CTO Realty Growth Inc - Ordinary Shares- New Stock

Thank you. Thank you.

Hello and welcome to the CTO Reality Growth Q2 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to Jenna McKinney, Director of Finance. Please go ahead.

Good morning everyone and thank you for joining us today for the CTO Realty Grove second quarter 2026 operating results conference call. Participating on the call this morning are John Albright, President and Chief Executive Officer, Phillip Mays, Chief Financial Officer and other members of the executive team that will be available to answer questions during I would like to remind everyone that many of our comments today are considered forward looking statements under federal securities laws. The company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we undertake no duty to update these statements. Factors and risks that could cause actual results to differ materially from expectations are discussed from time to time in greater detail in the company's Form 10-K, Form 10-Q, and other SEC filings. You can find our SEC reports, earnings release, supplemental, and most recent investor presentation on our website at ctoreet.com.

With that, I will turn the call over to John. Thanks, Jenna, and good morning, everyone. Our strategy of owning and operating high-quality shopping centers in high-growth markets, complemented by our structured investments, continues to produce results across all areas of our business. For the quarter, we again delivered strong results driven by robust same property NOI growth, healthy leasing, and $153 million of investments that awaited average initial yield of 10.2%. Starting with leasing, during the quarter we executed 25 new leases, renewals, and extensions, totaling 213,000 square feet, including 184,000 square feet of comparable leases at a positive cash rent spread of 6%. Year-to-date, we have now completed 366,000 square feet of leasing, including 330,000 square feet of comparable leases at a cash rent spread of 10%. Leases signed during the quarter include Cooper's Hawk and Out Parcel Development at Ashley Park and Party Barn Kids at Millennia Crossing, which is in front of the Mall of Millennia in Orlando.

Reflecting this leasing momentum, at quarter end, our total portfolio was 95.4% leased, up 150 basis points from a year ago. The current spread between leased and occupied rates is 400 basis points, and our signed not open pipeline is 6.3 million, representing approximately 5.8% of in-place annual cash base rent. We believe this provides a meaningful and visible earnings tailwind, as these tenants are expected to take possession and commence paying rent through the balance of 2026 and into 2027. One final leafy note, the Cheesecake Factory recently opened its nearly 7,000 square feet of restaurant space at the collection at Foresight in Georgia on July 21st. The opening was highly successful, and the shopping center continues to strengthen its position as a vibrant focal point in Atlanta's most affluent, In addition, demand for the center's 10-acre out parcel remains strong and we are in active lease negotiations with an anchor tenant to take possession. Also, reflecting the strength of our operating performance, same property NOI for our shopping centers increased 10.1% for the quarter compared to the prior year period. This growth continues to be driven by leasing activity across our portfolio, including the anchor backfills that have commenced paying rent.

Phil will provide additional details on same property NOI shortly. Moving to investment activity, during the quarter we fired Gallery on the Parkway, 152,000 square foot open air retail power center in Dallas, Texas for $53.3 million. The center is fully occupied and anchored by d***'s House of Sports, Nordstrom Rack, Cost Plus World Market, and Portillo's. Located on 12 acres along the Dallas North Tollway with over 121,000 vehicles passing daily, this property serves a dense trade area with a population of approximately 368,000 residents within a five-mile radius. It is also just two miles from the proposed site of the Dallas Mavericks New Arena Entertainment District. On a year-to-date basis, we have now completed $234.2 million of investments at a weighted average yield of 9.5%. On the recycling front, during the quarter we completed $90.7 million of property dispositions at a weighted average exit cap rate of 6.7 percent.

These sales included Mass & Yards, 163,000 square foot shopping center in Atlanta, Georgia, and Granada Plaza, 74,000 square foot shopping center in Tampa, Florida. These dispositions allow us to continue recycling capital out of low cap rates, stabilized assets, and into higher yielding investment opportunities. Further, the State of New Mexico is expected to take possession of approximately 98,000 square feet at our Albuquerque, New Mexico office property this fall, bringing the property back to full occupancy. Accordingly, we are now preparing to take this property to market. This will represent our last non-core asset to the State. In addition, we are under contract to sell, subject to customary closing conditions, a 76,500 square foot portion of Carolina Pavilion in Charlotte, North Carolina to a national retailer. This square footage consists of two adjacent vacant anchor boxes. normally leased to Value City Furniture and Joann Fabrics.

Assuming this sale closes, we will have resolved all but one of the vacant anchor boxes we have been discussing on prior calls. Based on the eight completed anchored leases and current lease negotiations for the one remaining vacant box, we positive lease spread of approximately 75% for these nine anchor spaces combined. Notably, beyond the favorable earnings impact driven by these new anchors, we believe that they will also drive more foot traffic and create vibrancy to our shopping centers. Turning to our structured investment platform, which continues to be an attractive complement to our investment strategy. During the quarter, we originated two preferred equity investments totaling $96.4 million. The first was a previously announced $75 million preferred equity investment in a Class A Premier Retail Property located in the Southwest, which generates a 12% initial cash yield and has a two-year term. with a $21.4 million preferred equity investment in a grocery-anchored development located in the Northeast, which generates a 12% initial yield, including 3% accrued paid-in-kind interest, and has an 18-month term. After the quarter end, we originated a $37 million first mortgage investment secured by a leasehold interest in a mixed-use property located in Austin, Texas, of which $29.8 million was funded at closing.

This investment generates a nine and three quarters initial cash yield and has a two-year term. Including this investment... Our pro forma structured investment portfolio stands at approximately $222 million, or approximately 15% of undepreciated assets, which is our target. The pro forma structured investment portfolio generates a weighted average yield of approximately 11.5%. Just a brief update on our six identified and out parcel opportunities. As previously discussed, last quarter we signed a lease with Swig for a drive-through customized beverage store at Marketplace at Seminole Town Center located in the Orlando Market. In this quarter, we signed a lease with Cooper's Hawk at Ashley Park located in Atlanta. and a market. We remain active in lease negotiations for the remaining pour-out parcels, which are located at Beaver Creek, West Broad Village, Plaza at Rockwall, and Collection at Foresight. continue to expect these six out parcels combined to generate a low double-digit unlevered yield on approximately $30 million of investment, with capital being deployed over late 2026 and into 2027, and beginning to contribute to earnings in 2027, with the full benefit expected to be recognized in 2028.

We look forward to providing updates related to this initiative as additional leasing is completed. Looking forward, we have built a robust pipeline of acquisition opportunities and are actively underwriting shopping centers that align with our growth strategy. We expect to close at least one additional acquisition before year end, further strengthening our portfolio. Together with our year-to-date activity, this leads us to raise our investment volume guidance by over $100 million to a new range of $300 million to $400 million. In summary, we are very pleased with our performance through the first half of 2026, and we remain excited about the embedded growth drivers across our portfolio, including our below-market in-place rents, our signed-not-open pipeline, our out-parcel development opportunities, and our disciplined capital recycling. We believe these initiatives position the company to deliver meaningful earnings growth for years to come.

With that, I will hand the call over to Phil. Thanks, John. On this call, I will briefly highlight our quarter results, provide an update on our same property NOI growth and balance sheet, and discuss our updated 2026 outlook. For the second quarter, core FFO was $18.4 million, a $3.8 million increase compared to $14.7 million reported in the comparable quarter of the prior year. On a per diluted share basis, core FFO was 53 cents per share versus 45 cents per share, an increase of nearly 18% ASFO was $19.1 million for the quarter, an increase of $3.9 million compared to $15.3 million reported in the comparable quarter of the prior year. on a prediluted share basis was 55 cents per share versus 47 cents per share. The growth in both core FFO and AFFO was primarily driven by leases executed over the past year that have commenced paying rent along with earnings contributions from our recent acquisitions and structured investments. Regarding same property NOI, as John mentioned, same property NOI for our shopping centers increased 10.1% in the quarter compared to the prior year period. year-to-date basis, shopping centers' same property NOI increased 8.2% or 7%, excluding certain non-recurring recovery benefits recorded during the first quarter of the year. Total same property in Hawaii, including our few non-core properties, increased 6.7% for the second quarter and 4.5% for the six months into June 30th.

