PINE - CTO Realty Growth Reports Third Quarter 2023 Operating Results | Benzinga
WINTER PARK, Fla., Oct. 26, 2023 (GLOBE NEWSWIRE) -- CTO Realty Growth, Inc. (NYSE:CTO) (the "Company" or "CTO") today announced its operating results and earnings for the quarter ended September 30, 2023.
Select Results
- Reported Net Income per diluted share attributable to common stockholders of $0.07 for the quarter ended September 30, 2023.
- Reported Core FFO per diluted share attributable to common stockholders of $0.47 for the quarter ended September 30, 2023.
- Reported AFFO per diluted share attributable to common stockholders of $0.48 for the quarter ended September 30, 2023.
- Sold two properties during the quarter for total disposition activity of $20.9 million at a weighted average exit cap rate of 6.9%, generating total gains on sales of $2.5 million.
- Reported a decrease in Same-Property NOI of (4.5%) for the quarter as compared to the comparable prior year period.
- Signed 14 comparable leases during the quarter totaling 106,190 comparable square feet at an average cash base rent of $25.79 per square foot, representing a comparable decrease of (0.4%).
- Repurchased 6,048 shares of Series A Preferred Stock at an average price of $18.52 per share.
- Increased the midpoint of full year Core FFO per diluted share guidance by 4.9% and full year AFFO per diluted share guidance by 4.5%.
- Paid a common stock cash dividend of $0.38 per share for the quarter, representing an annualized yield of 9.7% based on the closing price of the Company's common stock on October 25, 2023.
CEO Comments
"We had a productive third quarter, selling one of our three remaining single tenant office properties at a gain and acquiring an additional 10 acres of land adjacent to our Collection at Forsyth property outside of Atlanta," said John P. Albright, President and Chief Executive Officer of CTO Realty Growth, Inc. "Operationally, we improved our NOI margins within our existing portfolio through a combination of new tenant rent commencements and property-level cost controls, while also continuing our leasing momentum by leasing over 130,000 square feet during the quarter, generating comparable leasing spreads of 11.4% after excluding the impact of the replacement tenant for The Hall."
Quarterly Financial Results Highlights
The table below provides a summary of the Company's operating results for the three months ended September 30, 2023:
| (in thousands, except per share data) |
| For the Three Months Ended September 30, 2023 |
| For the Three Months Ended September 30, 2022 |
| Variance to Comparable Period in the Prior Year |
| Net Income Attributable to the Company |
| $ |
| 2,686 |
| $ |
| 4,817 |
| $ |
| (2,131 |
| ) |
| (44.2 |
| %) |
| Net Income Attributable to Common Stockholders |
| $ |
| 1,491 |
| $ |
| 3,622 |
| $ |
| (2,131 |
| ) |
| (58.8 |
| %) |
| Net Income per Diluted Share Attributable to Common Stockholders (1) |
| $ |
| 0.07 |
| $ |
| 0.19 |
| $ |
| (0.12 |
| ) |
| (63.2 |
| %) |
| Core FFO Attributable to Common Stockholders (2) |
| $ |
| 10,462 |
| $ |
| 8,684 |
| $ |
| 1,778 |
| 20.5 |
| % |
| Core FFO per Common Share – Diluted (2) |
| $ |
| 0.47 |
| $ |
| 0.47 |
| $ |
| — |
| 0.0 |
| % |
| AFFO Attributable to Common Stockholders (2) |
| $ |
| 10,766 |
| $ |
| 8,957 |
| $ |
| 1,809 |
| 20.2 |
| % |
| 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 |
| $ |
| — |
| 0.0 |
| % |
| Dividends Declared and Paid, per Common Share |
| $ |
| 0.38 |
| $ |
| 0.38 |
| $ |
| — |
| 0.0 |
| % |
| (1) |
| For the three months ended September 30, 2023, the denominator for this measure excludes the impact of 3.4 million shares 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. For the three months ended September 30, 2022, the denominator for this measure includes the impact of 3.1 million shares as the impact was dilutive for the period. |
| (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 nine months ended September 30, 2023:
