CTO Realty Growth Inc - Ordinary Shares- (CTO) Q2 Earnings call transcript Jul 26, 2024

In the latest earnings call, CTO Realty Growth provided a comprehensive update on its second quarter 2024 performance, showcasing a strong financial position and promising growth opportunities. Here are the key takeaways from the call:

Strong Leasing Environment and Investment Opportunities

CTO Realty's second quarter was marked by robust leasing activity, with 79,000 square feet of new leases, renewals, and extensions signed at an average rent of $25.87 per square foot. This leasing activity, combined with a strategic focus on high-growth markets in the Southeast and Southwest, has positioned the company for continued success. The company's portfolio, comprising 20 properties and 3.9 million square feet, is primarily located in business-friendly markets, driving strong tenant demand and occupancy rates.

Financial Highlights

The company reported a physical occupancy rate of 92.6% and a leased occupancy rate of 94.6%, reflecting the strength of its portfolio. Same-property NOI growth for the second quarter was 2%, and for the first six months of 2024, it was 4%. Core FFO for the quarter was $0.45 per share, representing a 5% increase from the same period in 2023. AFFO for the quarter remained consistent at $0.48 per share. For the first six months of 2024, core FFO was $0.93 per share, and AFFO was $1 per share, marking a 13% and 10% increase, respectively, compared to the first six months of 2023.

Investment Strategies and Guidance

CTO Realty is optimistic about its investment opportunities, with plans to increase its full-year investment range to $200 million to $250 million. The company is actively pursuing acquisitions in its target markets, with a focus on core retail open air centers. The guidance increase reflects the company's confidence in its strong first half results and the favorable transaction market.

Challenges and Opportunities

The call also highlighted ongoing efforts to address vacancy, particularly in larger spaces, such as the former Earth Fare store and the WeWork space. However, the company is seeing increased activity in these markets, indicating potential for future growth. The early repayment of a seller financing loan and the issuance of common shares under its ATM program were strategic moves to optimize the company's capital structure and fund its investment pipeline.

Conclusion

CTO Realty Growth's second quarter 2024 earnings call underscored a company in a strong financial position, with a clear focus on growth opportunities in strategic markets. The company's robust leasing activity, solid financial performance, and strategic investment strategies bode well for its future prospects. As CTO Realty continues to execute on its growth strategy, it is poised to capitalize on the favorable market conditions and deliver value to its shareholders.