This year-to-date growth, including non-core properties, was impacted by one tenant vacating 98,000 square feet of the 212,000 square feet at our Albuquerque, New Mexico property at the beginning of December in 2025. This is a great opportunity to see the growth of the property. As John discussed earlier, the space has been fully leased to the State of New Mexico, which is expected to commence paying rent in late 2026. Strong-same property and wide growth for our shopping centers in the first half of the year was driven by new anchor tenant openings, including One Life Fitness at Beaver Creek, Barnes & Noble at the Plaza at Rockwall, and the Pickler Pickleball Facility at the Collection at Foresight, all of which opened in late 2025 and are now contributing to cash rent against a price of $1,000. your period that excluded them. As we move into the back half of the year, the tenants along with certain anchor backfields that took possession and began paying cash rent late in 2025 will begin to roll into the prior year comparable periods. In addition, the third quarter of 2025 had unusually low bad debt expense accordingly, While we still expect healthy same-store growth going forward, we expect it to moderate from the beginning of the year pace. Moving to the balance sheet, at June 30th, we had total debt of $660.8 million, consisting of $643 million of unsecured borrowings and $17.8 million mortgage note payable, with a weighted average interest rate of 4.6%.

At the quarter, the total liquidity of $131.8 million, consisting of $107 million of undrawn commitments under our revolving credit facility and $24.8 million of cash on hand. Our only remaining debt maturity in 2026 is the $17.8 million mortgage note payable, which matures in August and carries an interest rate of 4.06%. At maturity, we intend to repay this mortgage using our revolving credit facility. During the quarter, we issued approximately 4.2 million common shares under our common stock ATM program at a weighted average gross price of $20.29 per share for total net proceeds of $83.6 million. For the six months ended June 30th, we issued approximately 4.9 million common shares at a weighted average gross price of $20.18 per share for total net proceeds of $97.8 million. These proceeds, together with our disposition and structured investment repayment activity, funded our investment volume while allowing us to reduce leverage. As a result, we ended the quarter with net debt to pro forma adjusted EBITDA of 5.8 times, a decrease of 0.6 times from the end of the first quarter.

We expect to continue to delever as our sign-out open pipeline commences paying rent, although leverage can vary quarter by quarter depending on investment and disposition activity and how we do it. it is funded. Regarding our investment and management of Alpine Income Property Trust, income from Pine for the quarter was $2.1 million, consisting of $1.4 million in management fees and $.7 million in dividend income. Reflecting Pine's recent earnings and dividend growth, our new annualized run rate is $8.9 million, consisting of $8.9 million in dividend income $5.7 million in management fees and $3.2 million in dividend income, representing a $.4 million increase from the annualized second quarter results. One unusual item that I would like to note, income tax expense was elevated at $1.1 million. Of this amount, approximately $800,000 is related to deferred taxes on unrealized gains on securities such as Pine, held in our taxable REIT subsidiary or TRS, and does not affect our non-GAAP measures. Because such unrealized gains are excluded net of income taxes. Accordingly, only approximately $300,000 of income tax expense impacted our non-GAAP measures this quarter.

Now turning to guidance, reflecting our strong first half results and our completed and pending investment activity, we are raising our full year 2026 outlook. We are increasing core FFO guidance to a new range of $2.09 to $2.13 per diluted share, up from our prior range of $2.06 to $2.11. And we are increasing our AFFO guidance to a new range of $2.21 to $2.25 per diluted share, up from our prior range of $2.19 to $2.24. At the midpoint, our revised core FFO guidance represents approximately 13% growth compared to actual results for 2025. Key assumptions reflected in our revised guidance include investment volume, including commercial loans and structured investments of $300 million to $400 million, up from our prior range of $175 million to $250 million, same property NOI growth for shopping centers of 5% to 6% up from our prior range of 3.5% to 4.5%, and general and administrative expenses of $20 million to $20.2 million. And with that, operator, please open the line for questions.

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you'll need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Matthew Airdner from Jones. Your line is now open.

Hey, good morning guys. Thanks for taking the question. I'd like to touch on the sign not open pipeline. So, kind of the recognition of that across 2027, is that going to be kind of balanced throughout the year? Is it more loaded into kind of the first or second half?.

Yes, hey Matt, it's Phil. Over at 27, it'll be pretty even. Going for the remainder of this year, there's probably four or five 400,000 or so that picked up in the third quarter, then that probably doubled to about 800,000 or so in the fourth quarter. And then it's pretty, then everything is almost online. over 90 percent online after that and it's pretty evenly going forward. a million, three million, four quarter going forward. And that's just base rent. Okay.

Got it. That's helpful. And then kind of looking ahead to 27, 28, you have 27% of the ABR kind of rolling over. Have you had any preliminary discussions there? And then I guess what opportunity do you think that provides you guys on top of the current situation?.

sign out some pipeline and then the out parcel development. Yes. So in a particular order, we have a very robust lease negotiations and LOI stages and discussions with almost all of the rest of the vacancy. So if all that kind of comes through, you're going to be high 98% sort of level. But on the, basically the, Tenants that are expiring, they're really the one hole we'll have that's kind of meaningful would be in West Broad where we're having a tenant downsize. But everything else is pretty, I think we mentioned before that our theater in Phoenix, we're working on a tenant to take over that box. So that will be good. But we really don't have any issues that have any concern. We have good renewals and a lot of interest for the boxes.

Yes, and you'll see even start our next quarter that 27 explorations come down. I think we've already had a couple people getting close to 100,000 square feet already renewed. So you'll start to see those just kind of come down as we get closer to year end as is typical.

Perfect. Awesome. Thank you, guys. Thanks. Thank you. Our next question comes from the line of Craig Kuchera from Lucid Capital Markets. Your line is now open.

Hey, good morning. John, you sold out of Atlanta this quarter. Was that more of a portfolio decision to reduce exposure there or AMC, or did you just think the asset had reached full value since I think it was about 99% occupied?.

Yes, a little bit of all of the above. Obviously Atlanta was our largest market, so lighten up that market probably was prudent. But AMC sort of was something that investors and analysts brought up quite a bit. So knocking out an AMC AMC was good. And obviously the cap rate was low where we can recycle into an accretive acquisition like the one we did in Dallas on the Dallas North Tollway.

Got it. And I'd like to talk about that transaction, which appears to be a little different than your typical acquisition. I think it's about 100% occupied, but it sounds like in a great location. Is there any value add opportunity there? Maybe out parcel development or below market rents, or I guess kind of what's the, or was it just a high cap rate and a very attractive market?.

Yes, you're right, Craig. You answered it for me that, you know, it was a very attractive location. right by north of the Galleria Mall, but close to where the Dallas Mavericks are going to build their arena. And basically the cap rate was higher than you would normally think for stabilized assets. And d***'s had just taken over and opened a new box, and Portillo's had just opened. And the ability to sell off a pad site if we wanted to, for instance, the Portillo's would make it even more accretive on the cap rate. We don't intend to, but that's a potential kind of value enhancing opportunity we have.

Okay, great. Changing gears, Phil, you had some interest rate swaps expiring over at Pine. Can you give us some color on your thoughts on the January 2027 expirations? Are you expecting to swap them again, or kind of your thoughts there?.

Yes, I mean, we will keep all of our term loans swapped. I believe there is a roll up in rate on the 27. don't want to call right off the top of my head what it's probably going to run, but that will run up closer to like a market rate. Most of our term loans, if we were to do new swaps now, Craig, would be around 5%. thinking about new term loans going forward that's probably a decent rate to model.

Okay, that's useful. Just one more for me, John. I think the Whole Foods loan you did was the first investment you made outside of the South.

Was that more of a one-off or do you think CTO might grow and deploy more capital maybe outside of the south and southwest going forward? I think more one-off. The developer we did that with is, you know, super talented and has a big pipeline of Whole Foods developments. We may be able to do some more with him in the future. So, yes, this is more of a one-off. Okay. Thank you.

Thank you. Our next question comes from Jay Cornright from Cantor Fitzgerald. Your line is now open.

Hey, thanks. Good morning. If I could just ask a bigger picture question to start, you know, can you talk a little bit about the general supply demand fundamentals you're seeing across the portfolio? You know, is it correct to say that even the power centers have become, I guess, more of a landlord's market where you have more pricing power than, you know, say a year ago where you may be experiencing some cap rate compression? Sure. and then just finally within that, if that is the case, is that what led to the increase in same-store NY in guidance, or are there other dynamics pushing that higher? Sure. I'll take the first part of that question. I'll let Phil answer the second part. Look, definitely the power center market has been, very strong of late and a lot of investor, more investor interest, more diverse tenant interest because you think about it, these large formats are in locations, you can't find the land, you can't build it for the cost that we're able to buy these things for. And so tenants are able to get in good locations good markets for the box they need. And these power centers are sort of morphing into, you know, community centers. For instance, at Carolina Pavilion, we mentioned that we're under contract to sell vacant Joann's to a tenant, and the tenant is a tenant that usually doesn't go into a power center.