| (in thousands, except per share data) |
| For the Nine Months Ended September 30, 2023 |
| For the Nine Months Ended September 30, 2022 |
| Variance to Comparable Period in the Prior Year |
| Net Income (Loss) Attributable to the Company |
| $ |
| (1,507 |
| ) |
| $ |
| 6,237 |
| $ |
| (7,744 |
| ) |
| (124.2 |
| %) |
| Net Income (Loss) Attributable to Common Stockholders |
| $ |
| (5,092 |
| ) |
| $ |
| 2,651 |
| $ |
| (7,743 |
| ) |
| (292.1 |
| %) |
| Net Income (Loss) per Diluted Share Attributable to Common Stockholders (1) |
| $ |
| (0.23 |
| ) |
| $ |
| 0.15 |
| $ |
| (0.38 |
| ) |
| (253.3 |
| %) |
| Core FFO Attributable to Common Stockholders (2) |
| $ |
| 28,937 |
| $ |
| 25,396 |
| $ |
| 3,541 |
| 13.9 |
| % |
| Core FFO per Common Share – Diluted (2) |
| $ |
| 1.28 |
| $ |
| 1.41 |
| $ |
| (0.13 |
| ) |
| (9.2 |
| %) |
| AFFO Attributable to Common Stockholders (2) |
| $ |
| 31,410 |
| $ |
| 26,564 |
| $ |
| 4,846 |
| 18.2 |
| % |
| AFFO per Common Share – Diluted (2) |
| $ |
| 1.39 |
| $ |
| 1.47 |
| $ |
| (0.08 |
| ) |
| (5.4 |
| %) |
| Dividends Declared and Paid, per Preferred Share |
| $ |
| 1.20 |
| $ |
| 1.20 |
| $ |
| 0.00 |
| 0.0 |
| % |
| Dividends Declared and Paid, per Common Share |
| $ |
| 1.14 |
| $ |
| 1.11 |
| $ |
| 0.03 |
| 2.4 |
| % |
| (1) |
| The denominator for this measure excludes the impact of 3.3 million and 3.1 million shares for the nine months ended September 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 September 30, 2023, the Company invested $4.3 million into 10.6 acres of land adjacent to The Collection at Forsyth.
During the nine months ended September 30, 2023, the Company invested $80.0 million into four retail property acquisitions totaling 470,600 square feet and one land parcel, and originated one $15.0 million first mortgage structured investment. These investments represent a weighted average going-in cash yield of 7.7%.
Dispositions
During the three months ended September 30, 2023, the Company sold two retail properties for total disposition volume of $20.9 million at a weighted average exit cap rate of 6.9%, generating total gains on sales of $2.5 million.
During the nine months ended September 30, 2023, the Company sold three retail properties for total disposition volume of $22.9 million at a weighted average exit cap rate of 6.7%, generating total gains on sales of $3.3 million.
Portfolio Summary
The Company's income property portfolio consisted of the following as of September 30, 2023:
Asset Type |
| # of Properties |
| Square Feet |
| Weighted Average Remaining Lease Term |
| Single Tenant |
| 7 |
| 372 |
| 5.3 years |
| Multi-Tenant |
| 16 |
| 3,746 |
| 4.3 years |
| Total / Weighted Average Lease Term |
| 23 |
| 4,118 |
| 5.1 years |
Square feet in thousands.
| Property Type |
| # of Properties |
| Square Feet |
| % of Cash Base Rent |
| Retail |
| 16 |
| 2,432 |
| 56.9% |
| Office |
| 2 |
| 331 |
| 7.5% |
| Mixed-Use |
| 5 |
| 1,355 |
| 35.6% |
| Total / Weighted Average Lease Term |
| 23 |
| 4,118 |
| 100% |
| Square feet in thousands. |
| Leased Occupancy |
| 92.8% |
| Occupancy |
| 89.6% |
Same Property Net Operating Income
During the third quarter of 2023, the Company's Same-Property NOI totaled $10.8 million, a decrease of (4.5%) over the comparable prior year period, as presented in the following table.
| For the Three Months Ended September 30, 2023 |
| For the Three Months Ended September 30, 2022 |
| Variance to Comparable Period in the Prior Year |
| Single Tenant |
| $ |
| 1,791 |
| $ |
| 1,699 |
| $ |
| 92 |
| 5.4 |
| % |
| Multi-Tenant |
| 8,971 |
| 9,575 |
| (604 |
| ) |
| (6.3 |
| %) |
| Total |
| $ |
| 10,762 |
| $ |
| 11,274 |
| $ |
| (512 |
| ) |
| (4.5 |
| %) |
| $ in thousands. |
Year-to-date, the Company's Same-Property NOI totaled $29.4 million, a decrease of (3.4%) over the comparable prior year period, as presented in the following table.
