WINTER PARK, Fla., July 27, 2023 (GLOBE NEWSWIRE) -- CTO Realty Growth, Inc. (: CTO) (the “Company” or “CTO”) today announced its operating results and earnings for the quarter ended June 30, 2023.
Select Highlights
- Reported Net Income per diluted share attributable to common stockholders of $0.03 for the quarter ended June 30, 2023.
- Reported Core FFO per diluted share attributable to common stockholders of $0.43 for the quarter ended June 30, 2023.
- Reported AFFO per diluted share attributable to common stockholders of $0.48 for the quarter ended June 30, 2023.
- Invested $72.5 million into three multi-tenant retail property acquisitions totaling 464,600 square feet at a weighted average going-in cash cap rate of 8.0%.
- Sold one property for $2.1 million at a weighted average exit cap rate of 4.8%, generating a gain of $0.8 million.
- Reported a decrease in Same-Property NOI of (2.5%) as compared to the comparable prior year period.
- Signed 17 leases totaling 60,528 comparable square feet at an average cash rent of $32.10 per square foot, representing 8.6% comparable growth.
- Repurchased 3,931 shares of common stock at an average price of $15.73 per share.
- Paid a common stock cash dividend of $0.38 per share, representing a 1.8% increase over the second quarter 2022 quarterly common stock cash dividend.
CEO Comments
“Building on our momentum from the first quarter, the quality of our properties, progress of our repositioning programs, and strength of our Sunbelt-focused markets continued to drive strong leasing activity during the second quarter,” said John P. Albright, President and Chief Executive Officer of CTO Realty Growth. “As we look towards the back half of the year and into 2024, we believe that our growing signed but not open pipeline, which now represents more than 3% of current in-place cash base rents, has us well-positioned to drive outsized growth for the benefit of our very attractive 8.5% common dividend.”
Quarterly Financial Results Highlights
The table below provides a summary of the Company’s operating results for the three months ended June 30, 2023:
| (in thousands, except per share data) | For the Three Months Ended June 30, 2023 | For the Three Months Ended June 30, 2022 | Variance to Comparable Period in the Prior Year | ||||||||
| Net Income Attributable to the Company | $ | 1,800 | $ | 1,218 | $ | 582 | 47.8 | % | |||
| Net Income Attributable to Common Stockholders | $ | 605 | $ | 22 | $ | 583 | 2,650.0 | % | |||
| Net Income per Diluted Share Attributable to Common Stockholders (1) | $ | 0.03 | $ | 0.00 | $ | 0.03 | 100.0 | % | |||
| Core FFO Attributable to Common Stockholders (2) | $ | 9,608 | $ | 8,485 | $ | 1,123 | 13.2 | % | |||
| Core FFO per Common Share – Diluted (2) | $ | 0.43 | $ | 0.47 | $ | (0.04 | ) | (8.5 | %) | ||
| AFFO Attributable to Common Stockholders (2) | $ | 10,781 | $ | 8,890 | $ | 1,891 | 21.3 | % | |||
| AFFO per Common Share – Diluted (2) | $ | 0.48 | $ | 0.49 | $ | (0.01 | ) | (2.0 | %) | ||
| Dividends Declared and Paid, per Preferred Share | $ | 0.40 | $ | 0.40 | $ | 0.00 | 0.00 | % | |||
| Dividends Declared and Paid, per Common Share | $ | 0.38 | $ | 0.37 | $ | 0.01 | 1.8 | % | |||
| (1) | The denominator for this measure excludes the impact of 3.3 million and 3.1 million shares for the three months ended June 30, 2023 and 2022, respectively, related to the Company’s adoption of ASU 2020-06, effective January 1, 2022, which requires presentation on an if-converted basis for its 2025 Convertible Senior Notes, as the impact would be anti-dilutive. |
| (2) | See the “Non-GAAP Financial Measures” section and tables at the end of this press release for a discussion and reconciliation of Net Income Attributable to the Company to non-GAAP financial measures, including FFO Attributable to Common Stockholders, FFO per Common Share - Diluted, Core FFO Attributable to Common Stockholders, Core FFO per Common Share – Diluted, AFFO Attributable to Common Stockholders and AFFO per Common Share - Diluted. |
Year-to-Date Financial Results Highlights
The tables below provide a summary of the Company’s operating results for the six months ended June 30, 2023:
| (in thousands, except per share data) | For the Six Months Ended June 30, 2023 | For the Six Months Ended June 30, 2022 | Variance to Comparable Period in the Prior Year | ||||||||||
| Net Income (Loss) Attributable to the Company | $ | (4,193 | ) | $ | 1,420 | $ | (5,613 | ) | (395.3 | %) | |||
| Net Loss Attributable to Common Stockholders | $ | (6,583 | ) | $ | (971 | ) | $ | (5,612 | ) | (578.0 | %) | ||
