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CTO Realty Growth, Inc. (CTO)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue rose to $37.64M, beating S&P Global consensus ($36.46M*) and increasing sequentially and year-over-year; GAAP diluted EPS was a loss of $0.77 largely driven by a $20.4M debt extinguishment, while Core FFO/share held at $0.45 and AFFO/share at $0.47 .
  • Leasing execution remained robust: 227K sf signed in Q2 with 190K sf comparable leases at +21.6% cash rent spread; signed‑not‑open pipeline reached $4.6M (4.6% of in-place cash ABR), positioning earnings tailwinds into 2026 .
  • Balance sheet actions reduced risk: the 3.875% 2025 convertible notes were fully settled (mix of cash and shares), with two SOFR swaps fixing $100M at 3.32%, and liquidity ended ~$85M (revolver availability plus cash) .
  • Guidance reaffirmed: 2025 Core FFO/share $1.80–$1.86 and AFFO/share $1.93–$1.98; assumptions maintained (investments $100–$200M, ~1% Same‑Property NOI growth, G&A $17.5–$18.0M) .
  • Near-term stock catalysts: revenue beat, visible SNO pipeline and anchor re‑tenanting at attractive spreads (40–60% targeted), and completed convert retirement; offset by temporary occupancy dip from bankruptcies and transition downtime .

What Went Well and What Went Wrong

What Went Well

  • Strong revenue and operating momentum: Total revenues of $37.64M (+30.5% YoY, +5.1% QoQ); Core FFO/share steady at $0.45; AFFO/share $0.47 .
  • Leasing strength: 190,027 sf of comparable leases at +21.6% cash rent spread; SNO pipeline at $4.6M (4.6% of in-place cash rent), with 6 of 10 anchor boxes resolved and targeted 40–60% spreads overall; “We believe that this leasing activity will provide the Company with earnings tailwinds into 2026” — CEO John Albright .
  • De-risked capital structure: full retirement of convertibles (~$71.1M total consideration) and SOFR swaps fixing $100M for five years, reducing floating-rate exposure and lowering rate on $100M by ~100 bps to just under 5% .

What Went Wrong

  • GAAP EPS optics: diluted EPS loss of $0.77 driven by a $20.396M loss on extinguishment of debt (excluded from Core FFO/AFFO), which overshadowed operating strength .
  • Occupancy dip: physical occupancy declined ~80 bps QoQ to 90.2%, reflecting bankruptcies and transitions (Party City, Joann’s) and some downtime ahead of re‑tenanting; management expects limited downtime at Staples-to-Barnes & Noble .
  • Comparable cash spread moderation: quarterly comparable spread at +21.6% vs Q1’s +37.2% (mix-driven, anchor re‑tenanting cadence) .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Total Revenues ($USD Millions)$35.74 $35.81 $37.64
Net Income (Loss) per Share – Diluted ($USD)$(0.56) $0.01 $(0.77)
Core FFO per Share – Diluted ($USD)$0.46 $0.46 $0.45
AFFO per Share – Diluted ($USD)$0.49 $0.49 $0.47
Same-Property NOI ($USD Millions)$17.10 $17.14 $17.55

Segment/portfolio snapshot (as of Q2 2025):

  • Property Type cash ABR mix: Retail 69.4%, Office 3.7%, Mixed‑Use 26.9%; leased occupancy 93.9%, physical occupancy 90.2% .
  • Portfolio asset type: Single Tenant 6 properties (252K sf), Multi‑Tenant 18 properties (5,002K sf); total 24 properties (5,254K sf), WALT ~4.9 years .

KPIs and Operating Metrics:

KPIQ4 2024Q1 2025Q2 2025
Leased Occupancy (%)93.4% 93.8% 93.9%
Physical Occupancy (%)90.3% 91.0% 90.2%
Signed‑Not‑Open Pipeline ($USD Millions)$5.2 $4.0 $4.6
Comparable Leasing Cash Rent Spread (quarter)+7.8% +37.2% +21.6%
Total Leases Signed (quarter, sf ‘000)68 113 227

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core FFO per Share – DilutedFY 2025$1.80–$1.86 $1.80–$1.86 Maintained
AFFO per Share – DilutedFY 2025$1.93–$1.98 $1.93–$1.98 Maintained
Same‑Property NOI GrowthFY 2025~1% ~1% Maintained
Investments (cash yield)FY 2025$100–$200M at 8.0–8.5% $100–$200M at 8.0–8.5% Maintained
G&AFY 2025$17.5–$18.0M $17.5–$18.0M Maintained
Common DividendQ2 2025$0.38 (Q1) $0.38 (Q2) Maintained

