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CTO Realty Growth, Inc. (CTO)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered solid operating metrics and leasing momentum, but per-share profitability was slightly softer year over year: Core FFO/share $0.48 vs $0.50 in Q3’24, while absolute Core FFO rose to $15.6M (+24% YoY). Management raised FY25 Core FFO and AFFO guidance ranges, citing improving NOI visibility from SNO and anchor backfills .
  • Revenue modestly beat S&P Global consensus: $37.76M actual vs $37.69M consensus; EPS was $0.03, while EPS consensus was not meaningful for this REIT (S&P EPS consensus returned 0.00).* The beat was driven by higher property income and interest income from commercial loans .
  • Balance sheet advanced: $150M of new term loans fixed initially at ~4.2% and retirement of a $65M 2026 term loan reduced near-term maturities; net debt/Pro Forma Adj. EBITDA improved to 6.7x from 6.9x in Q2, and liquidity ended at $170.3M .
  • Forward growth visibility improved: SNO pipeline increased to $5.5M (5.3% of ABR), with ~75% expected to begin contributing in 2026 and full contribution in 2027; Shops at Legacy secured a 30k sf coworking lease post-quarter and stands ~85% leased, supporting traffic and rent uplift in 2026+ .

What Went Well and What Went Wrong

  • What Went Well
    • Leasing strength and SNO expansion: 143k sf leased in Q3; YTD comparable leases of 424k sf at +21.7% cash rent spreads; SNO pipeline at $5.5M (5.3% of ABR) .
    • Guidance raised: FY25 Core FFO/share raised to $1.84–$1.87 (from $1.80–$1.86) and AFFO/share to $1.96–$1.99 (from $1.93–$1.98), reflecting higher NOI and balance sheet progress .
    • De-risked balance sheet/liquidity: Closed $150M of term loans at ~4.2% fixed initially, repaid $65M due 2026, and ended with $170.3M liquidity; net debt/EBITDA at 6.7x vs 6.9x in Q2 .
  • What Went Wrong
    • GAAP earnings still light: EPS $0.03 vs $0.17 in Q3’24, with net income to common down 76% YoY; per-share Core FFO down to $0.48 vs $0.50 YoY, driven in part by share count changes and deleveraging cadence .
    • Elevated non-recurring and TI timing: Non-recurring items were ~$0.5M this quarter (above typical $0.1–$0.3M run rate), and tenant improvements were elevated in Q3 with expectation for similar elevation in Q4 given anchor openings and reimbursements .
    • Remaining vacancy focus: Largest vacant anchor (~40k sf at Carolina Pavilion) still in process (considering split-box or single-tenant solutions), implying some timing risk to full SNO ramp .

Financial Results

Core P&L and REIT KPIs (quarterly progression)

MetricQ1 2025Q2 2025Q3 2025
Total Revenues ($USD Millions)$35.81 $37.64 $37.76
Net Income to Common ($USD Millions)$0.38 $(25.30) $1.04
GAAP Diluted EPS ($)$0.01 $(0.77) $0.03
Core FFO/share - Diluted ($)$0.46 $0.45 $0.48
AFFO/share - Diluted ($)$0.49 $0.47 $0.50
Same-Property NOI ($USD Millions)$17.14 $17.55 $18.65
Same-Property NOI YoY (%)2.4% 0.9% 2.3%
Leased Occupancy (%)93.8% 93.9% 94.2%

Q3 YoY comparison

MetricQ3 2024Q3 2025
Total Revenues ($USD Millions)$31.81 $37.76
Net Income to Common ($USD Millions)$4.35 $1.04
GAAP Diluted EPS ($)$0.17 $0.03
Core FFO/share - Diluted ($)$0.50 $0.48
AFFO/share - Diluted ($)$0.51 $0.50
Same-Property NOI ($USD Millions)$18.22 $18.65

Estimates vs Actuals (Q3 2025)

