income properties; the impact of environmental and land use regulations generally and on certain land sale transactions specifically; extreme or severe weather conditions; the impact of competitive real estate activity; variability in quarterly results due to the unpredictable timing of land transactions; the loss of any major income property tenants; the timing of land sale transactions; and the availability of capital. These risks and uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements.

~~In addition to the other information set forth in this report, you should carefully consider the factors discussed in~~heading Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016. There have been no material changes to those risk factors.~~2022. The risks described in the ~~Annual Report on~~ Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company. As of September 30, 2023, there have been no material changes in our risk factors from those set forth within the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

While we periodically reassess material trends and uncertainties affecting our results of operations and financial condition, we do not intend to review or revise any particular forward-looking statement referenced herein in light of future events.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no ~~unregistered sales~~repurchases of ~~equity securities~~shares of the Company’s common stock during the ~~nine~~three months ended September 30, ~~2017, which were not previously reported.~~2023.

The following ~~share~~ repurchases of shares of the Company’s Series A Preferred Stock were made during the ~~nine~~three months ended September 30, ~~2017:~~

Total Number
of Shares
Purchased

Average Price
Paid per Share

Total Number of
Shares Purchased as a Part of Publicly
Announced Plans
or Programs

Maximum Number (or
Approximate Dollar
Value) of Shares that
May Yet be Purchased
Under the Plans or
Programs

1/1/2017 - 1/31/2017

2,062

$
53.00

2,062

$
2,487,759

2/1/2017 - 2/28/2017

4,847

53.71

4,847

2,227,447

3/1/2017 - 3/31/2017

49,334

51.85

49,334

9,669,489
(1)
4/1/2017 - 4/30/2017

18,305

53.90

18,305

8,682,860

5/1/2017 - 5/31/2017

25,262

54.13

25,262

7,315,342

6/1/2017 - 6/30/2017

4,288

53.93

4,288

7,084,085

7/1/2017 - 7/31/2017

2,500

54.50

2,500

6,947,835

8/1/2017 - 8/31/2017

22,050

54.07

22,050

5,755,646

9/1/2017 - 9/30/2017

5,401

54.64

5,401

5,460,550

Total

134,049

$
53.24

134,049

$
5,460,550

~~(1)In March 2017, the Board approved the New $10 Million Repurchase Program.~~2023:


	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as a Part of Publicly Announced Plans or Programs ⁽¹⁾	Maximum Number (or Approximate Dollar Value) of Shares That May yet be Purchased Under the Plans or Programs ($000's) ⁽¹⁾
7/01/2023 - 7/31/2023	300	$	18.98	300	$	2,980
8/01/2023 - 8/31/2023	—		—	—		2,980
9/01/2023 - 9/30/2023	5,748		18.50	5,748		2,874
Total	6,048	$	18.52	6,048

(1)

On February 16, 2023, the Board approved a $3.0 million Series A Preferred Stock repurchase program, of which $2.87 million remained available as of September 30, 2023.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

Not ~~Applicable~~

applicable

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ITEM 6. EXHIBITS

(a) Exhibits:


(3.1)		Articles of Amendment and Restatement of CTO Realty Growth, Inc., as amended by the Articles of Amendment (Name Change), filed as Exhibit 3.1 to the registrant’s current report on Form 8-K12B filed February 1, 2021, and incorporated herein by reference.
~~Exhibit 10.1~~
(3.2)		~~Second~~Articles Supplementary, designating CTO Realty Growth, Inc.’s 6.375% Series A Cumulative Redeemable Preferred Stock, filed as Exhibit 3.2 to the registrant's Registration Statement on Form 8-A filed July 1, 2021 (File No. 001-11350), and incorporated herein by reference.

(3.3)		Third Amended and Restated ~~Credit Agreement, which supersedes the Company’s existing Amended and Restated Credit Agreement, with Bank~~Bylaws of ~~Montreal (“BMO”) and the other lenders thereunder, with BMO acting~~CTO Realty Growth, Inc., effective as ~~Administrative Agent, dated September 7, 2017,~~of February 16, 2023, filed as Exhibit ~~10.1~~3.1 to the registrant’s Current Report on Form 8-K as filed ~~September 13, 2017,~~February 17, 2023, and incorporated herein by reference.

