Author Topic: CTO - Consolidated Tomoka Land Company  (Read 33500 times)

odin

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Re: CTO - Consolidated Tomoka Land Company
« Reply #60 on: January 03, 2017, 12:01:43 PM »
Interesting info in 13D filed today.  Separately, CTO updated land sale progress.

"The Issuer's counsel responded, on behalf of Issuer, that because Wintergreen Advisers did not affirmatively represent that it is a shareholder of record, it would not be able to nominate directors to be voted on at the Issuer's 2017 annual meeting."

"In the same letter in which it disputed that Wintergreen had the authority to nominate directors, CTO offered to repurchase "all or a significant portion" of the 27.1% of CTO shares held by Wintergreen's Clients."

https://www.sec.gov/Archives/edgar/data/23795/000091957417000008/d7350492a_13d-a.htm



Gregmal

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Re: CTO - Consolidated Tomoka Land Company
« Reply #61 on: January 03, 2017, 12:58:22 PM »
Interesting info in 13D filed today.  Separately, CTO updated land sale progress.

"The Issuer's counsel responded, on behalf of Issuer, that because Wintergreen Advisers did not affirmatively represent that it is a shareholder of record, it would not be able to nominate directors to be voted on at the Issuer's 2017 annual meeting."

"In the same letter in which it disputed that Wintergreen had the authority to nominate directors, CTO offered to repurchase "all or a significant portion" of the 27.1% of CTO shares held by Wintergreen's Clients."

https://www.sec.gov/Archives/edgar/data/23795/000091957417000008/d7350492a_13d-a.htm

This is the stuff they've successfully hidden from most people. With all the facts out there, I have a hard time believing anyone in their right minds is happy with these types of anti-shareholder actions. Even if one does not agree with or like Wintergreen, CTO shareholders are better off without the current group. Not because they aren't capable, but because they refuse to put shareholders first.

mateo999

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Re: CTO - Consolidated Tomoka Land Company
« Reply #62 on: January 04, 2017, 01:30:17 PM »
Attaching my SOTP.  Doesn't scream "slap me in the face cheap".  I'm also trying to keep in mind IRR vs. upside given the slow nature of land sales.  Please let me know where I'm off base.

EDITED: corrected $106K in under contract proceeds to $106mm.
« Last Edit: January 04, 2017, 02:17:50 PM by mateo999 »

BG2008

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Re: CTO - Consolidated Tomoka Land Company
« Reply #63 on: January 04, 2017, 04:39:11 PM »
Attaching my SOTP.  Doesn't scream "slap me in the face cheap".  I'm also trying to keep in mind IRR vs. upside given the slow nature of land sales.  Please let me know where I'm off base.

EDITED: corrected $106K in under contract proceeds to $106mm.

Under your mid case scenario, if you believe that they can eventually convert into a REIT and purge the taxes, then the Deferred tax liabilities go away which is a $10 difference.  The subsurface deal was done in Feb of 2016, probably the worst time to structure minerals deals in the last few years.  If you use the deal figure, then that's another $3 difference. 

Regarding IRR and etc.  Any thoughts on the fact that land does rot over time.  It tends to appreciate.  When there are less land parcels left over due to land sales, it tends to go for more.  That's part of the charm of owning real estate/land from the owners perspective.  You sit on it and it tends to appreciate over time (barring big 2008/2009 style great recession). 

Nonetheless, I find the John/Mark and David Winters dynamic absolutely toxic.   


Gregmal

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Re: CTO - Consolidated Tomoka Land Company
« Reply #64 on: January 04, 2017, 05:10:25 PM »
Attaching my SOTP.  Doesn't scream "slap me in the face cheap".  I'm also trying to keep in mind IRR vs. upside given the slow nature of land sales.  Please let me know where I'm off base.

EDITED: corrected $106K in under contract proceeds to $106mm.

Under your mid case scenario, if you believe that they can eventually convert into a REIT and purge the taxes, then the Deferred tax liabilities go away which is a $10 difference.  The subsurface deal was done in Feb of 2016, probably the worst time to structure minerals deals in the last few years.  If you use the deal figure, then that's another $3 difference. 

Regarding IRR and etc.  Any thoughts on the fact that land does rot over time.  It tends to appreciate.  When there are less land parcels left over due to land sales, it tends to go for more.  That's part of the charm of owning real estate/land from the owners perspective.  You sit on it and it tends to appreciate over time (barring big 2008/2009 style great recession). 

Nonetheless, I find the John/Mark and David Winters dynamic absolutely toxic.

Agree on pretty much everything you said.

Regarding the last piece, perhaps I can add some color. Take it with a grain on salt.

I've had personal, one on one interaction and communications with all three.

-Albright is incredibly bright, but an arrogant schmuck whose communication skills leave a lot to be desired. He's quietly deceiving, nasty when he gets push back, and always seems to be looking out for himself. Given how much money he makes, I don't believe for a second he needs to keep selling his stock every other week to pay off a margin account.

-Patten is a very genuine, nice guy. Through my most recent talks with him, I've gotten the feeling(just my interpretation) that he is kind of disappointed in the fact he is likely to lose his job over this Albright/Winters debacle. He gets a lot of whats going on, and given his qualifications, if anything IMO, is underpaid for the work he does. I wouldn't care if he were interim CEO til a replacement is found.

-David Winters is an interesting fellow. A little eccentric on top of being somewhat anti-social but all in all a very nice guy who seems to shoot straight. His performance often gets ridiculed, but he's cut from a certain type of value investor cloth. He's not afraid to stick to what he knows and doesn't really have any interest in chasing what's currently popular in search of performance. IMO he's kind of a Bruce Berkowitz but where Berkowitz tends to finds his way into "value" assets most initially view as outrageously risky and speculative, Winters finds good old conservative "value" staples to be his thing. The style and approach is basically the same though. Fitting their JOE/CTO positions and scenarios are almost mirror images.

odin

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Re: CTO - Consolidated Tomoka Land Company
« Reply #65 on: January 12, 2017, 03:48:27 AM »
Has anyone considered the implications of the 9.8% REIT ownership limitation re: Winters stake?