So, it'll be great for this center to create more traffic and diverse traffic. and bring down the cap rate of the property by a fair amount in our opinion.

Yes, and then on the same store, Jay, it's really kind of three different things moving it. You know, one, I've talked about it before, you know, the same store pool is relatively small. A couple hundred thousand and a quarter is a hundred bips of growth. So I think early in the year we tend to be a little conservative. And then beyond that, just on the revenue side, tenants just moving in at a little quicker pace and getting open. a little quicker. And on the expense side, we really had expenses, I think even if you look comparably, they're down year over year. And it's really three things. The management expense is a little less as we've internalized management at a couple properties. favorable insurance renewal and insurance cost came down and then just timing of repair maintenance it was a little lighter in the quarter so it's really just kind of all of those things that led to the the bump in same-store guidance.

Okay, I appreciate that. And then I guess maybe just following up on the reference to the Caroline Pavilion and the two vacant anchor boxes that you're under contract to sell there. I guess over the past year and a half, two years, there's been a lot of discussion just around the 10 or 11 vacant big box assets, finding tenants. lease that up. So just curious to hear more about what made selling these assets the more compelling opportunity. And then assuming the sale does close, how do you want to utilize those proceeds? Yes, so one really our intention to sell it, but the user really wanted to buy it versus a lease. And so given that the use that this tenant would have is very accretive to the whole center, definitely made it an easy choice for us. And obviously it lessens the cap backs for us. We don't have to do a lot of TI that a normal tenant would require.

And then on the other box that we have there, at cons were in the final throws of a lease negotiations there. And so we hope to kind of get that announced in 30 days or, uh, or less and, and get them going. Uh, so that's going to be great to fill out that property. Um, But I'm sorry, what was the last question on part of the proceeds? Initially, we'll just take the proceeds and pay down the line, Jay. Okay, great. If I could just squeeze in one last one just on the reference to the office property in New Mexico. like you're about to go to market with that asset, is that likely do you think to be, you know, a second half of 2026 event or, you know, what do you think about just terms of the timeline to actually get that asset sold? It will probably be the end of the year or early next year. Given the tenant state of New Mexico, most likely we'll get occupancy before October. And so certainly a buyer is going to want to have that and see how the property looks before it. executing on something.

So we're out in the market now, but don't anticipate something happening until the very end of the year or next year.

Okay, great. Thank you very much. Thanks. Thank you. Our next question comes from the line of RJ Milligan from Raymond Jones. Your line is now open.

Yes, hey, good morning, guys. John, just to follow up on the last question, can you give us any indication on the expected pricing on that sale? Sure.

Yes, we haven't come out with that. So, you know, certainly... know with state of New Mexico as far as you know where we internally had the property NAV and so forth it's it's definitely higher than it was a year ago but there are there are costs associated with putting a state of Mexico in, but is that a cap rate that we feel like it's going to trade that we'll be able to move that capital into a retail property with not as, not a big frictional sort of decrease.

and yield maybe a little bit, but not a big one. Okay, and then as we think about property dispositions going forward, portfolio recycling, do you still view that there's a lot more to do or is this pretty much, you know, as we get into, after the office asset sale, there's not a lot left to do on the disposition side? I mean, there's a couple that,.

smaller properties, more stabilized, lower cap rate that we may recycle. On the acquisition side, we have something that we're working on. So if that kind of works out and we close on it, then we may want to push out another property.

Okay, and then bigger picture, John, on the structured investment side, I'm just curious if the changing rate outlook has impacted your view on, you know, investment risk or reinvestment risk as some of those investments are paid back?.

Yes, I think actually the industry environment is going to help us as far as deal flow when we want to replace some of the structured investments. I think a lot of borrowers, developers, banking on lower rates to refi. And when that's not going to happen, we may be. in a situation where we can provide some solutions there. So I think it's going to be more opportunity for us in the future rather than less.

Great. That's it for me. Thanks, guys. Thanks. Thank you. Our next question comes from the line of Gaurav Mehta from Alliance Global Partnerships. Your line is now open. Thank you. Good morning. I wanted to ask you on your same property NOI guidance, 5 to 6 percent, is that number adjusted for non-recurring items?.

adjusted for... Is that number comparable to 7%? We always take out lease term fees and unusual items like that. The first quarter, if you recall, did have some CAM true-ups, non-recurring items that we include and we leave in because it can happen from time to time so those are in there but as far as you know term fees and and and one-off items like that we always back out of the same.

property NOI. Okay. In your prepared remarks, you talked something about the bad debt expense that seemed like it was lower in the comparable period for last year. And so, the expectation is that bad expense should be like normalized for second half of this year that goes into same property NOI? Yes. So, we've generally been running around 100 basically.

points for bad debt and it's generally fairly consistent. We did have just in Q3 of last year, we had a couple of tenants that were basically fully reserved who got current. and so we collected that and it pushed bad debt in the third quarter down close to zero so that just i was just highlighting that only because you know it makes the third quarter a little tougher of a comp going forward on same store growth. And so it was just highlighting that so you could see same store growth moderates a little in the third quarter, you wouldn't know why.

Okay, understood. On the balance sheet, your leverage is 5.8 times. In the remarks, you mentioned that there could be further deleveraging of the balance sheet. So how should we expect that number to evolve over this year or next year?.

Yes, so just in the remarks, I was really just referring more to like, is our same sign not open pipeline comes online and we get some rent bumps here on some renewals and some new leasing just organically. But the sign not open pipeline and some leasing that we're working on, it should take it down about a half a term. And I was just referring to that. Okay, understood. Thank you. That's all I had.

Thank you. Our next question comes from the line of John Masoka from Riley Riley Securities.

Good morning. Morning, Dan. So maybe sticking with kind of the same store theme in the back half of the year, you kind of mentioned the favorable insurance renewal and the prospect of a new insurance renewal. property management efficiencies as being tailwinds. Do you lap those at some point here in 2H, or is it really going to be kind of a tailwind through the remainder of the year?.

Those two items will be a tailwind for the remainder of the year. The comp gets tougher in the second half for a couple of reasons. One, just the bad debt being basically zero in the third quarter last year. And then the anchor lease that we've been doing is starting to come online. So early in the year, there really wasn't any of those rents in the prior year comparable period as we kind of move on and get towards the latter part of the year. You have some of those rents that had come online in the prior comparable period that will make the comp period a little tougher. But we still fully expect healthy same-store growth for the remainder of the year.

Okay. And then you mentioned the anchor boxes, you know, coming out at around a 75% positive lease spread. I know when you had originally talked about kind of repositioning those assets or re-tenanting those assets, there was kind of, you know, higher lease spread was going to translate to kind of a higher CapEx spend. Is that what ended up happening? And I guess, I mean, how does that outlook, change the outlook for your CapEx spend or impact the outlook for your CapEx spend and kind of 2H and maybe into 2027?.

Kevin? Yes, so we've got with the two being sold, that leaves nine. of them are leased we have the one left those blended we expect it's 75% maybe even a little higher and we're just on the high end of the capex range we originally gave we're not that has not increased I think the high end was around 15 million in total and we'll be inside of that So the CAPEX is still generally coming in line with the higher end of where we thought it would be. The spreads have just come in better. I think we'll be at 75% or potentially we may even get to 80% once we finish the last box.

And then, you know, if I think about kind of the remaining investments, sorry, they're the remaining difference between what you've done year to date in terms of investments and kind of the pipeline or the guidance that's out there, how much of that is kind of really tangible in the pipeline and how much of that is maybe more theoretical as you look into kind of late three Q, four Q, uh,.

Yes, we feel pretty lucky that we have identified some opportunities that feel like they're very realistic.

we have is identifiable. Okay. And that's it for me. Thank you very much.

Thanks. This concludes the question and answer session and our call for today. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Hello, and welcome to the Annual Meeting of Stockholders of CTO Realty Growth, Inc. Please note that today's meeting is being recorded.

It is now my pleasure to turn this morning's meeting over to Laura M. Franklin, Chairman of the Board of CTO Realty Growth. Ms. Franklin, the floor is yours.

Good morning, everyone. Pursuant to the company's third amended and restated bylaws, I will preside as Chair of this meeting. I would like to welcome all of you to the 2026 Annual Meeting of Stockholders of CTO Realty Growth.

We are conducting this meeting in virtual format only, which will enable stockholders to listen to the proceedings from any computer, tablet or handheld device that has Internet connectivity.