| Net Loss per Diluted Share Attributable to Common Stockholders (1) | $ | (0.29 | ) | $ | (0.05 | ) | $ | (0.24 | ) | (480.0 | %) | ||
| Core FFO Attributable to Common Stockholders (2) | $ | 18,475 | $ | 16,712 | $ | 1,763 | 10.5 | % | |||||
| Core FFO per Common Share – Diluted (2) | $ | 0.82 | $ | 0.94 | $ | (0.12 | ) | (12.8 | %) | ||||
| AFFO Attributable to Common Stockholders (2) | $ | 20,644 | $ | 17,607 | $ | 3,037 | 17.2 | % | |||||
| AFFO per Common Share – Diluted (2) | $ | 0.91 | $ | 0.99 | $ | (0.08 | ) | (8.1 | %) | ||||
| Dividends Declared and Paid, per Preferred Share | $ | 0.80 | $ | 0.80 | $ | 0.00 | 0.0 | % | |||||
| Dividends Declared and Paid, per Common Share | $ | 0.76 | $ | 0.73 | $ | 0.03 | 3.6 | % | |||||
| (1) | The denominator for this measure excludes the impact of 3.3 million and 3.0 million shares for the six months ended June 30, 2023 and 2022, respectively, related to the Company’s adoption of ASU 2020-06, effective January 1, 2022, which requires presentation on an if-converted basis for its 2025 Convertible Senior Notes, as the impact would be anti-dilutive. |
| (2) | See the “Non-GAAP Financial Measures” section and tables at the end of this press release for a discussion and reconciliation of Net Income (Loss) Attributable to the Company to non-GAAP financial measures, including FFO Attributable to Common Stockholders, FFO per Common Share - Diluted, Core FFO Attributable to Common Stockholders, Core FFO per Common Share – Diluted, AFFO Attributable to Common Stockholders and AFFO per Common Share - Diluted. |
Investments
During the three months ended June 30, 2023, the Company invested $72.5 million into three multi-tenant retail property acquisitions totaling 464,600 square feet at a weighted average going-in cash cap rate of 8.0%. The Company’s second quarter 2023 investments included the following:
- Purchased Plaza at Rockwall, a 446,500 square foot multi-tenant retail power center in the Rockwall submarket of Dallas, Texas for a purchase price of $61.2 million. The property is situated on 42 acres along I-30 just over 20 miles northeast of downtown Dallas, Texas and is anchored by Best Buy, Ulta Beauty, Dick’s Sporting Goods, JCPenney, Belk, Five Below, and HomeGoods.
- Acquired three buildings in the 28,100 square foot retail portion of Phase II of The Exchange at Gwinnett in Buford, Georgia for a purchase price of $11.3 million. The Company is under contract to acquire the final remaining property that makes up the retail portion of Phase II of The Exchange at Gwinnett for a purchase price of $2.3 million. The Company previously purchased the Sprouts-anchored Phase I portion of The Exchange at Gwinnett in December 2021 and currently holds the development loan for the unfinished retail portion of Phase II of The Exchange at Gwinnett.
During the six months ended June 30, 2023, the Company invested $75.8 million into four retail property acquisitions totaling 470,600 square feet and originated one structured investment to provide a $15.0 million first mortgage. These investments represent a blended weighted average going-in cash yield of 8.1%.
Dispositions
During the three and six months ended June 30, 2023, the Company sold one retail property for $2.1 million at a weighted average exit cap rate of 4.8%, generating a gain of $0.8 million.
Portfolio Summary
The Company’s income property portfolio consisted of the following as of June 30, 2023:
Asset Type | # of Properties | Square Feet | Weighted Average Remaining Lease Term | |||
| Single Tenant | 8 | 436 | 5.6 years | |||
| Multi-Tenant | 16 | 3,749 | 4.4 years | |||
| Total / Weighted Average Lease Term | 24 | 4,185 | 5.3 years |
Square feet in thousands.
| Property Type | # of Properties | Square Feet | % of Cash Base Rent | |||||
| Retail | 16 | 2,434 | 54.6 | % | ||||
| Office | 3 | 395 | 9.3 | % | ||||
| Mixed-Use | 5 | 1,356 | 36.1 | % | ||||
| Total / Weighted Average Lease Term | 24 | 4,185 | 100 | % | ||||
| Square feet in thousands. | ||||||||
| Leased Occupancy | 93.4 | % | ||||||
| Occupancy | 91.4 | % | ||||||
Same Property Net Operating Income
During the second quarter of 2023, the Company’s Same-Property NOI totaled $10.9 million, a decrease of 2.5% over the comparable prior year period, as presented in the following table.
| For the Three Months Ended June 30, 2023 | For the Three Months Ended June 30, 2022 | Variance to Comparable Period in the Prior Year | |||||||||
| Single Tenant | $ | 2,147 | $ | 2,036 | $ | 111 | 5.5 | % | |||
| Multi-Tenant | 8,703 | 9,097 | (394 | ) | (4.3 | %) | |||||
| Total | $ | 10,850 | $ | 11,133 | $ | (283 | ) | (2.5 | %) | ||
$ in thousands.
