Good day. And welcome to the Consolidated-Tomoka First Quarter 2019 Earnings Call. All participants will be in listen-only mode [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Mr. John Albright, President and CEO. 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 first quarter ended March 31, 2019. 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. I'll turn it over to Mark to provide you with customary disclosures regarding our comments on this call today.

Thanks, John. Good morning, everyone. During our call today, we may make certain statements that may be considered to be forward-looking statements under Federal Securities law. 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 first quarter 2019 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 refer to reference during this call. With that, I'll turn it back over to John.

Thanks Mark. At this time, we'll open it up for questions. Operator?

We will now begin the question-and-answer session [Operator Instructions]. And our first question comes from Craig Kucera of B. Riley FBR. Please go ahead.

Thanks, good morning guys. I had a few questions I wanted to go through. First, your top line rental revenue was down about 9% from the fourth quarter. I know you had the disposition of Whole Foods. But were there any other changes in occupancy or accounting adjustments from the fourth quarter to the first quarter?

No. I think I'll check on that. But actually, we're up 16% year-over-year. And I think on the Whole Foods, we wouldn't have any other reason we'd be off.

I wanted to circle back to the O'Connor parcel. Can you provide some color on why they elected to terminate that agreement?

We put the property under contract with O'Connor some time ago, and gave them plenty of time to go through their entitlements and to work out a site plan, and to talk with tenants and other users. And they did get the site rezoned, which is very beneficial to us. But they wanted more time and we -- given the amount of time we've already given them, we didn't see that they would -- we weren't confident that they would execute under a time line that was acceptable to us. And there're ready, willing and able tenants to go on the site, and we decided that the best course of action to get the best value for us in acceptable timeframe is just really to do it ourselves. And so we're in the process of moving forward on that project and I'm sure along the way, there will be developers for different interests that will want to buy sites from us, there already have been people inquiring. But the tenants are ready, they just -- because O'Connor hadn't bought the site, they weren't sure whether O'Connor would go ahead. So they're being very tentative. So for us to step in and say we'll be the master developer here is very beneficial to move forward the tenant interest. And we'll do ground leases and put them into our portfolio and just move forward. So it's really us saying that the market is great for this site right now and rather risking it with another developer, we decided to step up and move forward.

So are you basically saying that, I think this is a 203 acre parcel that you're going to effectively develop the entire piece of land, or are you also looking to sell pieces off as you kind of move down the path?

I think it's safe to say that we will start with the site that makes the most sense on with the retail interest. And along the way people will come looking to buy the other parts of the property that would probably be most accessible or of use for multifamily and office and industrial. We've already filled it those types of interest. So I'm highly confident that along the way as we activate the first section of it that other people are going to come in and want to buy other pieces of it. So we will -- I doubt very seriously that we would develop all 200 acres.

And the piece that you're looking at developing is that predominantly going to be single-tenant type of assets, which you might hang on to, or would you expect that they might be assets that you dispose but some point in the future when it completes?

I think a lot of the low-hanging fruit will be assets that we would like to have in our single-tenant portfolio. But I'm sure once we get going on it that we will develop some of the small shop spaces that we would at some time monetize that. But a lot of the tenant interest would be work very well in our portfolio.

I know the land transactions from a timing perspective are tough to gauge. But do you anticipate closing anything in the second quarter outside of the NADG contract?

I would say that there is a good possibility. But given that things have taken longer and in the entitlement process and so forth that things have been slipping. But there is probably a possibility but it would be more small tickets type of the land transactions nothing of a size.

And given your availability on the line of credit, would you be acquiring, may be in advance of selling land here as we move through second quarter and the back half of the year, and levering up or are you looking more to match fund things as you progress through the year?

Yes, I think you will see us being more active on the acquisition front. So it might be levering up a bit in advance of some of these transactions. But the timing between the acquisition and some funding mechanism whether it'd be a land sale or a multi-tenant sale would only be couple of months.

And going to the balance sheet, you have the convertible debt issue coming due in less than a year now. Can you give us some color about what you're contemplating as far as refinancing matter considering matters accountable to balance sheet?

So, we're definitely going to position ourselves to take the convert out with our cash and maturity. So that's the way we're positioning ourselves. But obviously, we have little bit of time left to consider that almost a year or so. So we'll be in great shape to take care of that instrument.

Has there been any indication of interest as you're marketing the Golf and subsurface rights here in this year?