Participants in this meeting from the company include the senior management team and all of the independent directors as well as Computershare Trust Company, N.A., the Inspector of Elections, and a representative of Grant Thornton, our independent registered public accounting firm.

I understand we have approximately 11 others who are listening to the meeting via the virtual meeting portal. Mr. Daniel Smith, Secretary of the company, will act as Secretary of the meeting.

Now to proceed with the business of the meeting. Mr. Smith will confirm that the notice of this meeting was given to all stockholders as of the record date for the meeting. Dan?

I hereby certify that the stockholder meeting notice regarding the notice of Annual Meeting of Stockholders and availability of the 2026 proxy statement over the Internet was mailed to stockholders of record as of April 16, 2026, and that the mailing was commenced on May 5, 2026.

Additional copies of the proxy statement and a complete list of the stockholders of record as of the record date are available for your inspection and have been properly filed with the minutes of this meeting.

Thank you, Dan. I would now like to introduce Ms. Christine Abbey of Computershare Trust Company, N.A., who is participating in this meeting. Computershare has been appointed as Inspector of Elections for this meeting. Ms. Abbey's oath as Inspector of Elections will be filed with the minutes of the meeting. Ms. Abbey will confirm the presence of a quorum when she completes her tally of stockholders' proxies and ballots.

Now it is my pleasure to introduce your current Board of Directors: John Albright; George Brokaw; Chris Drew; myself, Laura Franklin; Blake Gable; and Chris Haga. A copy of the agenda for the meeting is available on the virtual meeting portal, along with a list of the rules of conduct for the meeting.

By following those rules and procedures, stockholders who logged in with their unique 15-digit control number will have an opportunity to participate in the meeting, and we will be able to handle the business of the meeting efficiently and fairly.

As stated in the rules of conduct, only those stockholders or their representatives who are logged into the virtual meeting with their control number will have the opportunity to vote their shares and submit questions during the meeting.

As stated in the rules of conduct, we ask that you restrict any questions to the items on the meeting agenda. Please note that any questions submitted during the meeting will be answered later in the meeting after the formal business portion has concluded. Thank you for your cooperation with these rules. It is now time to begin the formal part of the meeting.

As noted in the notice and proxy statement previously furnished to you, the record date for stockholders entitled to vote at the meeting was the close of business on April 16, 2026.

We believe that the total number of shares of the company, which are held by holders of record now present at the meeting, either in person or by proxy, is sufficient to declare that we have a quorum. Such determination is subject to verification by the Inspector of Election.

The next order of business to come before this meeting is a description of the matters properly brought before today's meeting. Proposals and director nominations from the company's stockholders in order to be properly brought before this meeting must have been submitted by January 19, 2026.

No stockholder proposals or nominations were properly submitted, which means that the only proposals and nominations properly before this meeting are those submitted by the Board. Voting on the proposals will commence after all proposals have been presented.

The first proposal before the stockholders of the company is the election of 6 directors for 1-year terms expiring upon the election and qualification of directors at the company's 2027 Annual Meeting of Stockholders. The Board of Directors of the company has recommended the election of John Albright; George Brokaw; Chris Drew; Laura Franklin; Blake Gable and Chris Haga to the Board. These 6 individuals are the only persons who have been nominated to stand for election to the 6 positions on our Board of Directors. No other nominations were made in compliance with the company's bylaws. Accordingly, all nominations are closed.

The second proposal before the stockholders of the company is the ratification of the appointment of our Audit Committee -- by our Audit Committee of Grant Thornton LLP as the company's independent registered public accounting firm for fiscal year 2026, which is described on Page 59 of the proxy statement.

The third proposal before the stockholders of the company is an advisory vote to approve executive compensation described on Page 61 of the proxy statement.

The fourth proposal before the stockholders of the company is the approval of the company's 6 amended and restated 2010 equity incentive plan as described beginning on Page 62 of the proxy statement.

The next order of business is a vote on the proposals. It is currently 11:06 a.m., and I declare the voting open. Stockholders who logged into the virtual meeting portal using the unique 15-digit control number may vote their shares during the meeting. In addition, prior to today's meeting, voting on the proposals was conducted by proxy via mail, phone and Internet.

[Voting]

It is approximately 11:07 a.m., and I hereby declare the voting closed. The inspector of elections will now count the votes. Will the Secretary please report the results of the voting?

We have been informed by the Inspector of Elections that the ballots have been counted and that the 6 nominees for election to the Board for a 1-year term have all been duly elected.

The appointment of Grant Thornton LLP has been ratified. The advisory vote regarding executive compensation has been in the affirmative and the stockholders have approved the company's sixth amended and restated 2010 equity incentive plan.

Consistent with the company's bylaws, no advanced notice has been given to the company regarding any other business to be conducted at this meeting. Therefore, no other business will be considered at this meeting. The official business portion of this meeting is now adjourned.

Before we disperse, however, as is customary, we would like to turn our remaining time over to the company's President and CEO, John Albright, who will now address any questions that have been submitted during the meeting.

If you have a question or comment, please follow the instructions on the virtual meeting portal, and please follow the rules and procedures for conduct of the meeting that were previously made available to you.

Laura, no questions have been submitted.

Thank you, Dan. That concludes the question-and-answer session. Thank you again for your attendance.

This concludes the meeting. You may now disconnect.

Good day, and thank you for standing by. Welcome to the CTO Realty Growth Q1 2026 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jenna McKinney, Director of Finance. Please go ahead.

Good morning, everyone, and thank you for joining us today for the CTO Realty Growth First Quarter 2026 Operating Results Conference Call. Participating on the call this morning are John Albright, President and Chief Executive Officer; Philip Mays, Chief Financial Officer; and other members of the executive team that will be available to answer questions during the call. I would like to remind everyone that many of our comments today are considered forward-looking statements under federal securities laws.

The company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we undertake no duty to update these statements. Factors and risks that could cause actual results to differ materially from expectations are discussed from time to time in greater detail in the company's Form 10-K, Form 10-Q and other SEC filings. You can find our SEC reports, earnings release, supplemental and most recent investor presentation on our website at ctoreit.com.

With that, I will turn the call over to John.

Thanks, Jenna, and good morning, everyone. We are pleased to report a strong quarter to start the year, highlighted by a robust leasing and strong same-store NOI growth as well as the $81.6 million acquisition of a high-quality shopping center in Texas. Our strategic focus on shopping centers located along growth corridors primarily in the Southeast and Southwest markets of the United States, along with the proactive asset management and leasing continues to produce strong results. Starting with retail leasing.

During the quarter, we executed leases, renewals and extensions totaling 153,000 square feet, including 146,000 square feet of comparable leases at an average cash rent increase of 14%. Our leasing activity for the quarter was spread across our portfolio, but particularly positive at [indiscernible] Crossing in Orlando, where we signed a lease with Williams Sonoma to fill the former Mattress Firm space. And just after quarter end, we signed a lease with Pottery Barn Kids to fill a space that had been vacant since we acquired the property. Combined, this activity has increased [indiscernible] Crossing to 97% leased and improves the quality of the tenant roster and value of the asset. Further, our only shopping center with leased occupancy below 90% is now Carolina Pavilion at 83%, and we are in active negotiations with tenants for all the remaining vacancy.

We look forward to providing announcements of this leasing activity at this shopping center in the future. We are also making strong progress with the 6 outparcel opportunities we discussed on our last call. During the quarter, we signed a lease with Swig for a drive-through customized beverage store at Marketplace at Seminole Towne Center located in Orlando. And just after quarter end, we signed a lease with Cooper's Hawk at Ashley Park located in Atlanta market. In addition, we have executed LOIs or in active lease negotiations for the remaining 4 outparcels. We continue to expect these 6 outparcels to generate low double-digit unlevered yield on approximately $30 million of investment. We anticipate that this $30 million will primarily be deployed and begin contributing to earnings in 2027 with the full benefit expected to be recognized in 2028.

We also look forward to providing additional announcements related to this initiative in the coming quarters. Reflecting our leasing progress at quarter end, our portfolio was 95.4% leased and our Signed-Not-Open pipeline totaled $6.2 million of annual cash base rent, representing approximately 5.5% of in-place annual cash base rent. We believe this pipeline of new lease revenue will provide a meaningful earnings tailwind beginning as we move through 2026 and into 2027. Further, leasing activity completed over the prior year for which tenants have commenced paying rent is already beginning to benefit NOI. For the quarter, same-property NOI for shopping centers increased 6.8% compared to the comparable prior year period. Excluding the benefit of certain nonrecurring items, same-property NOI for shopping centers grew at a healthy 4.2%.