From my very brief research it appears the 9.8% is the typical level adopted in REIT charters (not mandated by the IRS) to prevent five persons from owning more than 50% of the shares (required by IRS).  I found this interesting...

"Publicly traded REITs protect their REIT qualifications through, among other
ways, specific ownership limits in their charters. A typical ownership limit will
prohibit anyone from owning in excess of 9.8% of the REIT’s outstanding stock.
The ownership limit is designed to protect the REIT’s ability to meet what is
commonly referred to as the 5/50 test – essentially five or fewer individuals may
not own more than 50% of the stock during the second half of any year. By
prohibiting any one holder from owning more than 9.8%, it is impossible for any
five to reach 50%. A stockholder whose share ownership surpasses the limit will
have its shares automatically converted into “excess stock,” i.e., shares are
effectively confiscated from the shareholder and held in trust for the benefit of
some designated charity until the shares are sold in the marketplace."


bizaro86

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Re: CTO - Consolidated Tomoka Land Company
« Reply #66 on: January 12, 2017, 08:09:00 AM »
Has anyone considered the implications of the 9.8% REIT ownership limitation re: Winters stake?

From my very brief research it appears the 9.8% is the typical level adopted in REIT charters (not mandated by the IRS) to prevent five persons from owning more than 50% of the shares (required by IRS).  I found this interesting...

"Publicly traded REITs protect their REIT qualifications through, among other
ways, specific ownership limits in their charters. A typical ownership limit will
prohibit anyone from owning in excess of 9.8% of the REIT’s outstanding stock.
The ownership limit is designed to protect the REIT’s ability to meet what is
commonly referred to as the 5/50 test – essentially five or fewer individuals may
not own more than 50% of the stock during the second half of any year. By
prohibiting any one holder from owning more than 9.8%, it is impossible for any
five to reach 50%. A stockholder whose share ownership surpasses the limit will
have its shares automatically converted into “excess stock,” i.e., shares are
effectively confiscated from the shareholder and held in trust for the benefit of
some designated charity until the shares are sold in the marketplace."

My understanding is that the usual way around that is for the assets to go into an operating partnership, and give the pre-existing holder with >10% ownership a direct interest in the operating partnership. Make the OP interest convertible into REIT shares if they ever want to sell. That set up also allows the REIT to trade operating partnership interests to property owners, which I believe qualifies for a like kind exchange, allowing the property owners to use a 1031 exchange and defer taxes, so potentially gives them an advantage in acquiring property.

InelegantInvestor

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Re: CTO - Consolidated Tomoka Land Company
« Reply #67 on: March 07, 2017, 07:01:02 AM »
CTO settled to the extent that it is allowing Wintergreen to run its nominees on its own proxy. http://finance.yahoo.com/news/consolidated-tomoka-announces-settlement-litigation-141500031.html

Also, more color on what Minto is doing with the acreage they are buying from CTO.
http://nypost.com/2017/03/06/jimmy-buffet-announces-retirement-community-venture/
http://www.news-journalonline.com/news/20170216/jimmy-buffett-community-coming-to-daytona
 
Of course, this is not the first time a Buffett has been involved in CTO
http://articles.orlandosentinel.com/1999-08-11/business/9908100468_1_fentress-buffett-tomoka

Gregmal

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Re: CTO - Consolidated Tomoka Land Company
« Reply #68 on: April 12, 2017, 04:14:26 PM »
A lot of interesting things much to the tune of what I mentioned here some time ago, starting to come to light as the proxy fight wages on.
https://www.sec.gov/Archives/edgar/data/23795/000091957417003397/d7461149_dfan14-a.htm

"In 2015, Mr. Albright informed Wintergreen that CTO intended to pursue a hostile takeover of Forestar, a Texas real estate company of approximately equivalent size to CTO and sought Wintergreen's support.  Under this plan he could return to his home state and live in Dallas"

"In phone conversations Wintergreen had with Deutsche Bank after the strategic review, we learned that Deutsche Bank described the process as merely an accommodation to a client with whom they had an existing relationship.  This was not the strategic review envisioned by our shareholder proposal."

A half assed strategic review after Albright's plan to buy Forestar so he could work from home gets thwarted... Yuck.

Gregmal

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Re: CTO - Consolidated Tomoka Land Company
« Reply #69 on: November 01, 2017, 08:37:23 PM »
Figured i'd update here.

We now have 72% of land under contract and likely to close within a two year window.

The company has finally, and begrudgingly put out a NAV sheet in their latest presentation and you essentially have a conservative value of $80 a share plus over 1,000 acres and a lot of free call options.

Additionally, it was said that a potential REIT conversion would ignore the 1031 deferrals on a pass through basis and eliminate them after a 5 year holding period. This is a massive plus as the tax implications for shareholders on a $36 distubtion would be far higher than on a $7 distribution. The company still seemingly wants to do this with 80% stock; something that IMO is very anti-shareholder. Stop the selfish kingdom building crusade and pay some of it back to shareholders. 

Nonetheless I see a worst case downside here of maybe $5-$8 a share and only on a temporary basis versus what looks like a fairly straight forward 35-40% return over the next 24 months or so. The end game is and always has been that Albright sells most if not all of the land and then flips this to a REIT if there is still a big discount, or in the event the discount fades, gets to run his own personal REIT while being the king of Daytona.