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CTO Realty Growth, Inc. (CTO)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered solid operating momentum: revenues rose to $35.8M, GAAP diluted EPS was $0.01, Core FFO/share was $0.46, and AFFO/share was $0.49; guidance for FY2025 Core FFO ($1.80–$1.86) and AFFO ($1.93–$1.98) was reaffirmed .
  • Management executed on leasing and portfolio growth: Ashley Park was acquired for $79.8M at a going-in yield near the high end of guidance; comparable lease spreads were 37.2% across 109K sf; signed-not-open ABR pipeline is $4.0M (4% of Q1 cash rent) .
  • Balance sheet and liability actions de-risk near-term maturities: $51M 3.875% converts fully retired in April via cash and equity; SOFR swaps fixed $100M at 3.32% to cut revolver rate ~100 bps; liquidity stood at $138.4M at quarter-end .
  • Stock reaction catalysts: a strong beat vs negative Street EPS consensus, continued leasing wins with high spreads, and de-risked capital structure; a Q2 extinguishment charge is excluded from Core FFO/AFFO but may headline GAAP results near term .

What Went Well and What Went Wrong

  • What Went Well
    • Ashley Park acquisition added 559K sf in Atlanta at a high-end initial yield with below-market rents and ~40K sf vacancy to lease, offering NOI growth via lease-up and mark-to-market; basis ~$140/sf .
    • Leasing momentum: 112,585 sf signed, comparable cash rent spread 37.2%; management highlighted two large leases driving >80% spread on new leasing .
    • De-risking: $51M converts retired; $100M SOFR fixed swaps cut revolver cost by ~100 bps; liquidity ~$138–140M; net debt/EBITDA improved YoY to 6.6x .
  • What Went Wrong
    • GAAP net income attributable to common stockholders fell YoY ($0.01/share vs $0.20/share) due to prior-year gains and re-leasing downtime; Core FFO/share down $0.02 YoY to $0.46 .
    • Signed-not-open ABR pipeline stepped down to $4.0M from $5.2M at YE; rent commencements weighted to H2’25, pushing fuller benefits to 2026 .
    • Anchor box vacancies (Party City, JoAnn, etc.) create 2025 downtime and incremental $9–$12M landlord CapEx; management targets 40%–60% positive cash leasing spread, but rent commencements generally require ~1 year .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$28.127 $35.742 $35.811
Diluted EPS ($USD)$0.20 $(0.56) $0.01
Core FFO per Share - Diluted ($USD)$0.48 $0.46 $0.46
AFFO per Share - Diluted ($USD)$0.52 $0.49 $0.49
MarginsQ3 2024Q4 2024Q1 2025
EBITDA Margin %60.32%*58.71%*60.84%*
Net Income Margin %19.58%*(42.57%)*6.31%*

Values retrieved from S&P Global.*

KPIsQ4 2024Q1 2025
Same-Property NOI ($USD Millions)$17.103 $17.136
Leased Occupancy (%)93.4% 93.8%
Occupancy (%)90.3% 91.0%
Signed-Not-Open ABR ($USD Millions)$5.2 $4.0
Comparable Cash Rent Spread (%)23.0% FY24 37.2% Q1
Liquidity ($USD Millions)$222 YE, $213 9/30 $138.4
Portfolio Composition (% Cash Base Rent)Q4 2024Q1 2025
Retail66.4% 70.4%
Office4.1% 3.7%
Mixed-Use29.5% 25.9%

Guidance Changes

MetricPeriodPrevious Guidance (Feb 20, 2025)Current Guidance (May 1, 2025)Change
Core FFO/share - DilutedFY 2025$1.80–$1.86 $1.80–$1.86 Maintained
AFFO/share - DilutedFY 2025$1.93–$1.98 $1.93–$1.98 Maintained
Investments at Initial Cash YieldFY 2025$100–$200M at 8.0%–8.5% $100–$200M at 8.0%–8.5% Maintained
Same-Property NOI GrowthFY 2025~1% ~1% Maintained
G&AFY 2025$17.5–$18.0M $17.5–$18.0M Maintained
Net Loss/share (Recon)FY 2025$(0.64) to $(0.58) $(0.46) to $(0.40) Raised (less negative)
Loss on Extinguishment of Debt (Recon)FY 2025$0.82/share $0.62/share Lowered

Management reiterated that 2025 guidance reflects the expected cash settlement premium on converts ($0.05/share) and downtime from anchor re-leasing ($0.10/share); reaffirmed on the Q1 call .