Moving to investment activity. During the quarter, we announced an acquisition of Palms Crossing, a 399,000 square foot open-air center located in McAllen, Texas for $81.6 million. Palms Crossing is anchored by Best Buy, Hobby Lobby, Burlington Coat Factory, Barnes & Noble and Nike and is currently 98% leased and benefits from strong cross-border shopping. This property has also provides the opportunity to develop 2 additional outparcels beyond the 6 discussed earlier. With this acquisition, Texas is now our third largest state by ABR and combined contribution from Georgia, Florida, North Carolina and Texas increased to 85% of total ABR. On the property recycling front, Madison Yards located in Atlanta is under contract with a nonrefundable deposit, and we expect the sale to close in May.

Madison Yards is 99% leased and the anticipated sale would enable us to extract value from a stabilized asset while also reducing our AMC Theatres exposure to only 2 locations, which are both high performing. Further, the anticipated sale, along with Palms Crossing acquisition will complete the recycling proceeds at a positive cap rate spread contributing to future earnings growth.

As we move forward, we're evaluating additional property sales, focusing on recycling capital from stabilized properties into assets at positive initial yield spread with the potential for value-add opportunities and higher earnings growth in the future. Now turning to our structured investments. During the quarter, we received full repayment of our [indiscernible] $30 million preferred investment in Watters Creek Village. This repayment was expected and represents the only structured investment scheduled to mature in 2026. More notably, just after the quarter end, we completed a $75 million preferred equity investment in a Class A premier retail property located in the Southwest. This preferred investment yields 12% and has a term of 2 years. This activity increased our structured investment portfolio by $45 million to $158 million subsequent to quarter end with a weighted average yield of 11.6%. In summary, 2026 is off to a great start, and we are in a great position to sustain our growth in the quarters ahead.

Our portfolio continues to perform well and is supported by embedded growth drivers, including in-place below-market rents, our Signed-Not-Open pipeline, planned outparcel developments and disciplined capital recycling. Collectively, we believe that these initiatives can support meaningful earnings growth for several years to come and contribute to our increased guidance for core FFO and AFFO per diluted share to new ranges that imply approximately 12% growth at the midpoint.

And with that, I will now hand the call over to Phil.

Thanks, John. On this call, I will briefly highlight our earnings, provide an update on our balance sheet and discuss our raised 2026 outlook. Starting with operating results. For the first quarter, core FFO was $16.9 million, a $2.5 million increase compared to $14.4 million reported in the comparable quarter of the prior year. And on a diluted share basis was $0.52 per share versus $0.46 per share. AFFO was $18.2 million for the quarter, an increase of $2.7 million compared to $15.5 million reported in the comparable quarter of the prior year and on a diluted share basis was $0.56 per share versus $0.49 per share. The growth in both core FFO and AFFO was primarily driven by leases executed over the past year that have since commenced paying rent, although it did include approximately $0.01 related to nonrecurring recovery benefits from final 2025 CAM, real estate taxes and insurance billings that tenants recorded in this quarter.

With regards to property operations, as John mentioned, same-property NOI for shopping centers increased 6.8% in the first quarter compared to the comparable quarter of the prior year. Excluding the nonrecurring recovery benefits discussed earlier, same-property NOI for our shopping centers still increased a healthy 4.2%. Given the relatively small size of our same-property NOI, $200,000 impacts quarterly growth by approximately 100 basis points. Accordingly, unusual and nonrecurring items like this can occasionally skew our same-property NOI, so we want to highlight the impact of such items when appropriate. Notably, shopping center properties represented 97% of total same-property NOI for the quarter.

Total same-property NOI, including our few noncore properties, increased 3.4% for the quarter. This growth was impacted by one tenant as previously announced, vacating 98,000 square feet at our Albuquerque property at the beginning of December 2025, which more than offset the nonrecurring recovery benefits recorded. As a reminder, this vacancy has been fully leased to the state of New Mexico, which is expected to commence paying rent in late 2026. Moving to the balance sheet. At March 31, 2026, we had total debt of $651.8 million with a weighted average interest rate of 4.6%. Further, we ended the quarter with approximately $125 million of liquidity and leverage at 6.4x net debt to pro forma adjusted EBITDA, which is consistent with the end of 2025.

During the quarter, we opportunistically utilized our common ATM program to issue approximately 733,900 common shares at an average price of $19.59 per share for total net proceeds of $14.2 million. Notably, these proceeds, combined with the repayment of our $30 million Watters Creek preferred investment and higher NOI enabled us to maintain leverage at a consistent level even with the acquisition of Palms Crossing completed in this quarter. Now turning to guidance. For the full year 2026, we are increasing our core FFO outlook to a new range of $2.06 to $2.11 per diluted share and our AFFO outlook to a new range of $2.19 to $2.24 per diluted share. Key assumptions reflected in our guidance include increased investment volume, including structured investments of $175 million to $250 million, same-property NOI growth for shopping centers of 3.5% to 4.5% and general and administrative expenses of $19.7 million to $20.2 million.

And with that, operator, please open the line for questions.

[Operator Instructions]

Our first question comes from the line of Jay Kornreich with Cantor Fitzgerald & Company.

I guess I just want to start out with the new $75 million Southwest preferred equity investment at the 12% yield. I guess what attracted you to that investment? And how do you anticipate, I guess, the draw schedule occurring -- sorry, how do you anticipate the draw schedule occurring going forward? And in terms of funding sources for it, I guess you can use $30 million from the Watters investment, which was prepaid, but how do you think about funding the incremental $45 million?

Yes. We've already did the investment. So it was like it was one closing. And so as you mentioned, the Watters Creek was recycled into that. And we'll basically have, as we mentioned, an asset sale coming up and so forth, which will bring down leverage. But otherwise, we just use the balance sheet for the balance of it.

Okay. And then just going back to the original 10 vacant anchor spaces that we've talked about. I think there's still 3 remaining to be signed. Can you just give an update on how those conversations are progressing and when you think you could get a lease signed and ultimately rent payment beginning?

Yes. It's going really well as far as terms have been agreed upon moving to leases, but these things with these large national companies go really slow. So I would say, conservatively, I would say, 3 months and hoping to do it before then. But every time you think these things would take 30 days, it drags. So -- but we are -- the good thing is even though the lease may take that long, we're working right away on basically engineering drawings and what needs to be done to outfit the space for the tenants.

So that's not going to -- we're not going to wait for the lease to be signed to get that work done. So the lease commencement will kind of stay kind of probably take, call it, 9 months or so to kind of get the tenant in place, but that part won't move even though the lease may drag out.

Our next question comes from the line of Matthew Erdner with Jones Trading.

I'm just curious what's going to lead you kind of towards the high range of the investment guidance versus the bottom end? Because I think if you lean towards the bottom end, it will probably be one more structured investment. And given the timing of Madison Yards, should we expect anything to kind of happen in the second half of the year from an investment perspective?

Phil, I'll let you kind of address that, but I'll start with some of the pipeline. We do have structured investments that we are working on. It's relatively small, but that's something that could happen here in the next 30 days. And as far as acquisition pipeline, we do have our eyes on a couple of things, but they're not going to happen until they're not even out in the market yet. They're being prepared for market. So we hope to be more active probably in the next kind of 4 months. And then we'll -- as mentioned in our prepared remarks, we'll have some recycling going on, which will kind of happen in the next probably 3 months.

Yes, Matt, it's Phil. And you're correct in your assumption. So the small structured investment John referred to would put us right around the low end of the range. And then if we complete some of the larger property acquisitions in the pipeline, it would push us up towards the higher end of the range.

Got it. And then kind of as a follow-up to that, are you guys assuming that outparcel at Forsyth, there's 10 extra acres there in the investment guidance for this year? Or would that be additional?

Yes. So they won't contribute to earnings in this year. It's one of the pads that we've identified. So part of the -- where we've discussed $30 million of capital earning low double-digit yield unlevered. It's in that group. But any earnings from that will not be in this year, Matt.

Our next question comes from the line of Craig Kucera with Lucid Capital Markets.

With the preferred equity investment you made here in the second quarter, I think -- and it sounds like you've got another potential small one. I think that brings CTO's exposure to structured investments to around 11%, maybe closer to 15% when fully funded relative to undepreciated assets. Are you thinking about a cap or target on that as a percentage of the balance sheet similar to PINE?

