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CTO Realty Growth, Inc. (CTO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered mixed results: GAAP diluted EPS was $(0.56) vs $0.25 in Q4 2023, while Core FFO per share was $0.46 and AFFO $0.49; revenue rose to $35.7M, supported by acquisitions and structured investments .
  • Management initiated 2025 guidance: Core FFO $1.80–$1.86 and AFFO $1.93–$1.98, reflecting a ~$0.10/share impact from announced/anticipated store closings and ~$0.05/share impact from cash settlement of April 2025 converts; SNO recognition weighted to 2H25, with full benefit in 2026 .
  • Strategic catalysts: rapid re-leasing of bankruptcy-impacted boxes at 40–60% mark-to-market spreads (rent commencement largely in 2026), and robust acquisition pipeline; record 2024 Core FFO ($1.88/share) underscores execution and capital-raising to reduce leverage (net debt/Adj. EBITDA 6.3x) .
  • Street consensus (S&P Global) for Q4 2024 was unavailable during retrieval; comparisons to estimates could not be made and may require update once accessible [GetEstimates errors noted].

What Went Well and What Went Wrong

What Went Well

  • Record Core FFO for FY 2024 ($1.88/share) with $331M invested at a 9.3% yield; CEO: “record high Core FFO of $1.88 per share” and “robust performance” from exceeding investment/leasing expectations .
  • Strong leasing and SNO momentum: 452K sf executed in 2024 with +23% comparable cash spreads; $5.2M SNO (~6% of in-place cash rent) expected to be ~50% recognized in 2025 and fully in 2026 .
  • Balance sheet and liquidity improved via ATM and term loan: $165.2M of ATM net proceeds in 2024, $222M liquidity, net debt/Adj. EBITDA 6.3x; CFO emphasized leverage reduction and liquidity to support growth .

What Went Wrong

  • GAAP loss in Q4: diluted EPS $(0.56) vs $0.25 prior year, driven by higher D&A and transaction activity; Core FFO per share down vs Q4 2023 ($0.46 vs $0.48) amid reduced leverage and increased share count .
  • Bankruptcy-related vacancies create near-term earnings drag: guidance includes ~$0.10/share impact in 2025 before mark-to-market benefits commence largely in 2026 .
  • Same-property NOI guidance trimmed to ~1% for 2025 (would have been ~2–3% absent vacancies), showing temporary headwind before re-leasing tailwinds materialize .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Total Revenues ($USD Millions)$29.9 $31.8 $35.7
Diluted EPS ($)$0.25 $0.17 $(0.56)
Core FFO per Share - Diluted ($)$0.48 $0.50 $0.46
AFFO per Share - Diluted ($)$0.52 $0.51 $0.49
Adjusted EBITDA ($USD Millions)N/A$17.8 $20.1
Same-Property NOI ($USD Millions)$17.1 $16.8 $17.1
Occupancy (%)N/A90.0% 90.3%
Leased Occupancy (%)N/A95.8% 93.4%

Estimates vs Actuals: S&P Global consensus was unavailable at time of retrieval; comparisons will be added when accessible [GetEstimates errors noted].

Segment/Portfolio KPIs

  • Portfolio composition by property type (ABR mix): Retail 66.4%, Office 4.1%, Mixed-Use 29.5% as of 12/31/24 .
  • Asset type summary (properties, sf, WALT): 23 properties, 4.69M sf; single tenant: 6 assets/252K sf/WALT 5.2 yrs; multi-tenant: 17 assets/4.44M sf/WALT 4.8 yrs .
  • Debt summary: $520.8M total, 4.13% weighted average rate; swaps hedge key term loans; net debt/Pro Forma Adj. EBITDA 6.3x .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core FFO per Share - DilutedFY 2025N/A (initiated)$1.80–$1.86 Initiated
AFFO per Share - DilutedFY 2025N/A (initiated)$1.93–$1.98 Initiated
Same-Property NOI GrowthFY 2025N/A~1% (incl. store closing impact) Initiated
Investments (incl. structured)FY 2025N/A$100–$200M at 8.0–8.5% initial cash yield Initiated
G&AFY 2025N/A$17.5–$18.0M Initiated
Special ItemsFY 2025N/A~$0.10/share impact (store closings); ~$0.05/share impact (cash settle converts) New impacts
Common DividendQ1 2025$0.38 (Q4’24) $0.38 (Q1’25) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Leasing momentum & SNO183K sf H1; leased vs occupied gap ~$5M SNO to ramp in 2025 385K sf YTD; SNO $6.5M (~7.3% of rent) 452K sf FY; SNO $5.2M (~6%) with ~50% recognition in 2025, full in 2026 Stable to improving tailwinds
Capital raising & leveragePreferred + ATM, reduced revolver; swaps hedge rates $125.7M ATM; $100M term loan; leverage down to 6.4x $33M ATM in Q4; liquidity $222M; net debt/Adj. EBITDA 6.3x Strengthening balance sheet
Bankruptcy re-leasingN/AHighlighted opportunities (Conn’s, Big Lots backfills) Regained 4 boxes; targeting 3 Party City spaces; 40–60% spreads; rents largely commence 2026 Near-term drag, strong medium-term upside
Structured investmentsRaised outlook; active pipeline $43.8M mortgage; $10M preferred; considering $40–50M adds $40.2M Whole Foods-anchored loan; expects Waters Creek extension Active, strategic adjacency
Macro/tenant commentaryPositive demand; swaps reduce rate risk Restaurant softness; backfill resilience AMC performance improved; high-quality tenants targeted for boxes Mixed, manageable
Convert settlementN/AN/AIntend cash settlement; ~$0.05/share 2025 impact; ~$75M ref at $20 share price One-time 2025 headwind
10-acre land adj. Collection at ForsythN/AN/ANegotiations for anchor; contribution by late 2026/2027 New growth lever

