Good morning, ladies and gentlemen. And welcome to the Consolidated-Tomoka Second Quarter Earnings Call 2017. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to John Albright. President and CEO. Please go ahead.

Thank you. Good morning and welcome to today’s Consolidated-Tomoka Land Company’s conference call to review our operating results for the second quarter ended June 30, 2017. My name is John Albright, President and CEO of Consolidated-Tomoka Land Company. On the call with me this morning is Mark Patten, our Chief Financial Officer, and Dan Smith, our General Counsel and Corporate Secretary. Mark and I will review the details of our second quarter financial results in a moment. First, I’ll turn it over to Mark to provide you with customary disclosures regarding our comments on this call today and a few points regarding the format of our call.

Thanks, John. Good morning, everyone. During our call today, we’ll make certain statements that may be considered to be forward-looking statements under federal securities laws. The company’s actual future results may differ significantly from the matters discussed in these forward-looking statements, and we may not release revisions to these forward-looking statements to reflect changes after the statements were made. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company’s filings with the SEC and in our earnings release from last night. In addition, let me note that we filed our second quarter 2017 investor deck last night, which is now available on our website. Our investor deck provides additional information you may find useful. With that, I'll turn it back over to John.

Thanks Mark. We are pleased with where we stand and executing our business plan and strategy. We are pleased to have closed the third transaction with North American development group for a little over 19 acres or approximately $3.5 million plus nearly $1 million as reimbursement for a portion of the infrastructure cost we incurred to install roads within the Tomoka Town Center. The 19 acres which we sold at approximately $178,000 per acre will provide North American with remaining acres they need to develop their approximately 500,000 square foot retail power center. We believe North American will be getting underway with the development of this project in the next 30 to 45 days. We also closed on 30 acres on the West Side of I 95 to one of the prominent owner operators of order dealership here in Daytona Beach. The proceeds of approximately $2.9 million represented a price per acre of approximately $98,000 per acre for this parcel adjacent to the CarMax location on the West Side of I 95. We are pleased to been able to deploy the proceeds from three of our land transactions through the 1031 tax deferred structure into the execution of two, single tenant net income properties. The first is the property leased to Jo-Ann in Saugus, Massachusetts, just outside of Boston. And a second is a property leased to LA Fitness, in Brandon, Florida, near Tampa Bay. And a multi tenanted property adjacent to the LA Fitness in Brandon. I'll share more on our income property portfolio later in the call. Our pipeline of land contracts remains strong. Even though it closed number of transactions this year that were in our pipeline and in the contract for 23 acres around the RaceTrac at Williamson, LPGA, Boulevards was terminated by the buyer. We still have seven contracts or seven separate buyers or approximately 2,100 acres and potential proceeds of nearly $70 million on an average price per acre of approximately $34,000 per acre. It's also important to note that as we sit here today, the first phase of Minto's Latitude Margaritaville project, an age- restricted residential community of approximately 3,400 homes is well underway. ICI Homes has also begun construction of their residential project of an estimated 1,000 homes. Vantrust has begun construction of a 400,000 square foot distribution facility for B Braun and RaceTrac is finally begun construction of their site at the corner of Williamson and LPGA, Boulevard. In North America is well onto pre site work for its 500,000 square foot retail power center. Now I'll turn it back over to Mark to review our operating results.

Thanks John. As John mentioned, we had a very strong quarter driven by 77% increase in revenues, which equates to an increase of approximately $10 million over the same period in 2016. The largest component of this increase is the approximately $10.9 million in land sale revenue we achieved during the quarter. While we didn't close any land transactions in the same period last year. Our increased revenue also reflects increased rent revenues of approximately $1.5 million and the quarter also benefited from a sale of mitigation credits and impact fees for approximately $1.1 million. The offset for these increases was that we didn't have any percentage and completion revenue in the second quarter of this year versus last year where we were still recognizing revenue from the Tomoka Town Center transactions. Total revenue for the six months ended June 30, 2017 increased to approximately $61.6 million, an increase of over $30 million, or approximately 97% over the same period in 2016. Consistent with the second quarter, the revenue increased for the first half of 2017 was driven by increased land sales of approximately $38 million, increased rent revenues of approximately $2.3 million and the increase in mitigation credit and impact fee sales of approximately $1.2 million. Much like the quarter results, our year-to-date results for 2017 did not include percentage and completion revenue which was approximately $11.4 million in the first half of 2016. We are also pleased to note that our revenues in 2017 included essentially the beginning revenues from our new roster of tenants of The Grove of Winter Park, our renovated multi tenant property in Winter Park, Florida. Net income for the second quarter totaled approximately $3.7 million, resulting an earnings per share of $0.67 which an increase of $2.1 million in net income and $0.39…

