CTO — 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.
• Core FFO per diluted share: $0.52, compared to $0.46 in Q1 2025.
• AFFO: $18.2 million, an increase from $15.5 million year-over-year.
• AFFO per diluted share: $0.56, compared to $0.49 in Q1 2025.
• Same-property NOI growth: 6.8% year-over-year; excluding nonrecurring items, growth was 4.2%.
• Portfolio leased occupancy: 95.4% at quarter-end.
• Signed-Not-Open pipeline: $6.2 million in annual cash base rent, representing approximately 5.5% of in-place annual cash base rent.

2. Strategic Updates and Business Highlights:

• Acquisition: CTO acquired Palms Crossing, a 399,000 square foot shopping center in McAllen, Texas, for $81.6 million, which is 98% leased and expected to enhance earnings.
• Leasing Activity: Executed leases totaling 153,000 square feet, with an average cash rent increase of 14%. Notable leases included Williams Sonoma and Pottery Barn Kids.
• Outparcel Development: Progress on six outparcels, with expectations for low double-digit unlevered yields on a $30 million investment, contributing to earnings starting in 2027.
• 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:

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

4. Bad News, Challenges, or Points of Concern:

• Vacancy Issues: Carolina Pavilion remains below 90% leased at 83%, although negotiations are ongoing for remaining vacancies.
• Tenant Vacancies: The previous tenant at Albuquerque vacated 98,000 square feet, impacting same-property NOI despite being fully leased to the state of New Mexico for future rent.
• Market Uncertainty: Some concerns about macroeconomic factors affecting retail leasing, though management indicated no current hesitancy from retailers in signing leases.

5. Notable Q&A Insights:

• Investment Strategy: The $75 million preferred equity investment was funded by recycling the Watters Creek investment and utilizing the balance sheet for the remaining amount.
• Leasing Pipeline: Progress on leasing vacant anchor spaces is ongoing, with terms agreed but slow-moving due to large national tenants.
• Structured Investments Cap: Management indicated a likely cap on structured investments around 15% of the balance sheet.
• Market Dynamics: Competitive pressures from larger institutional buyers are noted, making acquisitions more challenging but providing opportunities for capital recycling.

Overall, CTO Realty Growth demonstrated strong financial performance in Q1 2026, with a focus on strategic acquisitions and leasing activities, while also navigating challenges related to vacancies and market conditions. The raised guidance reflects confidence in continued growth despite potential headwinds.