MetricConsensus (S&P Global)ActualResult
Revenue ($USD Millions)$37.69*$37.76 Slight beat
GAAP Diluted EPS ($)$0.00*$0.03 N/M for REIT EPS

Values retrieved from S&P Global.*

Segment/Portfolio Mix and Balance Sheet

  • Portfolio ABR mix (Q3 2025): Retail 69.7%, Office 3.6%, Mixed-Use 26.7% .
  • Leased occupancy 94.2%; physical occupancy 90.6% .
  • Long-term debt $606.8M; initial fixed rates ~4.21–4.24% on new 2029/2030 term loans via swaps; net debt/Pro Forma Adj. EBITDA 6.7x; liquidity $170.3M .

Leasing and SNO KPIs

  • Q3 leasing: 24 leases, 142.4k sf; comparable cash spread +10.3%; WALT 6.6 years .
  • YTD leasing: 64 leases, 481.7k sf; comparable 424.3k sf at +21.7% cash spread .
  • SNO pipeline: $5.5M (~5.3% of ABR) as of Oct 28; Legacy ~ $1M of SNO; majority recognition expected in 2026 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core FFO/share - Diluted ($)FY 2025$1.80–$1.86 $1.84–$1.87 Raised
AFFO/share - Diluted ($)FY 2025$1.93–$1.98 $1.96–$1.99 Raised
Same-Property NOI GrowthFY 2025~1% ~2.5% Raised
G&A Expense ($M)FY 2025$17.5–$18.0 $18.0–$18.5 Slightly higher
Investment Volume ($M) & Initial YieldsFY 2025$100–$200 at 8.0–8.5% $100–$200 at 8.0–8.5% Maintained
Common Dividend/ShareFY 2025$0.38 declared Q3 Continued quarterly cadence Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Leasing momentum and spreadsQ1: 109k sf comparable at +37.2%; SNO $4.0M . Q2: 190k sf comparable at +21.6%; SNO $4.6M .Q3: 143k sf; YTD comparable 424k sf at +21.7%; SNO $5.5M .Improving SNO pipeline and sustained spreads .
Anchor backfillActive progress; 6 of 10 anchors leased by Q2 .6 of 10 leased; targeting 40–60% cash spread on anchors; still negotiating 4 boxes .Ongoing, constructive .
Shops at Legacy (WeWork backfill)20k sf private club signed in 2024; continued small-shop leasing .30k sf coworking signed post-quarter; Legacy ~85% leased; ~ $1M SNO contribution .Inflecting positively .
Balance sheet/liquidityRetired converts in Q2; liquidity ~$84.6M; net debt/EBITDA 6.9x .$150M new term loans at ~4.2% fixed initially; only $17.8M 2026 maturity; liquidity $170.3M; net debt/EBITDA 6.7x .De-risking, improving .
Capital allocation/buybacksFocus on deleveraging in late 2024; converts retired Q2 .Repurchased ~$9.3M at ~$16.27; “best acquisition is our own stock” given valuation .More assertive on buybacks .
Asset recyclingQ1 acquisition Ashley Park ($79.8M) .Targeting a South Florida center by YE; will fund via revolver then recycle a stabilized asset .Active pipeline .
TIs and non-recurring costsTypically fluctuate with anchor openings .TI elevated in Q3 and likely Q4; non-recurring near $0.5M this quarter (above ~$0.25M norm) .Near-term elevated .
Tenant renewals/creditBelow-market rents create upgrading opportunities .Limited renewal risk; below-market legacy rents provide re-tenanting upside .Stable/positive .

