CTO-PA — CTO Realty Growth, Inc.

CTO Realty Growth Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Core FFO: $16.9 million, up from $14.4 million year-over-year; $0.52 per diluted share vs. $0.46.
• AFFO: $18.2 million, up from $15.5 million year-over-year; $0.56 per diluted share vs. $0.49.
• Same-Property NOI: Increased 6.8% year-over-year; 4.2% growth excluding nonrecurring items.
• Portfolio Occupancy: 95.4% leased at quarter-end; notable leasing activity contributed to this figure.
• Debt: Total debt of $651.8 million with a weighted average interest rate of 4.6%.
• Liquidity: Approximately $125 million available.

2. Strategic Updates and Business Highlights

• Acquisition: Acquired Palms Crossing, a 399,000 square foot shopping center in McAllen, Texas for $81.6 million, currently 98% leased.
• Leasing Activity: Executed leases totaling 153,000 square feet, with a 14% average cash rent increase. Notable leases included Williams Sonoma and Pottery Barn Kids.
• Outparcel Development: Progress on six outparcels with signed leases and ongoing negotiations expected to yield low double-digit returns.
• Property Recycling: Madison Yards in Atlanta is under contract for sale, expected to close in May, allowing for capital recycling into higher-yielding assets.

3. Forward Guidance and Outlook

• Core FFO Guidance: Increased to $2.06 to $2.11 per diluted share for 2026.
• AFFO Guidance: Increased to $2.19 to $2.24 per diluted share for 2026.
• Investment Volume: Expected structured investments between $175 million and $250 million, with same-property NOI growth projected at 3.5% to 4.5%.

4. Challenges and Points of Concern

• Vacancy Issues: Carolina Pavilion remains below 90% occupancy at 83%, with ongoing negotiations for remaining spaces.
• Tenant Vacancies: A previous tenant vacated 98,000 square feet at an Albuquerque property, impacting NOI despite future leasing plans.
• Market Uncertainty: Some concerns regarding macroeconomic factors affecting retailer hesitancy, although management reported no current pullback in leasing activity.

5. Notable Q&A Insights

• Investment Strategy: The new $75 million preferred equity investment at a 12% yield was funded through recycled capital from a previous investment and balance sheet resources.
• Leasing Pipeline: Management is optimistic about signing remaining leases for vacant anchor spaces, with terms agreed but timelines potentially extending due to the nature of negotiations.
• Market Dynamics: Increased competition from larger institutional investors in acquisitions is noted, but CTO aims to leverage its nimbleness in the market.
• Cap Rate Insights: Acquisitions are generally in the 7.5% to 8% range, while structured finance yields are around 10% to 13%.

Overall, CTO Realty Growth reported a strong start to 2026, with solid financial performance and strategic initiatives in place, though some challenges regarding occupancy and market conditions remain.