Cto Realty Growth, Inc. ((CTO)) has held its Q4 earnings call. Read on for the main highlights of the call.
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CTO Realty Growth, Inc. recently held an earnings call that reflected a positive overall sentiment, highlighting significant achievements in financial growth and strategic expansion. The company showcased a record-breaking increase in core FFO, substantial portfolio expansion, and vigorous leasing activity. Despite facing challenges such as retailer bankruptcies and costs related to convertible notes, the positive developments prominently overshadowed the obstacles, demonstrating the company’s robust execution of its strategic goals.
Record Core FFO Growth
CTO Realty Growth reported a record high core FFO of $1.88 per share for 2024, marking a 6% increase from 2023. This accomplishment underscores the company’s successful financial performance and its ability to generate consistent shareholder value.
Significant Portfolio Expansion
The company’s portfolio expanded by one million square feet, or 26%, reaching a total of 4.7 million square feet. This growth contributed to a total enterprise value increase of 33%, bringing it to approximately $1.3 billion, showcasing the company’s aggressive yet strategic expansion efforts.
Strong Leasing Activity
CTO Realty Growth signed leases for over 450,000 square feet at an average rent of $24.07 per square foot, achieving a positive cash lease spread of 23%. This indicates a healthy leasing market and the company’s effective negotiation capabilities.
Robust Investment Activity
The company achieved a weighted average yield of 9.3% through $227 million in retail property acquisitions and $104 million in structured investments. This demonstrates CTO Realty Growth’s strategic investments and its focus on high-yield opportunities.
Reduced Leverage and Improved Liquidity
CTO Realty Growth successfully reduced its net debt to EBITDA, ending the year at 6.3 times, and maintained over $200 million in liquidity. This financial stability positions the company well for future growth opportunities.
Impact of Retailer Bankruptcies
The company faced challenges due to recent retailer bankruptcies affecting several leases, including those with Big Lots, Conn’s, and Party City. This has necessitated efforts to regain and re-lease these spaces.
Convertible Notes Settlement Cost
CTO Realty Growth plans to settle convertible notes for cash in 2025, which will incur a cost of approximately $0.05 per share due to the premium settlement price. This indicates a strategic financial decision to manage future obligations.
Potential Delays in Rent Commencement
There are anticipated delays in rent commencement from new tenants in spaces previously affected by bankruptcies, expected in 2026. This may delay revenue recognition but offers potential for favorable rent spreads in the future.
Forward-Looking Guidance
During the earnings call, CTO Realty Growth outlined its guidance for 2025, projecting a core FFO range of $1.80 to $1.86 per share and an AFFO range of $1.93 to $1.98 per share. The company plans to manage lease expirations with potential rent increases of approximately 10% and anticipates a strong acquisition pipeline, leveraging its strengthened balance sheet. Additionally, they aim to re-lease vacated spaces by 2026, potentially achieving rent spreads between 40% and 60%.
In conclusion, CTO Realty Growth, Inc.’s earnings call highlighted a predominantly positive outlook with record financial growth, significant expansion, and strategic investments. While facing some headwinds, the company’s proactive measures and forward-looking strategies suggest continued resilience and potential for future success.