(4.1)		Specimen Common Stock Certificate of CTO Realty Growth, Inc., filed as Exhibit 4.2 to the registrant’s current report on Form 8-K12B filed February 1, 2021, and incorporated herein by reference.

~~Exhibit 31.1~~(10.1)†		Amended 2017 Executive Annual Cash Incentive Plan.

Exhibit 31.1		Certification filed pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002.

Exhibit 31.2		Certification filed pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002.

*Exhibit 32.1		Certification furnished pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002.

*Exhibit 32.2		Certification furnished pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002.

Exhibit 101.INS		Inline XBRL Instance Document

Exhibit 101.SCH		Inline XBRL Taxonomy Extension Schema Document

Exhibit 101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

Exhibit 101.DEF		Inline XBRL Taxonomy Definition Linkbase Document

Exhibit 101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

Exhibit 101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

Exhibit 104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

†	Management contract or compensatory plan or arrangement.

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~~Signatures~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			CTO REALTY GROWTH, INC.
	~~CONSOLIDATED-TOMOKA LAND CO.~~
	(Registrant)

October ~~30, 2017~~26, 2023	By:	/s/ John P. Albright
		John P. Albright President and Chief Executive Officer (Principal Executive Officer)

October ~~30, 2017~~26, 2023	By:	/s/ ~~Mark E. Patten~~Matthew M. Partridge
		Matthew M. Partridge, Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
October 26, 2023	~~Mark E. Patten, Senior~~By:	/s/ Lisa M. Vorakoun
		Lisa M. Vorakoun, Vice President and Chief ~~Financial~~Accounting Officer (Principal ~~Financial and~~ Accounting Officer)

6155


	(Unaudited)
	September 30, 2017		December 31, 2016
ASSETS
Property, Plant, and Equipment:
Income Properties, Land, Buildings, and Improvements	$	317,215,503	$	274,334,139
Golf Buildings, Improvements, and Equipment		6,355,561		3,528,194
Other Furnishings and Equipment		652,479		1,032,911
Construction in Progress		6,246,950		5,267,676
Total Property, Plant, and Equipment		330,470,493		284,162,920
Less, Accumulated Depreciation and Amortization		(21,552,883)		(16,552,077)
Property, Plant, and Equipment—Net		308,917,610		267,610,843
Land and Development Costs		40,750,335		51,955,278
Intangible Lease Assets—Net		35,810,734		34,725,822
Impact Fee and Mitigation Credits		1,265,437		2,322,906
Commercial Loan Investments		11,910,611		23,960,467
Commercial Loan Investments - Held for Sale		15,000,000		—
Cash and Cash Equivalents		5,944,544		7,779,562
Restricted Cash		7,027,196		9,855,469
Refundable Income Taxes		1,510,712		943,991
Other Assets		8,573,622		9,469,088
Total Assets	$	436,710,801	$	408,623,426
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Accounts Payable	$	1,307,813	$	1,518,105
Accrued and Other Liabilities		7,382,898		8,667,897
Deferred Revenue		1,313,025		1,991,666
Intangible Lease Liabilities - Net		30,026,994		30,518,051
Accrued Stock-Based Compensation		69,877		42,092
Deferred Income Taxes—Net		63,458,746		51,364,572
Long-Term Debt		173,651,530		166,245,201
Total Liabilities		277,210,883		260,347,584
Commitments and Contingencies - See Note 18
Shareholders’ Equity:
Common Stock – 25,000,000 shares authorized; $1 par value, 6,026,610 shares issued and 5,581,235 shares outstanding at September 30, 2017; 6,021,564 shares issued and 5,710,238 shares outstanding at December 31, 2016		5,951,720		5,914,560
Treasury Stock – 445,375 shares at September 30, 2017; 311,326 shares at December 31, 2016		(22,434,800)		(15,298,306)
Additional Paid-In Capital		22,168,687		20,511,388
Retained Earnings		153,562,478		136,892,311
Accumulated Other Comprehensive Income		251,833		255,889
Total Shareholders’ Equity		159,499,918		148,275,842
Total Liabilities and Shareholders’ Equity	$	436,710,801	$	408,623,426


