CTO Realty Growth Q3 Earnings Call Highlights

Key Points

• Core FFO rose 10.4% year over year to $0.53 per share in Q3, while CTO raised 2026 Core FFO guidance to $2.11–$2.14 per share, implying roughly 14% growth at the midpoint.
• Leasing momentum remained strong, with 467,000 square feet signed during the quarter and comparable cash rent spreads of 7%; excluding the newly acquired Zona Rosa property, leased occupancy increased to 95.7%.
• CTO expanded its portfolio through the $63 million Zona Rosa acquisition and the $103 million Summit Woods Crossing acquisition, while strengthening liquidity with a new $1 billion unsecured credit facility and reducing net leverage to 5.9 times adjusted EBITDA.

CTO Realty Growth NYSE: CTO reported higher third-quarter Core FFO and raised its full-year outlook after expanding leasing activity, completing investments and adding two Kansas City shopping centers to its portfolio.

Core funds from operations rose 10.4% year over year to $0.53 per diluted share in the third quarter, while year-to-date Core FFO increased 13.8% to $1.57 per share. President and Chief Executive Officer John Albright said the company signed 467,000 square feet of leases during the quarter and completed $102.3 million of investments at a weighted average yield of 9.4%.

“The third quarter was very productive for CTO as we continued our strong leasing and investment momentum,” Albright said. He added that activity during and shortly after the quarter led the company to raise its 2026 Core FFO guidance.

Leasing Progress and Occupancy

Comparable leasing activity totaled 396,000 square feet during the third quarter at a 7% cash rent spread. For the first nine months of 2026, comparable leasing totaled 726,000 square feet at a 9% cash rent spread.

The company said it has now addressed all 11 anchor spaces that had been vacated. Nine of those spaces were re-leased at approximately 70% positive spreads, while the remaining two are under contract to be sold to a national retailer for $20.7 million, with closing expected in the fourth quarter.

Among the quarter’s leasing highlights, CTO signed a 55,000-square-foot lease with Crunch Fitness at Crossroads Town Center in Phoenix to replace Harkins Theatres. Harkins’ existing lease runs through late 2028, but CTO negotiated an early termination right. The company expects approximately 12 months of downtime between Harkins’ planned early-2027 departure and the expected 2028 start of Crunch Fitness’ lease.

After the quarter ended, Amped Fitness agreed to expand by 19,000 square feet at Pompano Citi Centre, bringing its total footprint there to 53,000 square feet. An Amped affiliate also leased 56,000 square feet of previously unfinished second-floor shell space for research, development, testing and office operations. The lease will increase Pompano Citi Centre’s total square footage to 565,000 square feet, according to CTO.

Excluding Zona Rosa, leased occupancy rose to 95.7% at Sept. 30 from 95.4% in the prior quarter. Including the recently acquired Zona Rosa property, which was 67% leased at acquisition, total portfolio occupancy was 92.4%.

CTO’s signed-not-open pipeline stood at $5.6 million, equivalent to about 4.6% of in-place cash rent. Chief Financial Officer Philip Mays said approximately $3.2 million of that pipeline is expected to begin in 2027, with nearly all of it contributing by 2028. The figure does not include the subsequent Pompano leasing activity.

Kansas City Acquisitions and Structured Investments

During the quarter, CTO acquired Zona Rosa in Kansas City’s Northland submarket for approximately $63 million, or $82 per square foot. The lifestyle center includes anchors such as Dick’s Sporting Goods, Barnes & Noble, Old Navy, Burlington and DSW. The property has roughly 250,000 square feet of vacancy, including about 100,000 square feet of underutilized space.

Albright said the company sees opportunities to add health and fitness, entertainment, restaurant and hotel-related uses at Zona Rosa. The property also includes 10 acres of entitled development land.

In early October, CTO acquired Summit Woods Crossing in Lee’s Summit, Missouri, for $103 million, or $189 per square foot. The 545,000-square-foot power center was 99% occupied and is anchored by Lowe’s, Kohl’s, Best Buy, TJ Maxx and Total Wine. Albright characterized the property as a high-quality asset with below-market leases, including those held by Kohl’s and Lowe’s.

The acquisitions added approximately 1.3 million square feet to CTO’s portfolio and made Dick’s Sporting Goods and Best Buy the company’s two largest tenants, both investment-grade retailers.

CTO also originated a $37 million loan during July, with $29.8 million funded at closing. The loan is secured by a leasehold interest in a mixed-use Austin, Texas, property, carries a two-year term and has a 9.75% initial cash yield.

At quarter-end, the company closed a fully funded $32 million preferred equity investment in a joint venture that owns 10 shopping centers. The three-year investment yields 17%, including 7% paid in kind. Albright said the investment was made in a portfolio CTO had previously sought to acquire and is expected to be held rather than partially sold.

CTO’s structured investment portfolio totaled about $260 million at a blended rate of 12.1%. Albright said commercial loan investments represent roughly 14% of undepreciated assets and that the company does not expect that allocation to rise materially above its current level.

Balance Sheet and Updated Outlook

During the quarter, CTO closed a $1 billion unsecured credit facility comprising a $400 million revolver and $600 million of term loans. The facility added $250 million of commitments and liquidity, while extending the weighted average debt maturity to 4.3 years from 1.6 years.

The company also raised $27.3 million in net proceeds through its at-the-market equity program at an average gross price of $21.83 per share and repaid its only secured mortgage. Its debt is now entirely unsecured.

CTO ended the quarter with approximately $255 million of liquidity. Total debt was $723 million at a weighted average interest rate of 4.7%, while net debt to pro forma adjusted EBITDA was 5.9 times, compared with 6.7 times a year earlier.

Shopping-center same-property NOI grew 3.8% in the third quarter and 6.2% year to date. Income from CTO’s PINE management agreement and equity investment was $2.2 million for the quarter, with an annualized run rate of $9 million.

The company raised 2026 Core FFO guidance to $2.11 to $2.14 per diluted share, from a previous range of $2.09 to $2.13. It also increased the low end of AFFO guidance to a range of $2.22 to $2.25 per share. At the midpoint, Core FFO guidance implies approximately 14% growth over 2025.

Updated assumptions include shopping-center same-property NOI growth of 5% to 6% and approximately $472 million of investment volume, up from a prior expectation of $300 million to $400 million.

About CTO Realty Growth (NYSE:CTO)

CTO Realty Growth, Inc is an internally managed real estate investment trust (REIT) that owns, manages and invests in income-producing commercial real estate. The company's portfolio is focused primarily on open-air shopping centers and other retail properties, including locations anchored by grocery stores, home-improvement retailers and other necessity-based tenants.

The company also makes structured investments in commercial real estate and may pursue additional property investments in select markets.

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