Management Commentary

  • “We leased 143,000 square feet for the quarter bringing our year-to-date leasing to 482,000 square feet and our portfolio to 94.2% leased… signed 424,000 square feet of comparable leases for the year at a positive rent spread of 21.7%.” – John P. Albright, CEO .
  • “Our signed-not-open pipeline stands at $5.5 million… We believe that this pipeline positions us for meaningful earnings growth with approximately 76% of our ABR from the SNO pipeline anticipated to be recognized in 2026 and 100% in 2027.” – CEO .
  • “Just after the quarter end, we signed a 30,000 square foot lease with a coworking operator… [Shops at Legacy] lease percentage stands at approximately 85%.” – CEO .
  • “We closed $150 million in term loan financings… initial fixed interest rate of approximately 4.2%… we now only have $17.8 million of debt maturing in 2026… net debt to EBITDA of 6.7x… liquidity of approximately $170 million.” – CFO .
  • “Given the stock price… below a 9 multiple and almost a 10% dividend yield… the best acquisition investment is our own stock.” – CEO (on buybacks) .

Q&A Highlights

  • SNO revenue ramp: ~$4M contribution in 2026 (~75% of $5.5M), phased ~$0.5M Q1’26, ~$1.0M Q2’26, ~$1.0M Q3’26, ~$1.5M Q4’26; full $5.5M in 2027 .
  • Florida acquisition funding/leverage: Initially on revolver, to be backstopped by asset recycling; leverage impact minimal; SNO commencements reduce net debt/EBITDA by ~0.5x as they come online .
  • Vacancy focus: Largest remaining is ~40k sf at Carolina Pavilion; considering split-box or full-box tenant; Legacy remainder is mostly small-shop and manageable .
  • Tenant improvements and non-recurring items: TI reimbursements elevated in Q3 (e.g., One Life, Boot Barn, Barnes) and expected elevated in Q4; non-recurring ~$0.5M this quarter vs ~$0.25M typical run rate .
  • Renewals/credit and expirations: Limited non-renewal risk; below-market rents create re-tenanting potential; no adverse change on credit watch list .

Estimates Context

  • Revenue: Actual $37.76M vs S&P Global consensus $37.69M – slight beat.* Actual revenue from company filings .
  • EPS: Actual GAAP diluted EPS $0.03; S&P Global EPS consensus returned 0.00 for Q3’25 (not meaningful for REIT context).* Actual EPS from company filings .
  • Implication: Raised FY25 Core FFO/AFFO guidance and SNO trajectory should support upward estimate revisions for REIT cash flow metrics even if GAAP EPS remains noisy due to non-cash and financing items .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Raised FY25 Core FFO/AFFO guidance with higher Same-Property NOI growth (~2.5% vs ~1% prior) increases confidence in 2H’25–2026 earnings trajectory .
  • SNO and anchor backfills are the central 2026–2027 catalysts; modeled ramp implies notable 2H’26 earnings inflection and full run-rate by 2027 .
  • Balance sheet de-risking (new term loans at ~4.2% fixed initially, minimal 2026 maturities) plus $170.3M liquidity enhances flexibility for recycling and opportunistic buybacks .
  • Leasing fundamentals remain constructive (YTD comparable spread +21.7%, portfolio 94.2% leased), supporting forward NOI as SNO converts and remaining vacancy is addressed .
  • Near-term headwinds include elevated TIs and occasional non-recurring items; management signaled TI remains elevated in Q4 given anchor openings .
  • Capital allocation priority includes buybacks given valuation; management emphasized shares as “best acquisition,” suggesting continued repurchases subject to facility limits .
  • Asset recycling to fund a South Florida acquisition can upgrade growth profile without materially changing leverage, contingent on matching sales timing .

Appendix: Additional Context

  • Q3 dividend: $0.38/share common and $0.39844/share preferred declared for Q3’25 .
  • Disposition: Sold Main Street properties (Daytona Beach) for $7.1M with $5.0M seller financing at 6.5% to simplify portfolio and recycle into higher-growth centers .

Citations:
Press release – Q3 2025 results and outlook .
Earnings call transcript – Q3 2025 .
Press releases – Q2 2025 results .
Press releases – Q1 2025 results .
Dividend declaration – Q3 2025 .
Main Street properties sale .

S&P Global consensus data used for the Estimates section.*