	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2017		2016		2017		2016
Revenues
Income Properties	$	7,928,258	$	6,021,331	$	22,566,505	$	18,483,654
Interest Income from Commercial Loan Investments		637,801		534,212		1,727,449		2,050,507
Real Estate Operations		2,926,406		4,643,646		45,658,221		18,979,164
Golf Operations		797,420		1,001,368		3,655,877		3,877,923
Agriculture and Other Income		90,717		10,388		323,617		48,070
Total Revenues		12,380,602		12,210,945		73,931,669		43,439,318
Direct Cost of Revenues
Income Properties		(1,715,516)		(1,430,642)		(4,756,744)		(3,811,389)
Real Estate Operations		(459,169)		(1,257,183)		(15,408,547)		(4,638,865)
Golf Operations		(1,272,647)		(1,302,920)		(4,173,244)		(4,154,684)
Agriculture and Other Income		(18,874)		(52,894)		(89,847)		(153,599)
Total Direct Cost of Revenues		(3,466,206)		(4,043,639)		(24,428,382)		(12,758,537)
General and Administrative Expenses		(1,995,512)		(1,821,827)		(7,942,846)		(8,518,410)
Impairment Charges		—		—		—		(2,180,730)
Depreciation and Amortization		(3,161,169)		(1,945,460)		(9,139,434)		(5,818,386)
Gain (Loss) on Disposition of Assets		(266)		11,479,490		(266)		12,842,438
Land Lease Termination		—		—		2,226,526		—
Total Operating Expenses		(8,623,153)		3,668,564		(39,284,402)		(16,433,625)
Operating Income		3,757,449		15,879,509		34,647,267		27,005,693
Investment Income (Loss)		9,724		2,531		27,431		(561,162)
Interest Expense		(2,073,299)		(2,454,390)		(6,279,366)		(6,700,593)
Income Before Income Tax Expense		1,693,874		13,427,650		28,395,332		19,743,938
Income Tax Expense		(726,974)		(5,281,646)		(11,003,132)		(8,624,727)
Net Income		966,900		8,146,004		17,392,200		11,119,211
Less: Net Loss Attributable to Noncontrolling Interest in Consolidated VIE		—		15,010		—		36,964
Net Income Attributable to Consolidated-Tomoka Land Co.	$	966,900	$	8,161,014	$	17,392,200	$	11,156,175

Per Share Information- See Note 10:
Basic
Net Income Attributable to Consolidated-Tomoka Land Co.	$	0.18	$	1.44	$	3.13	$	1.96
Diluted
Net Income Attributable to Consolidated-Tomoka Land Co.	$	0.18	$	1.44	$	3.13	$	1.95

Dividends Declared and Paid	$	0.05	$	0.04	$	0.13	$	0.08



									Accumulated
					Additional				Other		Total
	Common		Treasury		Paid-In		Retained		Comprehensive		Shareholders’
	Stock		Stock		Capital		Earnings		Income (Loss)		Equity
Balance January 1, 2017	$	5,914,560	$	(15,298,306)	$	20,511,388	$	136,892,311	$	255,889	$	148,275,842
Net Income		—		—		—		17,392,200		—		17,392,200
Stock Repurchase		—		(7,136,494)		—		—		—		(7,136,494)
Exercise of Stock Options		22,527		—		746,026		—		—		768,553
Vested Restricted Stock		13,298		—		(274,919)		—		—		(261,621)
Stock Issuance		1,335		—		71,887		—		—		73,222
Stock Compensation Expense from Restricted Stock Grants and Equity Classified Stock Options		—		—		1,114,305		—		—		1,114,305
Cash Dividends ($0.13 per share)		—		—		—		(722,033)		—		(722,033)
Other Comprehensive Loss, Net of Income Tax		—		—		—		—		(4,056)		(4,056)
Balance September 30, 2017	$	5,951,720	$	(22,434,800)	$	22,168,687	$	153,562,478	$	251,833	$	159,499,918


