CTO Realty Growth Earnings Call Signals Steady Upside

Cto Realty Growth, Inc. ((CTO)) has held its Q4 earnings call. Read on for the main highlights of the call.

CTO Realty Growth’s latest earnings call struck a cautiously upbeat tone, as management highlighted record leasing metrics, strong rent spreads, and an expanding high‑yield acquisition pipeline, even while acknowledging headwinds from noncore assets, timing shifts in rent commencement, and leverage that remains above long‑term targets.

Record Occupancy Underscores Portfolio Demand

Leased occupancy climbed to a record 95.9% at year‑end, underscoring resilient tenant demand for CTO’s open‑air shopping centers and validating its focus on necessity‑ and service‑oriented retail. Management framed this as a key proof point that the portfolio is well positioned to weather macro volatility and support future earnings growth.

Shopping Center NOI Drives Operating Performance

Same‑property NOI for shopping centers, which represent about 93% of the company’s same‑property base, increased 4.3% in the fourth quarter of 2025, providing the core engine for portfolio growth. Executives emphasized that this segment’s performance more accurately reflects underlying operations than the modest overall NOI figure, which is dampened by a handful of noncore assets.

Leasing Volume and Rent Spreads Remain Robust

Leasing momentum remained strong with 189,000 square feet signed in Q4, including 167,000 square feet of comparable leases that delivered a powerful 31% cash rent increase. For the full year, the company signed 671,000 square feet (592,000 comparable) at a 24% cash rent lift, reinforcing pricing power and the ability to roll below‑market leases at meaningfully higher rents.

Anchor Re‑Tenanting Yields Strong Economics

Management reported meaningful progress re‑tenanting larger anchor spaces, resolving seven of 10 vacancies totaling 177,000 square feet during 2025. The company now expects a roughly 60% positive cash rent spread on these boxes, at the high end of prior targets, though these gains come with some near‑term downtime before the new tenants fully contribute.

Signed‑Not‑Open Pipeline Supports Future Earnings

CTO’s signed‑not‑open pipeline totals about $6.1 million of rent, or roughly 5.8% of annual cash base rents, providing good visibility into future revenue. Management expects close to half of this pipeline to commence in 2026 and all of it by 2027, positioning the company for a steady uplift in earnings as these leases open.

High‑Yield Acquisitions Boost Income Potential

On the external growth side, the company acquired Pompano Citi Center, a 509,000‑square‑foot center in Florida, for $65.2 million at 92% occupancy plus additional shell space to lease. In total, CTO closed $166 million of investments in 2025 at a weighted average initial cash yield of 9%, well above typical grocery‑anchored cap rates and supportive of accretive earnings growth.

Capital Recycling Enhances Portfolio Quality

The sale of The Shops at Legacy North for $78 million at a low‑5% cash exit cap rate highlighted CTO’s value‑add credentials and recycling discipline. Management noted that proceeds from this disposition can be redeployed into higher‑yielding opportunities, improving both earnings power and risk‑adjusted returns over time.

Liquidity Strengthens While Leverage Edges Down

The balance sheet showed incremental improvement with year‑end liquidity of $167 million, including $149 million of revolver capacity and $18 million of cash. Net debt to EBITDA ticked down to 6.4x from 6.7x, and only $17.8 million of debt matures in 2026, giving the company some breathing room even as leverage remains above more conservative levels.

Share Repurchases Signal Confidence and Capital Return

CTO repurchased $9.3 million of common stock in 2025 at an average price of $16.27 per share, a move management framed as an attractive use of capital alongside growth investments. The buybacks modestly offset issuance related to growth and underscore management’s confidence in the intrinsic value of the shares.

Guidance Points to Earnings Growth but With Moving Parts

For 2026, CTO guided to core FFO per diluted share of $1.98 to $2.03 and AFFO of $2.11 to $2.16, underpinned by $100 million to $200 million of new investments at 8.0% to 8.5% initial yields and shopping‑center same‑property NOI growth of 3.5% to 4.5%. Management highlighted the $6.1 million SNO pipeline, improving NOI cadence through the year, solid liquidity, and limited 2026 debt maturities, while noting that a planned Texas acquisition will temporarily lift leverage before expected deleveraging via asset sales and rent commencements.

In summary, CTO Realty Growth’s call painted a picture of a retail REIT with strong leasing fundamentals, attractive acquisition yields, and a solid pipeline of yet‑to‑open rents, offset by near‑term noise from noncore assets, timing shifts, and still‑elevated leverage. For investors, the story hinges on execution: delivering on lease‑up, activating the SNO pipeline, and recycling capital to steadily bring leverage down while sustaining growth.