Thanks Mark. With regards to our acquisition activity with our income property portfolio, we had a good quarter investing approximately $21 million and weighted average investment yield at acquisition of approximately 6.83%, above the low end of our guidance of 6%. At our last earnings call I mentioned our acquisition of the 23,500 square foot single -tenant property just outside Boston leased to Jo-Ann stores for $6.3 million, which was at 7.1% investment cap rate. Towards the end of April we acquired a 45,000 square foot single-tenant property leased to LA Fitness in Brandon, Florida, which in the metro Tampa Bay area. For approximately $14.7 million represent an investment cap rate of approximately 6.17%. The LA Fitness acquisition and adjacent tenant property are located in Dance retail quarter near number of main transit arteries in the Tampa Bay Area surrounding traffic levels and market demographics. In addition, earlier this month we held a groundbreaking for two restaurants we are developing with the tenants located on a six acre beach parcel in Daytona Beach. The community has really embraced development of these two restaurants, LandShark Bar & Grill which is a Margaritaville concept and Cocina 214 restaurant bar, a contemporary Mexican Tex- Mex concept that originated in Wonder Park, Florida. As we've mentioned previously, we are expecting to complete the development of these two restaurants each a little over 6,000 square feet in time for the tenants to commence operations in the first quarter of 2018. Finally, with regards to returning capital to our shareholders during the quarter we invested approximately $2.6 million in our buyback program buying back nearly 48,000 shares at an average price per share of $54.03. That concludes our prepared remarks. And at this time we'll open up for questions. Operator?

[Operator Instructions] The first question comes from David Corak of FBR. Please go ahead.

Hi, good morning. You guys sold some mitigation credits during the quarter. Can you just give us a sense as to what's left to sell there? Maybe an update on how you guys are thinking about the evaluation the remaining credits there.

Yes, thanks David. Good morning. Yes, so mitigation credits there one of two possibilities. As you can see on the balance sheet we've got about $1.5 of mitigation credits and the impact fees that remained at June 30. Sometimes those are incorporated into a land transactions so they kind of like basis but if you think about it from evaluation standpoint they are probably valued probably 3x, 4x that in terms of market value.

Okay. That's helpful. And then the mitigation bank, in your deck this morning you note potential monetization as early as 2Q, 2018. Can you just talk about kind of what gives you confidence and any update there that you can share with us?

Sure. So we are going through the process with our consultants and getting that bank permitted and from the timeline has been laid out, we feel like possibility of having that bank permitted by the first quarter perhaps maybe the second quarter. And then once it's permitted, yes we have good chance so we will have -- be able to monetize that land but that's our goal but it is something in the air with state agencies and federal agencies. So but that's what we know as we sit now.

Okay. And then any update on discussions on the sub service interest?

So there is always activity around different pieces there. But there is nothing concrete that we can talk about right now but there is -- given that we still have substantial amount of that there as development activity, each up there is always kind of possibility of service relates and so forth.

Okay. And then Mark just switching back to G&A. I appreciate your comments. It was a little bit higher than even I was expecting this quarter. But can you just talk about how much of that was one time driven and then maybe you can share with us good kind of normalized annual numbers that you guys are comfortable. I think including kind of stock comp.

Sure. I'll give it a shot. I think if you try to pick a part our G&A in the quarter for the six months, you are probably looking at between shareholder matters, proxy contest and related items, so it's probably $1.9 million, probably somewhere in that vicinity. So if carved that out you also think about the fact that we are going to move into our office and stop paying rent here at the end of the third quarter. That's probably another $50,000 savings for the year, 200 probably for an annualized basis. So probably something north to $6 million is my guess and stock comp we did about 750 in expense for the first half so if you double that probably gives you pretty good flavor.

Fair enough, okay. And then just switching back to the land. You guys put some industrial acreage on a contract, looks like about 60k in acre, do you think that's representative of the remaining -- that pricing, is that representative of the remaining 1,000 acres or 1,050 acres. It looks like you guys have 30,000 to 50,000 just kind fair values in your deck this morning per acre. And then maybe what exactly are those five acres?

Yes. So that's part of the 850 acres industrial park. So it's -- given that it is a smaller acreage. Obviously the price per acre is higher so when we had the range that's really to think that at some point possibly we will be able to sell 100, 200 acres to some sort of industrial development. And so that kind of gives you flavor for smaller parcel that is obviously on the higher end but if we get to a place where there is development activity that requires larger track, it will also blend down.

So is it fair to say that the other two smaller industrial parcels near there would be priced higher than your 30 or 50 range?

Yes. So if we have some more activity on the -- near the smaller acreage it will on the above the range.

Okay. And then switching over to the beach parcel. It looks like you guys are expecting that 7% to 11% on levered yield to $17 or $16.8 million total spend. So kind of two part question. Is the $6 million spend above your land cost, is that your spend or is that a combination of your spend and your tenant spend? And then kind of the second part of that question is on the yield. I guess I am little bit confused on why there is a range at this point of the rent is sort of blocked, if the base rent is locked in so I guess the question is, is it actually triple net leased or is there a percentage rent involved, I mean how does the yield work on that?