				Property						Remaining Lease
Tenant Description	Tenant Type	Property Location	Date of Acquisition	Square-Feet	Property Acres	Purchase Price		Percentage Leased		Term (in years)
Staples, Inc. (an affiliate of)	Single-Tenant	Sarasota, Florida	01/27/17	18,120	1.2	$	4,075,000		100%		5.0
Grocery-Anchored Shopping Center (Westcliff)	Multi-Tenant	Fort Worth, Texas	03/01/17	136,185	10.3		15,000,000		96%		4.1
JoAnn Stores, Inc.	Single-Tenant	Boston, Massachusetts	04/06/17	22,500	2.6		6,315,000		100%		11.8
LA Fitness Multi-Tenant Retail Building	Single-Tenant Multi-Tenant	Tampa, Florida	04/28/17	45,000 6,715	5.3		14,650,000		100%		13.9
				228,520		$	40,040,000


	Date of	Maturity	Original Face		Current Face		Lower of Cost
Description	Investment	Date	Amount		Amount		or Market		Coupon Rate
Mezz – Hotel – Atlanta, GA	January 2014	February 2019	$	5,000,000	$	5,000,000	$	5,000,000	12.00%
Mezz – Hotel, Dallas, TX	September 2014	September 2018		10,000,000		10,000,000		10,000,000	30 day LIBOR plus 7.50%
Total			$	15,000,000	$	15,000,000	$	15,000,000


	Three Months Ended September 30, 2017		Three Months Ended September 30, 2016		Nine Months Ended September 30, 2017		Nine Months Ended September 30, 2016
Revenue Description	($000's)		($000's)		($000's)		($000's)
Land Sales Revenue	$	—	$	318	$	39,564	$	508
Tomoka Town Center - Percentage of Completion Revenue		—		3,654		—		16,456
Revenue from Reimbursement of Infrastructure Costs		—		—		1,276		—
Impact Fee and Mitigation Credit Sales		548		209		1,987		481
Subsurface Revenue		2,374		463		2,827		1,535
Fill Dirt and Other Revenue		4		—		4		—
Total Real Estate Operations Revenue	$	2,926	$	4,644	$	45,658	$	18,980


					Gross Sales		Price per Acre		Gain
			Date of	No. of	Price		($ Rounded		on Sale
	Buyer (or Description)	Location	Sale	Acres	($000's)		000's)		($000's)
1	Minto Communities, LLC	West of I-95	02/10/17	1,581.00	$	27,151	$	17,000	$	20,041
2	Commercial	East of I-95	03/22/17	6.35		1,556		245,000		11
		Subtotal - Q1 2017		1,587.35		28,707		18,000		20,052

3	Commercial	East of I-95	04/05/17	27.50		3,218		117,000		2,955
4	Commercial	East of I-95	04/13/17	4.50		1,235		274,000		13
5	Commercial	West of I-95	04/25/17	30.00		2,938		98,000		627
6	NADG - Parcel B-I (FPII)	East of I-95	06/27/17	19.43		3,467		178,000		3,263	(1)
		Subtotal - Q2 2017		81.43		10,858		133,000		6,858

		YTD Q3 2017		1,668.78	$	39,565	$	24,000	$	26,910


	Acreage
Lease Year	(Approximate)	Florida County	Lease Payment (1)		Drilling Penalty (1)
Lease Year 1 - 9/23/2011 - 9/22/2012	136,000	Lee and Hendry	$	913,657	$	—
Lease Year 2 - 9/23/2012 - 9/22/2013	136,000	Lee and Hendry		922,114		—
Lease Year 3 - 9/23/2013 - 9/22/2014	82,000	Hendry		3,293,000		1,000,000
Lease Year 4 - 9/23/2014 - 9/22/2015	42,000	Hendry		1,866,146		600,000
Lease Year 5 - 9/23/2015 - 9/22/2016	25,000	Hendry		1,218,838		175,000
Lease Year 6 - 9/23/2016 - 9/22/2017	15,000	Hendry		806,683		150,000
Lease Year 7 - 9/23/2017 - 9/22/2018	15,000	Hendry		806,683		50,000
Total Payments Received to Date			$	9,827,121	$	1,975,000