Yes. Thanks for the question. So I would say that most likely, the cap will be -- it will definitely be below 20% and maybe more in line with the 15%. And so as you've seen at PINE, sometimes it will go a little higher as we anticipate some payoffs happening. But roughly 15% feels like a good place for us.

Okay. Great. And thinking about investment guidance, you've done $156 million year-to-date. I think you started out the year guiding to sort of 8% to 8.5%. The preferred equity down here this quarter is 12%. Has that sort of yield range changed at all because of that?

Yes. So the cap rates, I can kind of go into kind of what we're seeing on cap rates. And then as we see more visibility on what we'll be buying and kind of the structured finance kind of give you a better mix outcome. But in general, the acquisitions that we're seeing are kind of in the 7.5% to 8% range. And then with regards to structured finance, something in the kind of 10% to 13% range. And so you kind of have that little blend.

Okay. Great. That's very helpful. Just a couple more for me. Looking at your space that's expiring this year, it looks like it's significantly above the average in the portfolio, particularly on the anchor space, are mostly on the anchor space. You had, I think, a 24% cash increase in rent spreads last year. Do you -- I think you had [ 14% ] this quarter. Are you thinking something in the double-digit range is possible this year? Or is that going to be a little tougher?

Yes. I mean I think the spreads, you would see them kind of continue in the range they've been, Craig. Are you referring to '26 when you say this year, right?

Yes, in '26.

Yes, yes. So the expiring rents are a little higher, right? I think they're closer to [ '25 ] where we've been signing a lot of leases. But we're not only working on '26, we're also working on '27. I mean they start early. So I think while the spreads could come down a little just because the average rent and the leases expiring in '26 could bring it down a little. But generally, it still should be close to where we've historically been recently. Obviously, any one quarter can bounce around a lot just because it's not a lot of [ GLA ] in one quarter, but for the full year, should be pretty good.

Okay. That's helpful. Just one more for me.

What's driving that? -- there's fewer anchors in there, Craig. So that's what's left is small shop. So a little higher ABR.

And just one more for me. I think last quarter, the implied ABR recognition in the Signed-Not-Open pipeline was about [ 2.9 ] million for 2026. I think now we're looking at [ 1.8 ] million in the updated deck. Can you give us a sense of how you're anticipating the timing of that [ 1.8 ] million in '26 and sort of how we should think about modeling '27 from a Signed-Not-Open pipeline recognition perspective?

Yes. So about [ 1.5 ] million rolled off the pipeline from last time and got -- and commenced. And then with new leases, we kind of filled that back up, signing about [ 1.5 ] million. So the total the Signed-Not-Open pipeline did not move much. What did go in went in relatively closer to the beginning of the quarter. So it was in there for most of the quarter and it's reflected in the quarter's run rate. With what's left in the Signed-Not-Open pipeline, I think it will be a little more Q3, Q4 weighted. And then generally, almost all of it is in place, albeit maybe later in the year, prior to '27. So you should get pretty much the full impact of the Signed-Not-Open pipeline in '27. I think there's one tenant that pushes to early '28, but almost everything should be recognized in '27.

I'm sorry, are you saying recognized as of sort of that early '27 or throughout '27?

Early '27. So it should -- just other than one tenant, I think they're all -- you should get the full benefit of the Signed-Not-Open pipeline for '27. There's one tenant you won't get the full benefit of until '28 because they'll open during '27. But what's left for '26 will be later in the year, and then you'll get the full benefit in '27.

Our next question comes from the line of John Massocca with B. Riley Securities.

Maybe thinking about the Madison disposition. I know we can kind of back into the numbers a little bit on our own given your disclosure. But is it right to think that that's at about a 6% cap rate? I know it kind of depends a little bit on the NOI margin at that specific asset, but does that sound roughly correct?

It's a little higher than that because of the AMC Theatres.

Okay. All right. And then maybe kind of more big picture as you're thinking about your leasing pipeline and some of the vacancy that's left. And I know a lot of that's been addressed because a lot of it is in Carolina Pavilion. But is there any kind of hesitancy you've seen in retailers and frankly, in recent weeks around signing deals just given some of the macro uncertainty out there, some of the uncertainty about how some of the headline stuff maybe impacts the consumer. Just curious how the kind of leasing trajectory has been on a super recent basis.

There's been no hesitancy with pushing forward on leases. We have not seen any pullback whatsoever on any category.

Okay. And then the in-place portfolio, any new tenants or any kind of notable increase to the watch list? I was just curious if there's any kind of pushes and pulls there. Anything coming out of the watch list even too?

No. I mean really, as I've said in prior calls, it's really some of the smaller type tenants and maybe restaurant oriented, but there's been no notable change one way or the other on the watch list.

Okay. And then last one. There's been a decent amount of M&A in the space in kind of recent years, including a notable comp to you all recently. How does that impact kind of your disposition and acquisition outlook? Is there stuff that maybe comes out of those transactions or a competitor maybe not being in the space that increases the likelihood of you closing certain deals? Does it indicate something you can do on the capital recycling side that is interesting? Just kind of curious if the events outside of your control kind of changed the dynamics around how you're operating the business?

Yes. I would just say that there's just a lot more capital out there and that price point of that transaction was fairly aggressive. So it's helpful on our recycling side for sure, but not helpful on our acquisition side. So we pride ourselves on being fast to kind of address an acquisition. We can move fast. And the groups that are out there on the acquisition hunt are much larger kind of institutional and they take a lot longer. So just being a little bit nimble is an advantage for us.

Our next question comes from the line of Gaurav Mehta with Alliance Global Partners.

I wanted to ask you on the acquisition that you made, Palms Crossing this quarter. On the value-add upside, can you maybe talk about where the rents are on that property versus where the market rents are?

Yes. I mean the market rents are below market, but there's not really any sort of play where we're going to get a tenant out and we're going to have a huge mark-to-market on lease-up. I would just say that we do have a little bit of vacancy, and we have an outparcel that we didn't pay any money for that we're working on. So that's where the growth is going to come over and beyond what we bought. But they are below market, but not something that you can kind of get to anytime soon.

Okay. Second question on the guidance, just a clarification. On the Madison Yards, I didn't see that listed in the guidance assumption. Is that included in your guidance, the disposition?

No, we didn't put a disposition volume out there. Currently, that's the only near-term and planned disposition.

So I'm showing no further questions at this time. This concludes the question-and-answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Ladies and gentlemen, thank you for standing by. Welcome to the CTO Realty Growth Fourth Quarter and Year-End 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would like now to turn the conference over to Jenna McKinney, Director of Finance. Please go ahead.

Good morning, everyone, and thank you for joining us today for the CTO Realty Growth Fourth Quarter 2025 Operating Results Conference Call. Participating on the call this morning are John Albright, President and Chief Executive Officer; Philip Mays, Chief Financial Officer; and other members of the executive team that will be available to answer questions during the call.

I would like to remind everyone that many of our comments today are considered forward-looking statements under federal securities laws. The company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we undertake no duty to update these statements. Factors and risks that could cause actual results to differ materially from expectations are discussed from time to time in greater detail in the company's Form 10-K, Form 10-Q and other SEC filings. You can find our SEC reports, earnings release, supplemental and most recent investor presentation on our website at ctoreit.com.

With that, I will turn the call over to John.

Thanks, Jenna, and good morning, everyone. We are pleased to report a robust fourth quarter, highlighted by record high leased occupancy of 95.9% same-property NOI growth for our shopping centers of 4.3% and the previously announced acquisition of a shopping center in South Florida. Our strategic focus on shopping centers located in the higher-growth Southeast and Southwest markets of the U.S., along with the proactive asset management and leasing is producing strong results across all areas of our business. Nowhere is this better illustrated than in our retail leasing results.

During the fourth quarter, we signed leases for 189,000 square feet including 167,000 square feet of comparable leases and a cash rent increase of 31%. For the full year, we signed leases for a record 671,000 square feet including 592,000 square feet of comparable leases at a cash rent increase of 24%. Further, we continue to make meaningful progress backfilling our 10 anchor spaces.

As previously announced in the fourth quarter, we signed a lease with a national investment-grade retailer at Market Place at Seminole Town Center for 48,000 square feet. This single lease consolidated the 34,000 square feet formerly occupied by Big Lots, 9,000 square feet of small shop space and 5,000 square feet of new expansion space. Further, this lease brought us to 7 resolved anchor spaces in 2025, totaling 177,000 square feet.