| For the Nine Months Ended September 30, 2023 |
| For the Nine Months Ended September 30, 2022 |
| Variance to Comparable Period in the Prior Year |
| Single Tenant |
| $ |
| 5,125 |
| $ |
| 4,880 |
| $ |
| 245 |
| 5.0 |
| % |
| Multi-Tenant |
| 24,279 |
| 25,544 |
| (1,265 |
| ) |
| (5.0 |
| %) |
| Total |
| $ |
| 29,404 |
| $ |
| 30,424 |
| $ |
| (1,020 |
| ) |
| (3.4 |
| %) |
| $ in thousands. |
Leasing Activity
During the quarter ended September 30, 2023, the Company signed 21 leases totaling 132,552 square feet. On a comparable basis, which excludes vacancy existing at the time of acquisition, CTO signed 14 leases totaling 106,190 square feet at an average cash base rent of $25.79 per square foot compared to a previous average cash base rent of $25.90 per square foot, representing (0.4%) comparable decrease.
A summary of the Company's overall leasing activity for the quarter ended September 30, 2023, is as follows:
| Square Feet |
| Weighted Average Lease Term |
| Cash Rent Per Square Foot |
| Tenant Improvements |
| Leasing Commissions |
| New Leases |
| 74 |
| 7.0 years |
| $29.49 |
| $ |
| 1,443 |
| $ |
| 802 |
| Renewals & Extensions |
| 59 |
| 4.1 years |
| $20.79 |
| 89 |
| 63 |
| Total / Weighted Average |
| 133 |
| 5.9 years |
| $25.63 |
| $ |
| 1,532 |
| $ |
| 865 |
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 70 leases totaling 399,914 square feet. On a comparable basis, which excludes vacancy existing at the time of acquisition, CTO signed 45 leases totaling 267,301 square feet at an average cash base rent of $26.15 per square foot compared to a previous average cash base rent of $25.01 per square foot, representing 4.6% 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 |
| 198 |
| 8.3 years |
| $24.93 |
| $ |
| 4,373 |
| $ |
| 2,109 |
| Renewals & Extensions |
| 202 |
| 4.2 years |
| $24.21 |
| 142 |
| 136 |
| Total / Weighted Average |
| 400 |
| 6.3 years |
| $24.57 |
| $ |
| 4,515 |
| $ |
| 2,245 |
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 September 30, 2023, the Company sold approximately 465 acres of subsurface oil, gas, and mineral rights for $0.6 million.
During the nine months ended September 30, 2023, the Company sold approximately 3,481 acres of subsurface oil, gas, and mineral rights for $1.0 million, resulting in a gain of $1.0 million.
During the three months ended September 30, 2023, the Company sold 1.0 mitigation credit for $0.1 million.
During the nine months ended September 30, 2023, the Company sold approximately 9.5 mitigation credits for $1.1 million, resulting in a gain of $0.3 million.
Capital Markets and Balance Sheet
During the quarter ended September 30, 2023, the Company completed the following capital markets activities:
- Repurchased 6,048 shares of Series A Preferred Stock at an average price of $18.52 per share.
- Entered into $160 million of 5-year forward starting interest rate swap agreements to fix SOFR at a weighted average fixed swap rate of 3.78% for periods ending between 2031 and 2033.
The following table provides a summary of the Company's long-term debt, at face value, as of September 30, 2023:
| Component of Long-Term Debt |
| Principal |
| Interest Rate |
| Maturity Date |
| 2025 Convertible Senior Notes |
| .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) |
| 216.0 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 |
| .8 million |
| 4.56 |
| % |
| (1) |
| The Company utilized interest rate swaps on the $65.0 million 2026 Term Loan balance to fix SOFR and achieve a weighted average fixed swap rate of 0.26% plus the 10 bps SOFR adjustment plus the applicable spread. |
| (2) |
| Mortgage note assumed in connection with the acquisition of Price Plaza Shopping Center located in Katy, Texas. |
| (3) |
| The Company utilized interest rate swaps on $100.0 million of the Credit Facility balance to fix SOFR and achieve a weighted average fixed swap rate of 3.28% plus the 10 bps SOFR adjustment plus the applicable spread. |
| (4) |
| The Company utilized interest rate swaps on the $100.0 million 2027 Term Loan balance to fix SOFR and achieve a fixed swap rate of 0.64% plus the 10 bps SOFR adjustment plus the applicable spread. |
| (5) |
| The Company utilized interest rate swaps on the $100.0 million 2028 Term Loan balance to fix SOFR and achieve a weighted average fixed swap ... |