Yes, I would say we're very pleasantly pleased with the interest on the Golf side. So I'm pretty optimistic that Golf will be transacting this year and probably not the end of the year, may be in even third quarter. But it is a large parcel it has to be coming debt survey, so it's that sort of thing. A new survey is going to take some time but we're pleasantly surprised on the interest. So we're optimistic there. On subsurface, we have had some recent inquiries on that. So nothing, I would say, I wouldn't expect anything anytime soon but Carriage has been fairly successful in moving their drilling permit through the state, even though it’s taken a long time, they've diligently pursued it. And so we’re optimistic that at some point here this summer that perhaps they'll be for drilling, exploring for oil on their lease and we'll see what happens there.

And one more for me and I'll hop back in the queue. Given your commentary on just entitlements taking longer than maybe perhaps you'd expected, and the land sales pipeline has gotten smaller certainly than where it was in the back half of last year. Do you need to see a real material pickup in land sales to potentially go through a reconversion in 2020? Or do you see the balance sheet more or less being close enough at that point in time for that to possibly be on the horizon in early 2020?

I would say that, given that we really want to optimize the company for that possible conversion that you're getting the land as fully addressed as possible. It just makes us much more of a cleaner story and more of a peer story versus trying to convert to a REIT early, and just having the same story as far as the mixed assets in the company. So I don't think there's any rush to do a reconversion without having address the land more fully. So given that our federal tax payments are still de minimus, probably more reflective of making that decision when the tax payments are that, it is a burden on our shareholders. And so since we're in a C-corp structure and we're able to retain cash flow, we like that optionality. And so I think once the land is more fully addressed then that would be when we take up that opportunity.

[Operator Instructions] And our next question will come from Steve Olson [ph], a Private Investor. Please go ahead.

The investor presentation, I noticed did not include the expected cash flow. Last presentation had about $18 million as the operating cash flow. Is that still the expected amount for this calendar year?

Yes, we just didn't -- the first quarter standing on its own we didn’t include it in there but that's still our expectation to be in that range.

And regarding the land owned by the company within opportunity zone areas and I'm not speaking about the downtown land. But is our opportunity most likely to sell those lands to someone else to develop, or may we develop the lands or create joint ventures, could the tax advantages be beneficial to CTO?

We're open to both structure, but it has been more that there have been opportunity zone of funded investors who were looking for site. And so for instance, the Unicorp putting back under contract 13 acres to Clyde Morris and LPGA is really being driven by op-zone investor. And so we are open to looking at it on in both manners, if you will. So if there is somebody here that wants to buy our property at good price, we'll go ahead and transact that. And at the same notion if there is a tenant demand for parcel, and it's in op-zone, we're certainly open to creating our own op-zone investment and taking advantage of it that way.

I appreciate your update on the Golf and subsurface. Is there any other updates on the selling of the multi-tenant buildings?

I think you will see some more activity from us this year. And I just -- we just don't want to be in a position to announce something before something happen. So I think you will see more activity there.

And just I did notice that there is a tight range on the additional gains on dispositions, yet there is a wide range on the sales value that seem to indicate that some of the sales are not going to result in either much gain or loss. Am I thinking about that correctly?

I will let Mark address it. But we're just trying to be very conservative in giving a wide range there, because we're not trying to pin point exactly the value of what's going to transact or may transact. And so, we don't want us to be in a position where something happens, something that's found out that traded in a less than a pin point price that we gave you, so just trying to be conservative in our expectations. Is that fair, Mark?

That's absolutely right.

And is there any update on any activities regarding any of the income properties that offer redevelopment opportunities? And I guess I'm thinking about Monterey or the Reno, or even the CBS in Dallas, if you can comment on?

Sure. I don't want to comment -- I won't comment specifically on one of those three, but there are opportunities in that three that you mentioned, but don't want to comment on which one. But we're actively looking at something that might be value creating for us. And then I would say that there is tenant interest to stay in those locations as well. And I know that's a little opaque but I can't really talk specifically.

Okay, thank you. And good luck with everything. And the O'Connor, I appreciate the additional description of the opportunities with the O'Connor track, that seems like a tremendous opportunity for the company to add value to doing some of its own development or retaining some of the tracks.

Thanks, Steve.

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

Thank you very much for attending the call. And look forward to seeing some of you at the Annual Meeting next week. Thank you.

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