CTO-PA — CTO Realty Growth, Inc.

Summary of CTO Realty Growth Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Core FFO: $15.6 million for the quarter, up from $12.6 million year-over-year. Core FFO per share decreased slightly to $0.48 from $0.50.
• Same-Property NOI: Increased by 2.3% driven by leasing activity.
• Net Debt to EBITDA: Improved to 6.7x from 6.9x in the previous quarter.
• Liquidity: Approximately $170 million, including $161 million available under a revolving credit facility.
• Stock Repurchase: $9.3 million of common stock repurchased at an average price of $16.27 per share.

2. Strategic Updates and Business Highlights

• Leasing Activity: Year-to-date leasing activity reached 482,000 square feet, with a weighted average base rent spread of 21.7%. In Q3 alone, 143,000 square feet of new leases were executed at an average base rent of $23 per square foot.
• Shops at Legacy: Significant leasing progress, including a 30,000 square foot lease with a co-working operator and a 20,000 square foot private members-only club, bringing the lease percentage to approximately 85%.
• Acquisition Plans: Agreement to acquire a shopping center in South Florida, expected to close before year-end, with an attractive initial yield and potential for value creation.
• Anchor Space Leasing: Six out of ten vacant anchor spaces have been leased, with expectations of achieving a positive cash leasing spread of 40% to 60%.

3. Forward Guidance and Outlook

• Revised Guidance: Core FFO guidance raised to $1.84 to $1.87 per diluted share (previously $1.80 to $1.86) and AFFO guidance increased to $1.96 to $1.99 per diluted share (previously $1.93 to $1.98).
• Revenue Recognition: Approximately $4 million of the $5.5 million signed-not-open pipeline expected to be recognized in 2026, with full recognition in 2027.

4. Bad News, Challenges, or Points of Concern

• Vacancies: A notable 40,000 square foot vacancy at Carolina Pavilion remains a challenge, with ongoing negotiations for potential tenants facing delays.
• Nonrecurring Costs: Nonrecurring items increased to $0.5 million this quarter, which is higher than the typical range of $100,000 to $300,000.
• Tenant Improvements: Higher tenant improvement allowances this quarter may indicate increased costs associated with new leases.

5. Notable Q&A Insights

• Debt Management: The acquisition in Florida will be temporarily funded through the line of credit, with plans to recycle assets to manage debt levels effectively.
• Leasing Expectations: No significant risks anticipated for lease renewals in Q4, with most tenants expected to renew at higher market rates.
• Capital Allocation: The company is focused on share buybacks due to the current stock price being below market value, while also considering potential investments in structured finance.
• Future Acquisitions: The company is actively looking for additional acquisition opportunities but is cautious about the competitive landscape and timing.

Overall, CTO Realty Growth reported strong operational performance with positive leasing activity and improved financial metrics, while also facing challenges with certain vacancies and nonrecurring costs. The company remains optimistic about future growth and strategic acquisitions.