CTO Realty Growth NYSE: CTO reported first-quarter 2026 results marked by higher funds from operations, solid same-property net operating income growth at its shopping centers, and continued portfolio activity spanning acquisitions, dispositions, leasing and structured investments.
Leasing results and portfolio occupancy
President and CEO John Albright said the company began the year with “a strong quarter,” citing “robust leasing and strong same-store NOI growth.” During the quarter, CTO executed leases, renewals and extensions totaling 153,000 square feet, including 146,000 square feet of comparable leases at an average cash rent increase of 14%.
Albright highlighted leasing momentum at Millenia Crossing in Orlando, where the company signed Williams-Sonoma for a former Mattress Firm space. He added that just after quarter-end, CTO signed Pottery Barn Kids for space that had been vacant since acquisition. Combined, the leasing increased Millenia Crossing to 97% leased, according to Albright.
At quarter-end, CTO’s portfolio was 95.4% leased. Albright said the company’s only shopping center with leased occupancy below 90% was Carolina Pavilion at 83%, noting the company is “in active negotiations with tenants for all the remaining vacancy.”
CTO also discussed progress on outparcel development opportunities. Albright said the company signed a lease with Swig for a drive-through beverage store at Marketplace at Seminole Towne Center in Orlando, and signed a lease after quarter-end with Cooper’s Hawk at Ashley Park in the Atlanta market. The company has LOIs or active lease negotiations for the remaining four outparcels. Albright said CTO continues to expect the six outparcels to generate a low double-digit unlevered yield on about $30 million of investment, with capital “primarily” deployed and contributing to earnings in 2027 and the “full benefit” recognized in 2028.
Signed-but-not-open leases totaled $6.2 million of annual cash base rent, which Albright said represents about 5.5% of in-place annual cash base rent. He said the pipeline should provide “a meaningful earnings tailwind” through 2026 and into 2027.
Same-property NOI and operating performance
For the quarter, same-property NOI for shopping centers increased 6.8% year over year. Albright and CFO Philip Mays both noted that excluding certain non-recurring items, same-property NOI for shopping centers increased 4.2%.
Mays said the quarter included roughly $0.01 per share of “non-recurring recovery benefits from final 2025 CAM, real estate taxes, and insurance billings to tenants recorded in this quarter.” He also cautioned that with the company’s same-property NOI base, “$200,000 impacts quarterly growth by approximately 100 basis points,” which can cause unusual items to skew quarterly comparisons.
Total same-property NOI, including non-core properties, increased 3.4%. Mays said results were impacted by a previously disclosed vacancy of 98,000 square feet at the company’s Albuquerque property at the beginning of December 2025, which “more than offset” the non-recurring recovery benefits. He said the space has been fully leased to the State of New Mexico and is expected to commence paying rent in late 2026.
Acquisitions, dispositions and capital recycling
During the quarter, CTO acquired Palms Crossing, a 399,000-square-foot open-air shopping center in McAllen, Texas, for $81.6 million. Albright said the center is anchored by Best Buy, Hobby Lobby, Burlington, Barnes & Noble, and Nike, and was 98% leased at acquisition. He also pointed to “strong cross-border shopping” as a demand driver and said the property offers the opportunity to build two additional outparcels beyond the six previously discussed.
With the acquisition, Albright said Texas became CTO’s third-largest state by annual base rent, and the combined contribution from Georgia, Florida, North Carolina, and Texas rose to 85% of total annual base rent.
On the disposition side, Albright said Madison Yards in Atlanta is under contract with a nonrefundable deposit and is expected to close in May. He said Madison Yards is 99% leased, and the sale is expected to reduce the company’s AMC Theatres exposure to two locations that are “both high performing.” In response to an analyst question about cap rate, Albright said the implied cap rate is “a little higher” than 6% “because of the AMC Theatres.”
Mays clarified that the company did not include a disposition volume assumption in its guidance and said Madison Yards is “the only near-term and planned disposition” at this time.
Structured investments and balance sheet
CTO received full repayment of its 9.5% $30 million preferred investment in Watters Creek Village during the quarter. Albright said the repayment was expected and represented the only structured investment scheduled to mature in 2026.
After quarter-end, the company completed a $75 million preferred equity investment in a Class A “premier retail property” located in the Southwest. Albright said the preferred investment yields 12% and has a two-year term. He said the transaction increased the structured investment portfolio by $45 million to $158 million subsequent to quarter-end, with a weighted average yield of 11.6%.
Asked about funding, Albright said the preferred investment was completed “one closing,” with Watters Creek proceeds recycled into it, and that the company would “use the balance sheet for the balance of it.”
Albright also addressed portfolio limits for structured investments, saying the company’s cap would “most likely” be below 20% and “maybe more in line with the 15%.”
As of March 31, CTO had total debt of $651.8 million with a weighted average interest rate of 4.6%. Mays said the company ended the quarter with approximately $125 million of liquidity and leverage of 6.4x net debt to pro forma adjusted EBITDA, consistent with year-end 2025.
During the quarter, CTO used its common ATM program to issue about 733,900 shares at an average price of $19.59 per share, generating $14.2 million of net proceeds. Mays said the ATM proceeds, combined with the Watters Creek repayment and higher NOI, helped the company maintain leverage even with the Palms Crossing acquisition.
Earnings and raised 2026 guidance
For the first quarter, Core FFO was $16.9 million, up from $14.4 million in the prior-year period. On a diluted share basis, Core FFO was $0.52 per share versus $0.46 per share. AFFO was $18.2 million, up from $15.5 million, or $0.56 per diluted share versus $0.49 per share.
Mays said growth in Core FFO and AFFO was primarily driven by leases executed over the past year that have commenced paying rent, though results also included the non-recurring recovery benefits recorded in the quarter.
For full-year 2026, CTO raised its outlook ranges:
- Core FFO: $2.06 to $2.11 per diluted share
- AFFO: $2.19 to $2.24 per diluted share
Mays said guidance assumptions include structured investments of $175 million to $250 million, shopping center same-property NOI growth of 3.5% to 4.5%, and general and administrative expenses of $19.7 million to $20.2 million.
In Q&A, Albright said the company has a small structured investment it is working on that could happen within about 30 days, and that it expects to be “more active” on acquisitions in the next four months as some potential opportunities are prepared for market. Mays added that completing the small structured investment would put CTO around the low end of the structured investment guidance range, while completing larger acquisitions could push results toward the high end.
On leasing conditions, Albright said the company has seen “no hesitancy” and “no pullback whatsoever” from retailers in pushing deals forward, and noted no notable changes to the company’s watch list beyond issues that tend to be concentrated among smaller tenants and some restaurant-oriented tenants.
About CTO Realty Growth NYSE: CTO
CTO Realty Growth, Inc is a publicly traded real estate investment trust (REIT) that specializes in single-tenant net lease properties. The company's primary focus is on acquiring, owning and managing retail assets leased to creditworthy operators under long-term, triple-net lease agreements. By targeting essential retail segments, CTO Realty Growth seeks to generate stable, inflation-protected income streams while maintaining a disciplined investment approach.
The REIT's portfolio is concentrated in convenience store and fuel service locations, with additional assets in other retail categories where net lease structures prevail.
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