Additionally, we are in active negotiations for the three anchor spaces in the Value City at Carolina Pavilion which we expect to get back in early 2026. Notably, all combined, we expect to achieve a positive cash rent spread of approximately 60%, the high end of the targeted range previously disclosed. So while getting these boxes back did result in temporary downtime, it ultimately accelerated our ability to achieve higher rents and stronger tenant credits along with driving higher customer traffic to the respective center.

More broadly, as of year-end, our signed-not-open pipeline stands at $6.1 million, representing approximately 5.8% of annual cash base rents. We believe this pipeline position us for meaningful earnings growth as reflected in our outlook, with almost half of the signed-not-open pipeline anticipated to be recognized in 2026 and 100% in 2027.

Moving to investment activity. In December, we acquired Pompano Citi Center, an open-air retail center located on 35 acres in Pompano Beach submarket of Fort Lauderdale, Florida, for $65.2 million. The property consists of 509,000 square feet of operating space that is currently 92% occupied, plus 62,000 square feet of unfinished shelf space, primarily on the second level presenting future leasing opportunity. Pompano Citi Center is anchored by Burlington, T.J. Maxx, Nordstrom Rack, Ross Dress For Less and JCPenney. Further, the property enjoys a prime location at a high-traffic intersection offering great visibility and access. This acquisition provides another attractive opportunity to create long-term value through both strategic mark-to-market rent opportunities and incremental leasing.

Including the acquisition of Ashley Park, an open-air lifestyle center acquired early in 2025 and $21 million of structured investments originated during 2025, we closed $166 million of investments during 2025 at a weighted average initial cash yield of 9%.

Moving to dispositions. Last quarter, I provided an update about the significant leasing we completed at The Shops at Legacy North located in Dallas, Texas. During this quarter, we capitalized on those leasing efforts and sold The Shops at Legacy North for $78 million and a cash exit cap of low 5%. While the lease-up of this shopping center took longer than anticipated, we are pleased with the ultimate outcome and the ability to accretively recycle the proceeds into higher-yielding acquisitions. This transaction demonstrates our team's ability to execute value-add strategies at properties, retenanting, increasing occupancy and bringing rents up to market.

As we look ahead, I do want to note a near-term anticipated acquisition. We are under contract to acquire a 384,000 square foot shopping center located in Texas for approximately $83 million. We look forward to announcing the closing of this acquisition in the first quarter of 2026 and providing more details at that time. Additionally, while we have plenty of liquidity under our revolving credit facility to acquire this property, we may elect to fund this acquisition by selling a stabilized property, thus accretively recycling the proceeds to further drive earnings.

Finally, while both leasing and capital recycling will add to earnings growth in 2026 and 2027, we never rest here at CTO. We have identified 6 outparcels for development in our various stages of negotiations with tenants ranging from preliminary to detailed lease negotiations. Three of the 6 outparcels are for larger boxes and uses. We expect to drive significant foot traffic to their respective centers. While each specific opportunity is unique, in general, they average about $5 million of investment capital and low double-digit yield. If completed, we expect the capital to be invested over 2026 and 2027 with leases beginning to contribute to earnings in the second half of 2027.

In summary, while we are pleased with our 2025 performance, we are even more excited about the future of CTO. We are beginning to reap the benefits of our strategic business plan, focusing on the right assets in the right markets, along with the proactive leasing and asset management. I'm immensely proud of the team here at CTO and what they have accomplished along with the performance and results they are driving for our shareholders.

And with that, I will now hand the call over to Phil.

Thanks, John. On this call, I will highlight our earnings, provide an update on our balance sheet and discuss our initial 2026 outlook. Starting with operating results. For the fourth quarter, core FFO was $15.8 million, a $1.6 million increase compared to the reported in the comparable quarter of the prior year. On a per share basis, core FFO was $0.49 per diluted share compared to $0.46 per diluted share in the comparable quarter of the prior year. For the full year, core FFO was $60.5 million, a $12.6 million increase compared to $47.9 million reported in the comparable prior year. On a per share basis, core FFO was $1.87 per diluted share compared to $1.88 per diluted share in the comparable prior year. The change in core FFO per share for the full year reflects the reduction in leverage that took place late in 2024 when we reduced net debt to EBITDA by approximately a full turn.

With regards to same-property NOI, total same-property NOI, including our 4 noncore properties, increased 1.1% for the fourth quarter. Same-property NOI for our noncore properties was impacted by Fidelity, vacating almost half of our 212,000 square foot office property located in Albuquerque, New Mexico and lower percentage rent from our beachfront restaurants in Daytona Beach, Florida. As previously disclosed, we have already released the portion of the building vacated by Fidelity to the state of New Mexico for an initial lease term of 10 years, making the property now 100% leased to two investment-grade tenants. Further, we currently expect the state of New Mexico to begin paying cash rent in the latter half of 2026.

Notably, same property NOI for our shopping centers increased 4.3% in the fourth quarter. This growth was driven by leasing activity across our portfolio and a reduction in maintenance costs related to a property enhancement project completed in the fourth quarter of 2024. For context, shopping center properties represent 93% of total same-property NOI for the fourth quarter. However, given the relatively small nominal size of our same-property NOI, just $200,000 impacts quarterly growth by approximately 100 basis points and one tenant vacating together with the seasonal impact of percentage rent at a noncore property can obscure the same-property NOI trend at our shopping centers. Accordingly, we have updated our supplemental financial information this quarter to more clearly highlight the metrics related to our shopping center properties.

Moving to the balance sheet. We started the fourth quarter in a strong financial position after completing the previously announced $150 million term loan financing at the end of the third quarter. The proceeds from these new term loans were used to retire a $65 million term loan scheduled to mature in March of 2026 and reduce the balance on our revolving credit facility to provide enhanced liquidity. Notably, we now only have $17.8 million of debt maturing in 2026.

Also, as previously disclosed, early in the fourth quarter, we repurchased $5 million of common stock at a weighted average purchase price of $16.26 per share increasing our repurchases for the full year of 2025 to a total of $9.3 million at a weighted average purchase price of $16.27 per share.

Regarding liquidity, we ended the year with $167 million of liquidity, consisting of $149 million available under our revolving credit facility and $18 million in cash available for use. This provides more than adequate capacity to initially fund the $83 million anticipated acquisition of a shopping center located in Texas that John discussed earlier.

From a leverage perspective, we ended the fourth quarter with net debt to EBITDA of 6.4x, an improvement from 6.7x at the end of the third quarter. The anticipated acquisition in Texas will temporarily elevate our leverage to a level similar to that at the start of the quarter. However, we anticipate deleveraging from the sale of select assets as well as rent commencing from our signed-not-open pipeline.

Now turning to our 2026 outlook. Our initial earnings guidance for the full year of 2026 is $1.98 to $2.03 for core FFO per diluted share and $2.11 to $2.16 for AFFO per diluted share. Key assumptions reflected in our initial guidance include: investment volume, including structured investments of $100 million to $200 million at a weighted average initial yield between 8% and 8.5%. The same-property NOI growth for shopping centers of 3.5% to 4.5% and general and administrative expenses of $19.5 million to $20 million. One last note, the cadence of our same-property NOI growth will improve over the year as tenants included in our signed-not-open pipeline take possession of their space and commence paying rent.

And with that, operator, please open the line for questions.

[Operator Instructions] The first question comes from Jay Kornreich with Cantor Fitzgerald.

First, I wanted to ask about backfilling the 10 vacant anchor centers. Could you just give us another color as to the timing of how rent from those already signed leases starts to get paid in 2026? And then for the three leases that have yet to be signed, any thoughts as to timing for that? And if that can also, I guess, hit the upper end of that 40% to 60% increase in leasing spreads you forecasted?

Yes, thanks. I'll kind of answer sort of the ones that we're still working on. We have -- we're in a fortunate situation with regards to the vacancies that are left where we have multiple tenants buying for the space, and we're trying to obviously optimize sort of the higher paying credit, what it does for the center, that sort of thing. So we're trying to move around the chess pieces. So -- and that's more talking about Carolina Pavilion and there's two boxes there. And so I would suspect that that's going to get resolved here in the next 6 months for sure. And then as we talked about before, these things tend to take a year at least to kind of get into operation.

But I'll let Phil talk about the others that we've signed up.

Yes, Jay, on the ones that have already been completed, as far as contributing to the fourth quarter, it's really just the two Boot Barns, one at Rockwall and one at [ price ] that got opened really quick. We did get Slick City moved into Carolina, but it was very, very late in the year, it didn't contribute much this year. And then just going forward, it will ramp up about half in '26 and then they'll all be online in '27.

