CTO Realty Growth Q2 Earnings Call Highlights

Key Points

• CTO Realty Growth reported strong second-quarter results, with Core FFO rising to $18.4 million, or $0.53 per share, from $14.7 million a year earlier. Shopping-center same-property NOI grew 10.1%, while portfolio occupancy increased to 95.4%.
• The company expanded its investment activity, acquiring a Dallas power center for $53.3 million and originating $96.4 million in preferred-equity investments. Its structured-investment portfolio reached approximately $222 million, with an average yield of about 11.5%, while leverage declined to 5.8 times adjusted EBITDA.
• CTO raised its 2026 outlook, increasing Core FFO guidance to $2.09–$2.13 per share and AFFO guidance to $2.21–$2.25. The revised forecast assumes $300 million–$400 million of investments and 5%–6% same-property NOI growth.

CTO Realty Growth NYSE: CTO reported higher second-quarter funds from operations and raised its full-year outlook, citing strong shopping-center leasing, same-property net operating income growth, acquisitions and structured investments.

Core FFO totaled $18.4 million, or $0.53 per diluted share, compared with $14.7 million, or $0.45 per share, in the prior-year quarter. Adjusted FFO was $19.1 million, or $0.55 per diluted share, versus $15.3 million, or $0.47 per share, a year earlier.

Chief Financial Officer Philip Mays said the gains were primarily driven by leases that commenced during the past year, as well as contributions from acquisitions and structured investments.

Leasing and Same-Property Growth

The company completed 25 new leases, renewals and extensions encompassing 213,000 square feet during the quarter. Comparable leases accounted for 184,000 square feet and carried a positive cash rent spread of 6%. Through the first half of 2026, CTO completed 366,000 square feet of leasing, including 330,000 square feet of comparable leases at a 10% cash rent spread.

At quarter-end, the portfolio was 95.4% leased, up 150 basis points from a year earlier. The difference between leased and occupied space was 400 basis points, while the signed-but-not-open pipeline represented $6.3 million, or about 5.8% of annual in-place cash base rent.

President and Chief Executive Officer John Albright said the pipeline provides a visible earnings tailwind as tenants take possession and begin paying rent through the remainder of 2026 and into 2027. Mays said roughly $400,000 of base rent is expected to come online in the third quarter, followed by approximately $800,000 to $1 million in the fourth quarter. More than 90% of the pipeline is expected to be online thereafter, with the contribution relatively even during 2027.

Shopping-center same-property NOI increased 10.1% year over year in the second quarter and 8.2% for the first six months. Excluding certain non-recurring recovery benefits recorded in the first quarter, year-to-date growth was 7%.

Mays said the first-half performance benefited from new anchor openings, including Onelife Fitness at Beaver Creek, Barnes & Noble at The Plaza at Rockwall and The Picklr at The Collection at Forsyth. He said same-store growth is expected to moderate in the second half as these rents begin to enter year-earlier comparisons and as the company laps unusually low bad-debt expense in the third quarter of 2025.

Investments, Dispositions and Development

During the quarter, CTO acquired Gallery on the Parkway, a fully occupied 152,000-square-foot open-air power center in Dallas, for $53.3 million. The property is anchored by Dick’s House of Sport, Nordstrom Rack, Cost Plus World Market and Portillo’s.

Albright said the asset’s location near the Dallas North Tollway, north of the Galleria area and near the proposed Dallas Mavericks arena and entertainment district made it attractive. He also noted that the company could potentially sell a pad site, though it does not intend to do so.

Year to date, CTO completed $234.2 million of investments at a weighted average yield of 9.5%. The company also disposed of $90.7 million of properties during the quarter at a weighted average exit capitalization rate of 6.7%, including Madison Yards in Atlanta and Granada Plaza in Tampa.

Albright said the Atlanta sale helped reduce the company’s exposure to its largest market, eliminated an AMC theater tenancy that investors had raised as an issue, and allowed capital to be recycled into higher-yielding opportunities.

The company expects the State of New Mexico to occupy approximately 98,000 square feet at its Albuquerque office property this fall, returning the asset to full occupancy. CTO is preparing to market the property for sale and expects a transaction at the end of 2026 or in early 2027. Albright described the Albuquerque asset as the company’s last non-core property slated for sale.

CTO is also under contract to sell a 76,500-square-foot portion of Carolina Pavilion in Charlotte to a national retailer. The space includes two vacant former anchor boxes. Management said that, assuming the sale closes and remaining negotiations are completed, it expects approximately a 75% positive lease spread across nine anchor spaces, potentially rising toward 80% after the final box is resolved.

Structured Investments and Balance Sheet

CTO originated two preferred-equity investments totaling $96.4 million during the quarter: a $75 million investment in a Class A retail property in the Southwest with a 12% initial cash yield and two-year term, and a $21.4 million investment in a grocery-anchored Northeast development with a 12% initial yield, including paid-in-kind interest, and an 18-month term.

After quarter-end, the company originated a $37 million first-mortgage investment secured by a leasehold interest in a mixed-use Austin property, with $29.8 million funded at closing. The investment carries a 9.75% initial cash yield and two-year term.

Including that transaction, CTO’s pro forma structured-investment portfolio stood at approximately $222 million, or about 15% of undepreciated assets, with a weighted average yield of roughly 11.5%.

Total debt was $660.8 million at June 30, with a weighted average interest rate of 4.6%. Liquidity totaled $131.8 million, including $107 million available under the revolving credit facility. Net debt to pro forma adjusted EBITDA was 5.8 times, down 0.6 turns from the end of the first quarter.

During the quarter, CTO issued approximately 4.2 million shares through its at-the-market program, generating $83.6 million in net proceeds. Mays said the equity issuance, dispositions and structured-investment repayments funded investment activity while reducing leverage.

Raised 2026 Outlook

CTO raised its 2026 Core FFO guidance to $2.09 to $2.13 per diluted share from $2.06 to $2.11 previously. It increased AFFO guidance to $2.21 to $2.25 per share from $2.19 to $2.24.

The updated outlook assumes $300 million to $400 million of investment volume, up from $175 million to $250 million, and shopping-center same-property NOI growth of 5% to 6%, compared with prior guidance of 3.5% to 4.5%. The company said it expects to close at least one additional acquisition before year-end.

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.