Earnings Call Themes & Trends

TopicQ4 2024 (prev)Q1 2025 (prev)Q2 2025 (current)Trend
Leasing momentum70 leases in 2024; comparable cash rent +23% YoY; SNO $5.2M Comparable spread +37.2%; SNO $4.0M 190K sf comparable at +21.6%; SNO $4.6M; 6/10 anchors resolved; targeting +40–60% spreads Ongoing strength; anchor mark-to-market building
Anchor re‑tenantingIdentified value‑add anchor boxes Ashley Park acquired; execution ramping Burlington, Boot Barn, Bassett, Slick City, Bob’s signed/assigned; remaining boxes in negotiations Positive execution; traffic drivers coming
Balance sheet actionsATM raised $165.2M in 2024; leverage 6.3x ND/EBITDA Prepped convert payoff; swaps in April Convert retired; $100M swaps at 3.32%; liquidity ~$85M; ND/EBITDA 6.9x De‑risked, slightly higher leverage vs YE due to acquisition
Occupancy/macro93.4% leased; 90.3% occupied 93.8% leased; 91.0% occupied 93.9% leased; 90.2% occupied; dip driven by bankruptcies (Party City, Joann’s), limited downtime Temporary dip; recovery as SNO opens
Structured investments12.15% Whole Foods loan; optionality Pipeline intact Little new structured activity near term; focus on core acquisitions; Whole Foods site progressing Stable; selective

Management Commentary

  • “We remain on target to achieve a positive cash leasing spread of 40% to 60% in total for these 10 anchor spaces...our signed‑not‑open pipeline now stands at $4,600,000...will provide the company with earnings tailwinds going into 2026.” — John Albright, CEO .
  • “Convertible notes were retired in full for approximately $71.1 million...This repayment did result in an extinguishment of debt charge of approximately $20.4 million...excluded from our computation of both core FFO and AFFO.” — Philip Mays, CFO .
  • “We executed SOFR swaps, fixing SOFR for $100,000,000...reducing our floating rate exposure and the applicable interest rate...by nearly 100 bps to just under 5%...” — Philip Mays, CFO .
  • “We received strong tenant interest...Barnes & Noble is on schedule to open...Boot Barn...prior to year end...combined we are achieving 86% cash rent spread on them.” — John Albright (Plaza at Rockwall) .

Q&A Highlights

  • Albuquerque office: Fidelity downsizing ~half; State of New Mexico signed to backfill majority; expected payment blended into GAAP rent; minimal rent roll‑down and limited downtime .
  • Acquisition pipeline and leverage: one shopping center targeted in core market; near‑term leverage may tick up but plan to recycle assets; term loan likely in late Q3/early Q4 to term out revolver draws .
  • Leasing cadence: majority of remaining vacancy under LOIs or negotiation; expected signings over next ~60 days; SNO recognition heavier in Q4 and into 2026 .
  • Occupancy drivers: Q2 dip largely Party City and Joann’s departures; Staples to Barnes & Noble transition causes limited downtime late 2025/early 2026 .

Estimates Context

MetricQ4 2024Q1 2025Q2 2025
Revenue Consensus Mean ($USD Millions)*33.39*35.25*36.46*
Revenue Actual ($USD Millions)35.74 35.81 37.64
Primary EPS Consensus Mean ($USD)*-0.03*-0.255*-0.36333*
Primary EPS Actual ($USD)*-0.4674*0.0138*-0.0137*
  • Q2 revenue beat consensus; EPS also better than consensus on the S&P Global Primary EPS basis. GAAP diluted EPS loss reflects the debt extinguishment charge excluded from Core FFO/AFFO .
  • Prior quarters: Q1 revenue and EPS exceeded consensus; Q4 EPS missed on S&P’s Primary EPS measure despite revenue above consensus.
  • Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue and S&P EPS beats alongside reaffirmed full‑year guidance support estimate stability; expect potential upward bias to revenue run‑rate as SNO pipeline converts in Q4/Q1 .
  • GAAP EPS noise from one‑time debt extinguishment was non‑economic to Core FFO/AFFO; focus on Core FFO/AFFO trajectory, which remained stable sequentially .
  • Anchor re‑tenanting at targeted +40–60% cash spreads is a central driver for 2026 earnings lift; near‑term occupancy headwinds are transitory .
  • Balance sheet risk reduced post‑convert retirement and added SOFR hedges; management plans to term out revolver and maintain liquidity; ND/EBITDA at 6.9x with path to deleveraging as SNO opens .
  • Dividend sustainability supported by payout ratios (Q2 Core FFO payout ~84.4%, AFFO ~80.9%); high implied yield remains an investor draw .
  • Watch Q3/Q4 lease execution pace and opening schedules (B&N, Boot Barn, others) as near‑term catalysts, along with any acquisition/recycling updates .
  • Regional exposure to high‑growth MSAs (GA, TX, FL, NC) underpins leasing demand and rent mark‑to‑market opportunity .