	For the nine months ended September 30,
	2017		2016
Proceeds from the Disposition of Debt Securities	$	—	$	827,738
Cost Basis of Debt Securities Sold		—		(843,951)
Loss recognized in Statement of Operations on the Disposition of Debt Securities	$	—	$	(16,213)
Proceeds from the Disposition of Equity Securities		—		5,424,624
Cost Basis of Equity Securities Sold		—		(5,983,978)
Gain (Loss) recognized in Statement of Operations on the Disposition of Equity Securities	$	—	$	(559,354)
Total Gain (Loss) recognized in Statement of Operations on the Disposition of Debt and Equity Securities	$	—	$	(575,567)


			Fair Value at Reporting Date Using
			Quoted Prices in				Significant
			Active Markets		Significant Other		Unobservable
	September 30,		for Identical		Observable Inputs		Inputs
	2017		Assets (Level 1)		(Level 2)		(Level 3)

Cash Flow Hedge - Interest Rate Swap	$	409,985	$	—	$	409,985	$	—
Total	$	409,985	$	—	$	409,985	$	—


	Three Months		Three Months		Nine Months		Nine Months
	Ended		Ended		Ended		Ended
	9/30/2017		9/30/2016		9/30/2017		9/30/2016
	($000's)		($000's)		($000's)		($000's)
Depreciation and Amortization Expense	$	1,201	$	626	$	3,479	$	1,715
Increase to Income Properties Revenue		(552)		(559)		(1,633)		(1,722)
Net Amortization of Intangible Assets and Liabilities	$	649	$	67	$	1,846	$	(7)


			Future Accretion		Net Future
	Future		to Income		Amortization of
	Amortization		Property		Intangible Assets
Year Ending December 31,	Amount		Revenue		and Liabilities
Remainder of 2017	$	1,201,316	$	(551,619)	$	649,697
2018		4,805,264		(2,217,330)		2,587,934
2019		4,776,705		(2,212,206)		2,564,499
2020		4,335,284		(2,145,477)		2,189,807
2021		2,644,848		(2,296,332)		348,516
2022		2,026,921		(2,367,492)		(340,571)
Thereafter		13,789,831		(16,005,973)		(2,216,142)
Total	$	33,580,169	$	(27,796,429)	$	5,783,740


	Face		Maturity	Interest
	Value Debt		Date	Rate
Credit Facility	$	41,000,000	September 2021		30 ‑day LIBOR plus 1.50% -2.20%
Mortgage Note Payable (originated with UBS) (1)		7,300,000	February 2018		3.655%
Mortgage Note Payable (originated with Wells Fargo) (2)		30,000,000	October 2034		4.330%
Mortgage Note Payable (originated with Wells Fargo) (3)		25,000,000	April 2021		30 ‑day LIBOR plus 1.90%
4.50% Convertible Senior Notes due 2020, net of discount		75,000,000	March 2020		4.500%
Total Long-Term Face Value Debt	$	178,300,000


	September 30, 2017				December 31, 2016
			Due Within				Due Within
	Total		One Year		Total		One Year
Credit Facility	$	41,000,000	$	—	$	34,300,000	$	—
Mortgage Note Payable (originated with UBS)		7,300,000		7,300,000		7,300,000		—
Mortgage Note Payable (originated with Wells Fargo)		30,000,000		—		30,000,000		—
Mortgage Note Payable (originated with Wells Fargo)		25,000,000		—		25,000,000		—
4.50% Convertible Senior Notes due 2020, net of discount		71,769,432		—		70,880,581		—
Loan Costs, net of accumulated amortization		(1,417,902)		—		(1,235,380)		—
Total Long-Term Debt	$	173,651,530	$	7,300,000	$	166,245,201	$	—


	Shares		Vested /			Shares
	Outstanding	Granted	Exercised	Expired	Forfeited	Outstanding
Type of Award	at 1/1/2017	Shares	Shares	Shares	Shares	at 9/30/2017
Equity Classified - Performance Share Awards - Peer Group Market Condition Vesting	—	12,635	—	—	—	12,635
Equity Classified - Market Condition Restricted Shares - Stock Price Vesting	69,500	—	—	(32,000)	—	37,500
Equity Classified - Three Year Vest Restricted Shares	37,504	17,451	(17,298)	—	(267)	37,390
Equity Classified - Non-Qualified Stock Option Awards	113,500	—	(23,500)	—	—	90,000
Liability Classified - Stock Options and Stock Appreciation Rights	11,000	—	—	(5,000)	—	6,000
Total Shares	231,504	30,086	(40,798)	(37,000)	(267)	183,525