Earnings Call Themes & Trends

TopicQ3 2024 (Prior-2)Q4 2024 (Prior-1)Q1 2025 (Current)Trend
Investment pipeline & yieldsRaised FY24 investment guidance; $191M Q3 investments at ~9.5% yields; added term loan, equity ATM FY24 Core FFO record; investments $331M at 9.3%, Q4 investments $57M at 10.2% Ashley Park $79.8M at high-end initial yield; expect more core and structured opportunities Positive, active pipeline
Anchor re-leasingIdentified mark-to-market opportunity; signed-not-open $6.5M; expected 2026 commencements Detailed 10 boxes, 40–60% cash spread, rent largely in 2026 Two boxes executed; more imminent; 40–60% total spread; $9–$12M CapEx Executing, 2026 tailwind
Balance sheet & leverageNet debt/EBITDA down to 6.4x; liquidity >$200M Liquidity $222M; planned cash settlement of converts Converts retired (cash+shares); net debt/EBITDA 6.6x; SOFR swaps lower rate ~100 bps De-risked maturities
Tariffs/macroNoted supportive markets, some restaurant softness Guidance embedded known vacancies, bad debt; structured investment reinvestment yields Monitoring tariff uncertainty; tenant demand robust; cap rates stable-to-lower Neutral-to-positive backdrop
Structured investmentsAdded Whole Foods dev loan at 12.15%; preferred equity at 14% Expect extensions; potential +$40–$50M growth of structured book Seeing more structured opportunities midyear Re-accelerating

Management Commentary

  • “We acquired Ashley Park…for $79.8 million at the going in yield that was at the high end of our guidance. Additionally, our operating fundamentals remain strong as evidenced by our leasing spreads and pipeline.” — CEO John Albright .
  • “We executed two SOFR swaps, fixing SOFR for $100 million…reducing the applicable interest rate by nearly 100 basis points from ~5.8% to ~4.8%.” — CFO Philip Mays .
  • “Our releasing outlook for these anchor spaces remains positive, and we still expect to achieve a positive cash leasing spread of 40% to 60% in total.” — CEO John Albright .
  • “Core FFO was $14.4 million…$0.46 per share…primarily the result of our reduction in leverage and downtime associated with the re-leasing of the anchor spaces.” — CFO Philip Mays .

Q&A Highlights

  • Leasing spreads and drivers: two large leases (54K of 63K sf) drove >80% new lease spread in Q1; management anticipates high-end spreads on anchor re-tenanting .
  • Anchor re-leasing CapEx and timing: $9–$12M total landlord CapEx; rent commencement generally ~1 year, with some tenants willing to start earlier on “as is” basis .
  • Funding and recycling: capacity to fund via revolver; potential office sale late year post-lease; consider recycling stabilized assets into higher-yield opportunities .
  • Vacancy revenue impact: Party City and JoAnn combined $1.5M annual ($0.9M + ~$0.6M); Party City paid through March, JoAnn through April .
  • Investment range: could exceed prior $40–$50M structured adds; bankers supportive to term out revolver balances .

Estimates Context

  • Q1 2025 vs S&P Global consensus: CTO beat Street EPS and modestly beat revenue; EBITDA modest miss on consensus.
  • Expect estimate revisions to reflect leasing momentum, de-risked capital structure (converts retired, swaps), and 2H’25 rent commencements weighting, with full anchor re-leasing tailwind in 2026 .
MetricConsensus (S&P Global)ActualSurprise
Revenue ($USD)$35.2547M*$35.811M +$0.556M
Primary EPS ($USD)$(0.255)*$0.0138 +$0.269
EBITDA ($USD)$22.3083M*$21.788M $(0.520)M

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Strong operational execution (high-spread leasing, Ashley Park acquisition) combined with a de-risked capital structure (converts retired, swaps) underpins stable FY2025 guidance and positions for 2026 earnings tailwinds as rent commencements ramp .
  • Near-term GAAP optics: a Q2 extinguishment of debt charge will be excluded from Core FFO/AFFO, but may headline GAAP; guidance reconciliation lowered loss-on-extinguishment from $0.82 to $0.62/share, improving net loss/share range .
  • Leasing cadence matters: signed-not-open ABR recognition is back-half weighted; anchor re-leasing spreads of 40–60% are compelling, but timing pushes fuller benefits into 2026; investors should model gradual 2H’25 ramp .
  • Portfolio mix is tilting more retail and less office/mixed-use, with largest exposure concentrated in GA, FL, TX, NC; supports demand-driven rent growth narratives .
  • Interest expense tailwind: fixing $100M of SOFR lowers revolver costs by ~100 bps; focus on incremental cash flow uplift vs prior rate .
  • Watch structured investments and asset recycling: management is seeing more opportunities; selective recycling and potential terming-out provide funding flexibility .
  • Valuation lens: Core FFO per share steady at $0.46 vs Q4; YoY per-share pressure reflects dilution from leverage reduction and anchor downtime; leasing execution and 2026 commencements are the medium-term thesis drivers .

Notes on sources and coverage:

  • The Q1 2025 earnings press release used here is the company’s primary release; an 8-K Item 2.02 press release was not separately listed in this dataset. Related Q1 press releases: acquisition (Mar 3), convertible notes exchange (Apr 3), and earnings release scheduling (Mar 27) .
  • Prior quarters referenced for trend analysis: Q4 2024 and Q3 2024 press releases and earnings call transcripts .