Management Commentary

  • CEO: “2024 was a year of significant accomplishments… we reported core FFO of $1.88 per share for the year, a record high” .
  • CEO on re-leasing: “we have been proactive… we already have LOIs… potential re-leasing spread… 40% to 60%… we expect rent from new tenants to commence during 2026” .
  • CFO on converts/guidance: “settling our convertible notes for cash will cost approximately $0.05 per share in 2025… our guidance includes a $0.10 per share impact related to these spaces” .
  • CEO on acquisitions: “our acquisition pipeline is robust, and we currently anticipate closing 1 or 2 acquisitions in the near term” .

Q&A Highlights

  • Convert settlement and funding: Company elected cash settlement of April 2025 converts; initial funding via revolver, likely termed later; settlement amount variable with share price; ~$75M if shares at ~$20 .
  • Timeline clarification: SNO recognition ~50% in 2025 and full in 2026; bankruptcy-impacted boxes expected to contribute in 2026 (distinct from SNO) .
  • Structured investment cadence: Waters Creek likely extended; structured portfolio could add ~$40–50M in 2025 .
  • CapEx and lease terms: $9–12M incremental CapEx for backfills; targeted 10–15-year leases with higher-quality credit tenants .
  • Same-store NOI ex-vacancy: would have been ~2–3% in 2025; guidance at ~1% reflects temporary vacancy impacts .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 could not be retrieved due to system limits at the time of analysis; therefore, beat/miss assessment vs Wall Street consensus is unavailable and should be updated when access is restored [GetEstimates errors].
  • Given guidance elements (store closing and convert impacts) and re-leasing timelines, we expect Street models to reflect a 2025 inflection late in the year and a stronger 2026 as SNO and mark-to-market rents fully flow through .

Key Takeaways for Investors

  • Near-term earnings headwinds (store closings, convert cash settlement) are quantified in guidance (~$0.15/share), setting up clearer visibility into 2H25 and 2026 inflection as SNO and re-leasing tailwinds kick in .
  • Medium-term NOI growth driven by 40–60% rent mark-to-market on re-leased boxes and 10–15-year lease terms improves center quality and valuation multiples; execution milestones will be lease signings and permit/buildout cadence .
  • Balance sheet flexibility remains solid: $222M liquidity, hedged term loans, and net debt/Adj. EBITDA at 6.3x support continued acquisitions and structured investments without over-reliance on equity markets .
  • Acquisition pipeline is active; subsequent purchase (Ashley Park, 559K sf) post-Q4 expands Atlanta footprint and brings additional anchor mix—watch for integration and leasing synergies .
  • Dividend maintained at $0.38/quarter with Q4 payout ratios within historical ranges; coverage should improve as re-leasing and SNO commence .
  • Monitor 2025 quarterly progression: SNO recognition should start in 2H25, while bankruptcy backfills are largely 2026 events—quarterly same-property NOI could be uneven before strengthening toward year-end .
  • Trading setup: catalysts include announced new leases in former Big Lots/Conn’s/Party City boxes, convert settlement clarity in April, and announced acquisitions at attractive yields, all of which can re-rate the stock as visibility improves .

Supporting Data (Selected)

  • Investments: Q4 investments $57.0M at 10.2% initial yield; FY investments $330.8M at 9.3% .
  • Debt: $520.8M total; W.A. rate 4.13%; swaps across major tranches; net debt/Pro Forma Adj. EBITDA 6.3x .
  • Leasing: Q4 2024 total 67,788 sf; FY 2024 total 452,301 sf, +23% comparable cash rent growth .
  • Portfolio: 23 properties, 4.687M sf; leased occupancy 93.4%; occupancy 90.3% .
  • Dividends: Q1 2025 common dividend $0.38; Q4 2024 payout ratios 82.6% Core FFO, 77.6% AFFO .

Notes:

  • All facts, numbers, and statements above are sourced from company filings and earnings materials as cited.
  • S&P Global consensus data was unavailable at the time of query; update estimate comparisons when accessible [GetEstimates errors].