CTO Realty Growth, Inc. Q4 FY2024 earnings call

• Investment activity in 2024: Achieved a weighted average yield of 9.3% with $227M retail property acquisitions and $104M structured investment. Included a $40M first mortgage loan in November for a retail center development in Atlanta and acquisition of Granada Plaza for $17M in December, expanding presence in Tampa.
• Leasing activity: Fourth quarter signed 68,000 sq ft of new leases, etc. Full-year leasing over 450,000 sq ft at avg rent $24.07/sq ft. Comparable lease activity 152,000 sq ft with 23% cash spread. Signed not open pipeline ~6% of in-place cash rents.
• Handling retailer bankruptcies: Successfully regained 4 spaces from Big Lots, Conn's, etc. Working on agreements for 3 Party City and 3 Jo-Ann spaces. Estimates potential releasing spreads 40%-60% for these spaces.
• Acquisition pipeline: Robust with anticipation of closing one or two acquisitions in the near term.
• Balance sheet: In fourth quarter, raised $33M at $19.77 per share, total net proceeds under ATM program $165M for 2024. Ended 2024 with net debt to EBITDA at 6.3 times and $222M liquidity.

In 2024, CTO Realty Growth achieved a weighted average yield of 9.3%. This included $227 million of retail property acquisitions in the Southeast and Southwest and $104 million of structured investment. For leasing, during the fourth quarter, 68,000 square feet of new leases, renewals, and extensions were signed, bringing full-year leasing activity to over 450,000 square feet at an average rent of $24.07 per square foot. On a comparable lease basis, 152,000 square feet were signed for the full year 2024 with a positive cash lease spread of 23% and an average rent of $23.36 per square foot. The signed not open leasing pipeline represents almost 6% of in-place cash rents, with rent commencement weighted toward the second half of 2025.

• For 2025, core FFO range is $1.80 to $1.86 per share and AFFO range is $1.93 to $1.98 per share.
• Settlement of convertible notes will cost approximately $0.05 per share in 2025.
• Guidance includes a $0.10 per share impact related to recently regained retailer spaces, assuming possession around end of Q1 2025.
• Anticipates 50% of signed not open pipeline to impact 2025 and full impact in 2026.

• Convertible note settlement: The cash settlement price is not fully fixed until maturity and will change based on common share price.
• Market conditions: Factors that could cause actual results to differ from forward-looking statements, as disclosed in SEC filings.

Q: Follow up on convertible notes settlement, clarification on cash settlement and no share issuance expectation.

A: Phil Mays states they intend to settle in cash, contractually only right is cash settlement, note holders could still be open to share exchange but currently anticipate cash settlement.

Q: Guidance on 2025 outlook between acquisitions and structured investments.

A: John Albright says presently primarily core acquisitions, no structured investment opportunities in front now but expect some later in the year.

Q: Color on property NOI guidance trend from quarter to quarter.

A: Phil Mays says focus on annual number, generally pretty even with slight bumps, hopefully picking up more in fourth quarter.

Q: Question on Waters Creek structured investment maturing in April, status and resolution.

A: John Albright says was with borrower a week ago, hoping for short-term extension, if got back, anticipate reinvesting at higher yield.

Q: Aggressiveness in expanding structured investment portfolio in 2025.

A: John Albright says maybe add $40M to balance, upper bounds of $50M growth expected.

Q: AMC performance and current state.

A: John Albright says AMCs are top performers in their markets, performing very well with good box office macro backdrop.

Q: Question on ten additional acres next to Forsyth, plan and tenants interested.

A: John Albright says in negotiations with tenants, tenants are investment grade, value creation from income accretion and cap rate compression.

Q: Guidance on additional potential bad debt and unknown vacancies.

A: Phil Mays says known vacancies excluded from 2025, tenants in place have historical 1% bad debt run rate.

Q: Timing of rent commencement for regained spaces in 2026.

A: Phil Mays says hoping most online in first half of 2026, some in latter half depending on timing.

Q: Tenants interested in regained spaces and value creation.

A: John Albright says tenants are investment grade, value creation from income accretion and cap rate compression compared to previous tenants.

Q: CapEx outlook for 2025 and impact on ROI.

A: Phil Mays says CapEx is incremental to run rate, lower end of CapEx on lower end of spread, higher end on higher spread. ROI growth expectations for 2025 in 2-3 range.

Q: Plan on leverage neutrality and equity front-loading.

A: John Albright says want leverage to go down, acquisitions are accretive even at lower stock price levels, getting closer to REIT index inclusion.

Q: Underwriting and mark to market opportunity with Carolina Pavilion acquisition.

A: John Albright says underwriting included potential tenant bankruptcies, mark to market opportunity is exciting with great activity in backfilling tenants.

Q: Revana development schedule changes due to current administration and job losses.

A: John Albright says Revana seeing great activity on multifamily front, no bumps in development schedule due to high housing demand.

Q: Acquisition opportunities from retailer bankruptcies.

A: John Albright says not seeing opportunities from smaller landlords exiting, instead seeing large capital migrating into shopping center space, these bankruptcies are opportunities rather than headwinds.

Q: LOIs and grocer tenants.

A: John Albright says LOIs are for non-grocery tenants, had a grocer opportunity but it was delayed due to their pipeline.