		Wtd. Avg.
Performance Shares with Market Conditions	Shares	Fair Value
Outstanding at January 1, 2017	—	$	—
Granted	12,635		55.66
Vested	—		—
Expired	—		—
Forfeited	—		—
Outstanding at September 30, 2017	12,635	$	55.66


		Wtd. Avg.
Market Condition Non-Vested Restricted Shares	Shares	Fair Value
Outstanding at January 1, 2017	69,500	$	27.03
Granted	—		—
Vested	—		—
Expired	(32,000)		14.08
Forfeited	—		—
Outstanding at September 30, 2017	37,500	$	38.09


		Wtd. Avg.
		Fair Value
Three Year Vest Non-Vested Restricted Shares	Shares	Per Share
Outstanding at January 1, 2017	37,504	$	47.53
Granted	17,451		55.06
Vested	(17,298)		46.70
Expired	—		—
Forfeited	(267)		52.51
Outstanding at September 30, 2017	37,390	$	51.39


				Wtd. Avg.
				Remaining
				Contractual		Aggregate
		Wtd. Avg.		Term		Intrinsic
Non-Qualified Stock Option Awards	Shares	Ex. Price		(Years)		Value
Outstanding at January 1, 2017	113,500	$	49.03
Granted	—		—
Exercised	(23,500)		34.95
Expired	—		—
Forfeited	—		—
Outstanding at September 30, 2017	90,000	$	52.71	7.23	$	662,700
Exercisable at January 1, 2017	76,600	$	45.94	5.75	$	573,181
Exercisable at September 30, 2017	69,600	$	52.03	7.13	$	559,340


		Fair Value
		of Shares
Non-Qualified Stock Option Awards	Shares	Vested
Non-Vested at January 1, 2017	36,900
Granted	—
Vested	(16,500)	$	924,066
Expired	—
Forfeited	—
Non-Vested at September 30, 2017	20,400


Assumptions at:	September 30, 2017		December 31, 2016
Expected Volatility	14.70	%	14.13	%
Expected Dividends	0.27	%	0.22	%
Expected Term	0.32	years	0.61	years
Risk-Free Rate	1.06	%	0.66	%


	Revenue for		Revenue for
	Three Months		Three Months		Increase (Decrease)
	Ended		Ended		Vs. Same Period		Vs. Same Period
Operating Segment	9/30/2017		9/30/2016		in 2016		in 2016 (%)
Income Properties	$	7,928,258	$	6,021,331	$	1,906,927		32%
Interest Income from Commercial Loan Investments		637,801		534,212		103,589		19%
Real Estate Operations		2,926,406		4,643,646		(1,717,240)		-37%
Golf Operations		797,420		1,001,368		(203,948)		-20%
Agriculture & Other Income		90,717		10,388		80,329		773%
Total Revenue	$	12,380,602	$	12,210,945	$	169,657		1%


	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as a Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs
1/1/2017 - 1/31/2017	2,062	$	53.00	2,062	$	2,487,759
2/1/2017 - 2/28/2017	4,847		53.71	4,847		2,227,447
3/1/2017 - 3/31/2017	49,334		51.85	49,334		9,669,489	(1)
4/1/2017 - 4/30/2017	18,305		53.90	18,305		8,682,860
5/1/2017 - 5/31/2017	25,262		54.13	25,262		7,315,342
6/1/2017 - 6/30/2017	4,288		53.93	4,288		7,084,085
7/1/2017 - 7/31/2017	2,500		54.50	2,500		6,947,835
8/1/2017 - 8/31/2017	22,050		54.07	22,050		5,755,646
9/1/2017 - 9/30/2017	5,401		54.64	5,401		5,460,550
Total	134,049	$	53.24	134,049	$	5,460,550