Good morning, and welcome to Consolidated-Tomoka's Second Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to John Albright. Please go ahead.

Thank you, operator. Good morning, and welcome to today's conference call to review the operating results of Consolidated-Tomoka Land Company for the quarter ended June 30. My name is John Albright, President and CEO of the company. On the call with me 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 the 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 law. 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 issued last night. Also, we filed our Q2 2018 investor presentation last night, which is now available on our website. Our investor presentation provides additional information you may find useful and that we may reference during this call. With that, I’ll turn the call back over to John.

Thanks Mark. We’re pleased with our second quarter results, particularly with the progress we made related to our land holdings. During the quarter, we completed transactions representing more than 2,500 acres of our land highlighted by the completion of the sale of a 70% in our mitigation bank joint venture with BlackRock that holds approximately 2,500 acres of land for total proceeds of $15.3 million. We also completed three other land transactions involving approximately 32 acres and resulting in proceeds of approximately 1.7 million, an average of nearly 53,000 per acre. We also completed three other land transactions involving approximately 32 acres and resulting in proceeds of approximately 1.7 million, an average of nearly 53,000 per acre. In addition, we added to our pipeline of potential land sales. Our pipeline now has 17 contracts representing the potential sale of approximately 4,290 acres or approximately 78% of our remaining land holdings with total potential proceeds of more than 179 million reflecting an average price per acre of approximately 42,000 per acre. So, another point to consider is that the company has only 1,200 acres of land that is not under contract. While there is a lot of things that need to happen to close on those 17 contracts we are thrilled to be in this position and remain upbeat about the opportunity to further advance our strategy of monetizing our land and converting those proceeds into income from a primarily single tenant net lease portfolio of properties. I’m going to turn it over to Mark to highlight a few elements of our second quarter operating results.

Thanks John. As John mentioned, we had a solid second quarter. As our release highlighted, we achieved net income of $2.56 per share on revenues of nearly $14 million, and our operating income came in at more than $21 million. Our highlights for the quarter include the land transactions John mentioned, and the continued growth in revenue from our income property operations. Our income property operations revenue and net operating income from this segment grew by approximately $2.2 million and approximately $1.8 million respectively over the same quarter in 2017, basically a 30% increase of both. I also wanted to highlight one aspect of the mitigation bank transaction. As John noted, this transaction was structured as the sale of a 70% interest in the entity that holds the approximately 2,500 acres of land that makes up the mitigation bank. While the transaction effectively represents the disposition of 25 acres of our land holdings, based on the structure we presented the results of this transaction as a gain on the disposition of assets rather than our land sale within our real estate operations revenue. The gain we recognized is comprised of two components, approximately $1.96 per share from the sale of the 70% interest in the mitigation bank venture and approximately $0.53 per share from the gain on the retained interest. We had a good quarter for our share buyback program investing approximately $2.2 million to repurchase nearly 37,000 shares, that’s an average price of $59.57 a share. In addition, our board approved an increase to the buyback program we currently have in place putting the total buyback program back up to $10 million. We also finished the quarter on a strong liquidity position with approximately $4.3 million in cash at more than $99 million of capacity on our credit facility.…

That concludes our prepared remarks. At this time, we’ll open it up for questions. Operator?

Thank you. [Operator Instructions] And our first question comes from Matt Boone with B. Riley FBR. Please go ahead.

Good morning guys. Regarding the sale of mitigation bank, in the press release you had said that you guys are required to meet certain conditions within 160 days following the closing of the transaction, what are those conditions and what is the update there in terms of meeting those conditions?

Hi Matt good morning. Thanks for that question. Actually, the good news was the conditions were completed prior to June 30, which is why we recognized it in the quarter, and they really had to do with getting the permit from the state and the number of credits, the amount of credits that were awarded and then a couple of other almost administrative elements.

Okay, great. And then turning to the acquisition front, can you give us an idea of what kind of opportunities you are currently seeing in the market and then if you have identified any particular properties thus far in 3Q 2018?

Matt, this is John. Yes, we have been very busy chasing a lot of different opportunities. We feel very pretty good that what we are seeing is something that we can execute on that is going to be reflective of our goals for the year. So, it’s a challenging market with a lot of capital out there for higher quality assets as you know, but we feel very pretty good that we're going to be able to find some things to acquire here.

Okay. So, it is fair to assume that you all will be pretty active in the back half of 2018 just given where your guidance range is? Okay.

Right.

And then, going off of that, you upped the buyback back to 10 million how are you guys viewing, you know acting on the buyback versus any potential acquisitions?

Well basically it is kind of a dual course of action here of buying back shares when it is an opportunistic pricing and as you can see we have been active and we upped it. So, it is not an either or, we can do both and we will if those opportunities present themselves.

Okay, thanks. And then turning to The Grove at Winter Park. Has that reached stabilization or where is occupancy there just kind of like an overall update would be great?

Yeah, so the good news is that Wawa is under construction now. They've gone vertical. They plan to be open by November. That has created a kind of a more velocity on the leasing side in the last couple of months. So, the amount of transactions we’re seeing we feel very confident that we’ll be at stabilization by the end of the year on that property. We'll be in kind of in, I would say, kind of 80's type occupancy at the end of the year.