Year-to-date, the Company’s Same-Property NOI totaled $20.2 million, a decrease of 2.4% over the comparable prior year period, as presented in the following table.
| For the Six Months Ended June 30, 2023 | For the Six Months Ended June 30, 2022 | Variance to Comparable Period in the Prior Year | |||||||||
| Single Tenant | $ | 4,048 | $ | 3,892 | $ | 156 | 4.0 | % | |||
| Multi-Tenant | 16,182 | 16,835 | (653 | ) | (3.9 | %) | |||||
| Total | $ | 20,230 | $ | 20,727 | $ | (497 | ) | (2.4 | %) | ||
$ in thousands.
Leasing Activity
During the quarter ended June 30, 2023, the Company signed 24 leases totaling 106,938 square feet. On a comparable basis, which excludes vacancy existing at the time of acquisition, CTO signed 17 leases totaling 60,528 square feet at an average cash base rent of $32.10 per square foot compared to a previous average cash base rent of $29.57 per square foot, representing 8.6% comparable growth.
A summary of the Company’s overall leasing activity for the quarter ended June 30, 2023, is as follows:
| Square Feet | Weighted Average Lease Term | Cash Rent Per Square Foot | Tenant Improvements | Leasing Commissions | |||||||||
| New Leases | 59 | 9.4 years | $ | 22.68 | $ | 734 | $ | 676 | |||||
| Renewals & Extensions | 48 | 3.9 years | $ | 31.37 | 13 | 6 | |||||||
| Total / Weighted Average | 107 | 6.5 years | $ | 26.58 | $ | 747 | $ | 682 | |||||
In thousands, except for per square foot and weighted average lease term data.
Comparable leases compare leases signed on a space for which there was previously a tenant.
Overall leasing activity does not include lease termination agreements or lease amendments related to tenant bankruptcy proceedings.
Year-to-date, the Company signed 49 leases totaling 267,362 square feet. On a comparable basis, which excludes vacancy existing at the time of acquisition, CTO signed 31 leases totaling 161,111 square feet at an average cash base rent of $26.38 per square foot compared to a previous average cash base rent of $24.42 per square foot, representing 8.0% comparable growth.
A summary of the Company’s overall leasing activity for year-to-date 2023, is as follows:
| Square Feet | Weighted Average Lease Term | Cash Rent Per Square Foot | Tenant Improvements | Leasing Commissions | |||||||||
| New Leases | 125 | 9.3 years | $ | 22.24 | $ | 2,930 | $ | 1,307 | |||||
| Renewals & Extensions | 142 | 4.3 years | $ | 25.62 | 53 | 73 | |||||||
| Total / Weighted Average | 267 | 6.4 years | $ | 24.05 | $ | 2,983 | $ | 1,380 | |||||
In thousands, except for per square foot and weighted average lease term data.
Comparable leases compare leases signed on a space for which there was previously a tenant.
Overall leasing activity does not include lease termination agreements or lease amendments related to tenant bankruptcy proceedings.
Subsurface Interests and Mitigation Credits
During the three months ended June 30, 2023, the Company sold approximately 604 acres of subsurface oil, gas, and mineral rights for $0.1 million, resulting in a gain of $0.1 million.
During the six months ended June 30, 2023, the Company sold approximately 3,016 acres of subsurface oil, gas, and mineral rights for $0.4 million, resulting in a gain of $0.4 million.
During the three months ended June 30, 2023, the Company sold approximately 7.7 mitigation credits for $0.9 million, resulting in a gain of $0.3 million.
During the six months ended June 30, 2023, the Company sold approximately 8.4 mitigation credits for $1.0 million, resulting in a gain of $0.3 million.
Capital Markets and Balance Sheet
During the quarter ended June 30, 2023, the Company completed the following capital markets activities:
- Repurchased 3,931 shares of common stock at an average price of $15.73 per share.
- Repurchased 746 shares of Series A Preferred stock at an average price of $18.82 per share.
The following table provides a summary of the Company’s long-term debt, at face value, as of June 30, 2023:
| Component of Long-Term Debt | Principal | Interest Rate | Maturity Date | ||||
| 2025 Convertible Senior Notes | $ 51.0 million | 3.875 | % | April 2025 | |||
| 2026 Term Loan (1) | 65.0 million | SOFR + 10 bps + [1.25% – 2.20%] | March 2026 | ||||
| Mortgage Note (2) | 17.8 million | 4.06 | % | August 2026 | |||
| Revolving Credit Facility (3) | 209.7 million | SOFR + 10 bps + [1.25% – 2.20%] | January 2027 | ||||
| 2027 Term Loan (4) | 100.0 million | SOFR + 10 bps + [1.25% – 2.20%] | January 2027 | ||||
| 2028 Term Loan (5) | 100.0 million | SOFR + 10 bps + [1.20% – 2.15%] | January 2028 | ||||
| Total Debt / Weighted Average Interest Rate | $ 543.5 million | 4.35 | % | ||||
| (1) | The Company utilized interest rate swaps on the $65.0 million 2026 Term Loan balance to fix SOFR and ac |