Yes. So the $6 million is our spend. There is additional spend from the tenants beyond that. And then the range is basically because it is percentage rent so it's based on the growth sales, the restaurants have given us their estimates of what they think can do. We looked at what the other restaurants in that area along the beach do. So that's kind of that's why we've given you that range. It is on the expense side, the tenants are responsible for them.

Okay. So the yield is on -- the 7% to 8% yield is on your $16.8 million investment.

Correct.

Okay. Fair enough, all right. And then when you think about your -- some of your income producing portfolio. Are there assets in there that you would look to sell today that you think might make this portfolio as a whole more marketable? For instance maybe the Class B office in Daytona Beach. Are any of those work selling and kind of redeploying?

Yes. As you know, we've sold one of our flex office buildings in the past. And we certainly look to monetize I mean if we had something lined up that was a larger acquisition where basically we can recycle some of these 1031 investments. So we are always looking to keep on upgrading the portfolio. So for sure if we do have an acquisition opportunity that is a little bit larger and allows us some room we would definitely look to keep on recycling the portfolio and upgrading it.

The next question comes from Steven Graff of Wintergreen.

Hi, good morning. John and Mark, in our recent meeting Wintergreen suggested undertaking review the income property portfolio. And as you recall, some of our suggestion included but was just discussed looking to improve general line quality of the holding. Better focusing the portfolio and better describing special situation aspects to some of these holdings. Now all with your real goal is helping to make it more attractive to investors. So really we would like to know what steps have been taken since that meeting to implement those suggestions and really what the timing is where we can expect to see some changes.

Well, if you look at our presentation that we filed this morning, I think you would be pretty impressed with the quality of the portfolio. And I think as we discussed if you look at the page in there that compares our portfolio with peers, public market peers, and you'll see that our demographics in our portfolio are superior to those other companies. And that's, hey, Mark, what pages are those?

Pages 37, Steven are the demos and then page 38 is kind of snap shot of really the three leaders in their net lease space against start portfolio.

So if you look at that Steven that on page 38, so you look at our top credits, so Wells Fargo is our largest credit, that's AA minus, Hilton Grand Vacations is now public company BB plus and Whole Foods obviously looking to be acquired by Amazon. Amazon, A minus, Whole Foods is BBB minus and then Lowe's A credit and then LA Fitness, people that's kind of their ranking. And then if you look at some of our peers that have for instance Dollar Tree, Mister Car Wash and AMC and Camping World, I think you would probably conjecture that our portfolio is actually superior. So like we just answered David Corak, we are always looking to upgrade the portfolio over time which we have. We have recycled quite a bit of our portfolio since we got here. So but we've always looking to keep on doing that. So we just have to line up an acquisition before we can kind of continue recycle.

Okay. I think we shared our concerns that the ongoing plan really hasn't resonated with the investment community just based on the discount between Nav and share price is one of the factors. So just to encourage you to really evaluate what we had suggested at the meeting.

Okay, appreciate that, thank you.

The next question comes from Dan Geary of Samson Investment partners. Please go ahead.

Hey, guys. How are you? Congrats again on the good quarter and lot of progress you made at the -- a much greater company than it was a few years ago. So keep going with what you are doing. Just a general question on the housing market. Obviously, demand in Minto has been or interest in Minto has been very strong. But can you just kind of discuss what you are seeing in the housing market in Minto and outside of Minto?

Sure. It's a great story in that there is a lot of job growth going on in the city right now. A lot of economic activity whether is the university is expanding, private business is expanding, relocating like for instance the B Braun distribution facility under construction, that's 4,000 square feet. And there is going to be new jobs coming around the corner. And so that's why we are -- obviously Minto been the Latitude Margaritaville development going to be age-restricted, there is a big demand in those markets for primary housing. And so with ICI under construction with the 600 acres Bayberry Phase 2 is kind of what we call it, I think they are going to do very well. They should start selling homes here this fall and start delivering next year. So with Bayberry, with ICI delivering homes and Minto delivering homes next year, all that additional economic activities, those going to drive more housing demand. So that's the good news. The bad news is we only really have 1,000 acre residential site left. That's on SR40 so as all that demand is kind of strengthening we hope that would be kind of a positive result for that acreage. But, yes, it's a pretty good story that this market albeit a smaller market really has a lot of great things going on.

And does ICI have a timeframe for when they expect to spill out that 600 acres?

Yes. So in general what most people kind of pro forma, the home builders for a community of that size, I'd say it's probably going to be 10 to 15 units a months as far as selling. So call it 120 to 200 units a year possibly. And the one thing for instance on the Minto Margaritaville development. They expect to deliver the absorption over 300 homes a year and it's really about the construction constraints as far as labor, the amount of labor and sub contractors to do any more homes than that. That's really straining the capacity to deliver homes.

And that ladies and gentlemen, concludes our question-and-answer session. I'd now like to turn the conference back over to John Albright for any closing remarks.

Thank you very much for being on the call. And if you have any questions, please don't hesitate to call us directly. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines. Have a great day.