Okay, thanks. And then looking at your golf operations, you guys transitioned to Arcis Golf last quarter, can you give an update on what kind of impact that has had thus far?

You know what, the impact is really, I think been positive. It just isn’t showing up yet in the results. Unfortunately, in the second quarter we had an unusual weather sort of experience in terms of rain in the morning rather than rain in the afternoon and the amount of rain was up 17 inches over the year ago. So, it’s been a little bit rough in that regard, but in terms of their activity and otherwise how they are approaching them – the management it has been very favorable.

Okay. And last one from me is, has there been any change to your thought process on the potential reconversion, I know previously you’ve talked about wanting to be up to 80% of land disposed and you have 78% under contract now. I was just curious, is it still kind of the plan to maybe pursue that later on or how has that thought process changed since last quarter?

Yes, let’s say there hasn't been a change of thought process. We still think that makes sense once significant portion of the land on a contract has been closed and we’ve made that transition from that closing into income properties. So, we’re really focused on execution of getting the land closed, and so I think they kind of obviously first, second quarter next year and maybe be a good time to really revisit it, but right now we're just focused on getting these land contracts to a closing. So, I think next year would definitely be a time to think about that harder once these deals are closed.

Got it. Thank you. That’s all from me.

Thanks Matt.

[Operator Instructions] And our next question comes from Steve Olsen, a Private Investor. Please go ahead.

Good morning. Thanks for taking my questions. I have a few, I’ll try to be quick. On the NAV worksheet, the 187-acre track east – on Williamson, east between LPGA and Strickland, that value increased rather significantly, can you share some details on that track of land?

Sure Steve. So, you know that track of land is a little bit tricky and that it has a lot of wetlands associated with it. So, the ultimate value of that track really is dependent on certain uses in certain locations where you can mitigate wetlands. So that – so you see the valuation range we have is fairly wide because it’s kind of to be determined on certain parts of that track, you know how that gets developed, but the good news is, we’ve had fair amount of interest in that parcel and so that’s why we’re reflecting some changes there. So, hopefully by the end of the year we will have more kind of transparency on whether we have a group that’s interested in buying and developing or not, but it is safe to say that is an infill site. It has many different uses. It could be partial, commercial, multifamily, residential, industrial and so even medical. So, there are a lot of moving parts and we’re talking with the various different groups on that site.

Okay. Great. On the landfill pipeline, the Daytona West, I guess, it is the 850-acre O'Connor parcel, I was really pleased to see that that went under contract. I had always thought that had a longer holding period. I don't think you get deposits, are there certain obligations that the contract purchaser gets to perform certain tasks to continue to proceed whether or not it's wetland studying or getting approvals and – over the next year or two?

Yes. So, as you know a lot of our contracts don't have large deposits because they're in raw land format and unentitled. And the real value creation opportunity for us, if a group doesn't actually buy a piece of property is that they take it through entitlements. So, the group that has it on a contract is spending hundreds of thousands of dollars on various engineers, planning, consultants, traffic studies and so that’s the real value that they are investing in this contract and if they decide that doesn't work for them then we get all that kind of those studies that we could use for somebody else. So, they are working very hard on it, and doing a lot of work and they will encourage from what they see so far, but we will know more in months to come.

Okay. I was pleased with the buyback activity in the quarter. And I guess at that pace of a little bit over 2 million, if you look at your cash and observation from your cash flow chart where you are anticipating 10.5 million of net operating cash flow, if you continue that pace combined with your dividend, you know that would result in the company returning to shareholders about 100% of the upgrading cash flow, which I think is reasonable and depending upon other investment opportunities, probably appropriate. Is that an accurate observation?

Yes. I mean that’s accurate. Obviously, the stock price has gotten weak recently, not a lot of volume. Certainly, you have seen that the buyback program has kicked in and been successful. You know it’s interesting to note that the stock price is lower than before the federal government lowered the tax rate for corporations. So – and we have had a fair amount of land closings. So, as we have had land closings, the mitigation bank, you know $15 million basically are going from land into the income segment, you know you think of that as kind of a deleveraging event as we reap those sort of proceeds. So, yes, the return of capital through a dividend stock buyback is an accurate assumption that we are still successful on the rest of the program.

And I guess on acquisitions and what you have as your goal or guidance for this year and where you are today you just continue the rigorous due diligence and don't let the goals impact or sacrifice the rigor in your analysis, because I imagine, you don't have – where are you as far as 231 exchange transactions, you probably need to close more land, you're not obligated to make any investments within any certain period of time, are you, currently?

No, not currently. You’re right, Steve. Basically, the mitigation transaction and the other land transactions for the most part were reversed into the Aspen deal, and so yes, when you see that we don't have a lot of restricted cash it really means that we don't have our 10:31 o'clock kind of ticking.

Okay. I am sure the board would understand and appreciate making fewer investments, if management believes the opportunities are limited. Well, thanks and good luck.

Thank you. Appreciate it.

This concludes our question-and-answer session. I like to turn the conference back over to John Albright for any closing remarks.

Thank you for dialing in and we look forward to talking to you throughout the quarter. Thank you.