CTO Swings to Profit, Raises Full-Year Outlook
Second-quarter revenue rose 17% to $43.8 million as investment income increased.
CTO Realty Growth (CTO), a real estate investment trust focused on shopping centers, swung to a second-quarter profit as property operations strengthened and investment income rose. Net income attributable to common stockholders was $13.2 million, or $0.38 a diluted share, compared with a $25.3 million loss, or $0.77 a share, a year earlier.
The quarter extended an acceleration in same-property performance while CTO shifted more capital toward structured investments. Shopping-center same-property net operating income rose 10.1% from a year earlier, up from 6.8% growth in the first quarter and 4.3% in the fourth quarter of 2024.
Core funds from operations increased 26% to $18.4 million, while Core FFO rose to $0.53 a diluted share from $0.45. The per-share measure edged up from $0.52 in the first quarter and $0.49 in the fourth quarter. Adjusted FFO increased 25% to $19.1 million, or $0.55 a diluted share, compared with $0.47 a year earlier.
Income-property revenue rose to $37.1 million from $33.4 million, while interest income from commercial loans and investments increased to $5.23 million from $3.02 million. Comparable leasing volume climbed to 184,000 square feet from 146,000 in the first quarter, although the cash rent spread narrowed to 6% from 14%. Total leased occupancy held sequentially at 95.4% and remained 150 basis points above its June 2024 level.
CTO completed $152.6 million of investments at a 10.2% weighted-average yield, including $96.4 million of preferred equity yielding 12% and the $53.3 million acquisition of Gallery on the Parkway. It also sold $90.7 million of properties at a 6.7% weighted-average exit cash capitalization rate, helping reduce net debt to 5.8 times pro forma adjusted earnings before interest, taxes, depreciation and amortization from 6.4 times at the end of March.
The company now expects 2026 Core FFO of $2.09 to $2.13 a diluted share, raised from $2.06 to $2.11, and AFFO of $2.21 to $2.25, up from $2.19 to $2.24. It also lifted its investment-volume forecast to $300 million to $400 million from $175 million to $250 million and its shopping-center same-property NOI growth outlook to 5.0% to 6.0% from 3.5% to 4.5%.
CTO financed the expansion partly through the issuance of 4.18 million shares at an average gross price of $20.29, raising $83.6 million net. Commercial loans and investments reached $187.4 million at June 30, up from $104.8 million at year-end, leaving structured investments with a larger role in the company's earnings mix.