Okay. I appreciate that. And then just one follow-up. I guess looking at the office property in New Mexico, which now has this new lease worked out between the two tenants, I guess, how do you think about the value and opportunity to dispose of that asset now? And whenever that does happen, should it happen? What would your ideal use of the proceeds be?

Yes. So we're definitely in a fortunate position that now that we have the state of New Mexico, taking half the building and Fidelity another other half, we certainly have a marketable asset right now. So we are in early discussions with groups that have an interest in buying it. But as we get closer to the state of New Mexico's rent commencement, it's kind of really we're going to have higher values to us. So we're being patient with it, knowing that we have that opportunity and alternatively, to your question, we would look to reinvest those proceeds into an open air center, a larger open air center. And if we find a great candidate acquisition opportunity, we may speed up the process of selling that building in New Mexico.

Our next question is going to come from Craig Kucera with Lucid.

I want to talk about Pompano Citi Center. There is a mention of some potential mark-to-market lease-up opportunity there. Can you give us some color on what you think that might be?

Well, it's really -- I mean, look, JCPenney is the largest tenant and they literally pay nothing. And so if that company wherever to really go under or get back space or most likely is something where we buy out their space, that's a huge opportunity at that property. But really, the real opportunities, Craig, the lease-up, there's a fair amount of vacancy, and we're very active right now in -- with LOIs going out to prospective tenants. It's really turning this around, creating the excitement of the activity, and we're doing that. So we're really very optimistic about Pompano. So -- but there's -- it's more about lease-up than taking an old tenant and bringing in a new tenant at higher rent. But certainly, the largest one by far, JCPenney is that opportunity down the road.

Right. That could be pretty significant if they're paying nothing. Changing gears, it was a very strong leasing quarter. Obviously, a lot going on at Seminole Town Center. But outside of that, were there just kind of a flavor of the market, are you seeing any particular categories that are really creating or are you finding demand in your shopping centers for?

It's really the strong national brands that are still very interested in spaces if you have them. You have the T.J. Maxx' of the world, the Ross and so forth. So I mean, you're actually seeing more development occur in different markets because those tenants are doing very well in this economy as we read the national headlines and so they're looking for store expansion. So if you have a big box in a good market and a good center, you really are in the driver's seat.

Great. I saw you extended and increased the Revana loan and extended founders. Have you gotten any indication from Watters that they'll extend? Or you expect that to be repaid in the second quarter?

Yes. Unfortunately, we expect that to be repaid. We are hoping that it wouldn't, but it looks like it will. So we'll be on the hunt to replace that.

Got it. And I saw that Revana paid down a portion of their balance but you would anticipate them drawing down the remaining $25 million or so available on that loan in 2026?

Yes. They have some basically users for some of the site and they need to do site work and put in the roads and all that kind of stuff, utilities. And so it's really master development work. And so yes, we expect that to be used to improve that site.

Okay. Great. And just one more for me. Phil, this is on the ABR recognition timing on the signed-not-open. Can you give us any more granularity certainly relative to 2026? Is this like we -- should we assume something ratable? And as far as 2027, is that also throughout 2027, I would imagine? Or any additional granularity would be helpful for modeling purposes.

Yes. Ratable is pretty close. It may ramp up a little more towards the latter half of the year in '26. But if you're doing it ratable or a little bit stacked towards the latter part of the year, you're going to be pretty close. And same for '27, from what we can see now.

You would say the same for '27 as well?

Yes, from what we can see now, yes.

Our next question is going to come from John Massocca with B. Riley.

So maybe thinking about the Texas acquisition that's in the pipeline, how does that property, you think, look compared to the portfolio today? And I guess, is there more kind of a value-add opportunity in that acquisition as you see it today? Or is that going to be something that's more stabilized or you're just getting it at a really solid yield and maybe there's some rent mark-to-market in the future that's attractive?

How about if I say all of the above? We're lucky that it's a stabilized asset with upside opportunity. There's actually a land parcel that comes along with it that there's definitely possibilities for and there is a little bit of lease-up and there is some below-market leases, but nothing near term so that you can get a hold out. So it hits all the boxes. So we're pretty excited about it.

Okay. And then maybe thinking about acquisitions in the pipeline or in the guidance beyond that transaction and with the likely repayment of the one structured investment in mind, how much of that is maybe structured investments as you see it today? And how much of that would be additional shopping center purchases?

We're definitely on the hunt for the larger shopping center purchases. And we -- in the last week, I went to go see two larger ones that were definitely interested in. I would say that the market, there's not a lot on the market right now. There is a lot of talk about brokers doing a lot of valuations for sellers. And so we'll see whether that comes to fruition. But we're definitely looking to find some chunkier shopping centers this year.

As we mentioned before, we still have some recycle opportunities in our portfolio where we've leased up properties and they're slower growth now. And if we can move them into, for instance, the Texas acquisition, where there's a ramp of cash flow increases and lease-up opportunity. That's kind of where we like to position ourselves.

And as you think about -- I mean, I know if you bespoke based on whatever asset you decided to sell, but what's kind of the day one spread in yields between kind of dispositions and acquisitions? I mean you gave acquisition cap rates and guidance, but just kind of curious what the disposition side would be.

I mean at least 100 basis points, if not more, most likely more.

To the positives?

Yes.

Okay. And then last one for me. CapEx kind of came up a little bit in 4Q, is that kind of a better run rate level as we look at the portfolio today? Because I know you sold legacy, which is a little bit more of a CapEx-intensive asset. Just kind of curious how we should think about that going forward.

Yes, the fourth quarter was elevated. It did include the large anchor lease at Market Place at Seminole. That's the one John talked about where the anchor took the 34,000 square foot box and then also is absorbing 9,000 a small shop plus 5,000 square feet of expansion. And there was also a restaurant in there and the restaurants always carry a little heavier TI. So I would say the fourth quarter is probably a little higher than the run rate going forward. Those run rates are, for a portfolio our size, are better to look at an annual basis because it's just one lease like an anchor in any one quarter can skew it up significantly. And I would say just generally, the fourth quarter is a little higher than a good run rate.

The next question is going to come from Gaurav Mehta with Alliance Global Partners.

I wanted to follow up on the SNO timing of 47% in 2026. It seems like it's different than 76% you had in last quarter. So is it like the new leases that came in? Or was there any changes in the timing?

Yes. When you look at it from quarter-to-quarter, there's a lot of moving parts. So there was a tenant that moved off of it and into this year, right? And then you also -- you had where we sold legacy, so then that dropped off. And I think that's probably the biggest mover in your kind of reconciliation of the 76% that was previously there to 50% now. There was a lot of lease-up at legacy, as John discussed that we completed, and then with selling that, that drops out of the pipeline. And the amount did not decrease because we signed a lot of new leases, right? So the signed-not-open pipeline is still significantly large even with legacy falling off, but that's the change, the biggest driver of that change for '26.

Okay. Understood. Second question I have is on your market allocation as you look to acquire new properties. I see that Atlanta seems to be much higher at 36% than rest of the market. And I'm just wondering if you could just maybe comment on how you think about allocating in any given market as far as exposure to cash ABR?

Yes. I mean, look, we're not looking to add to Atlanta. So you'll probably see Atlanta move down over time for sure. And so given that our portfolio is 85%, North Carolina, Florida, Texas, Georgia, we certainly have one of the strongest portfolios relative to the growth of markets where tenants want to be. And so you'll just see more of our investments in other markets kind of in that Southeast, Southwest, but less so in Atlanta.

The next question will come from Jason Weaver with JonesTrading.

Just first of all, when it comes to allocation, can you talk about the relative merits between grocery, anchor, lifestyle and power centers and of those, what you're most likely looking to target?

Yes. I mean, look, grocer is terrific, but it's a lower-yielding kind of product and a little bit slower growth sort of product. And so -- and then lifestyle is fantastic. We've had some great success, but they're a little bit more expensive to operate. You need more of that security element and everything because you have restaurants and entertainment and so forth, but they work really well in the right locations. And then power is just more stable but higher growth opportunities with lease-up and less sort of CapEx exposure, tenants that are going in those don't need really high TI sort of finish outs like the lifestyle centers do, but that's sort of an easy sort of way to think about them.

Yes. And how are you thinking about the relative availability in the market for what you can deploy to today?

Yes. We're not right now on the grocer side. We're not chasing those just because of the yields are so low. However, we do -- we're looking at lifestyle and power, for sure. And a lot of the opportunities we're looking at are kind of have that grocer opportunity in the future where grocers would come into those centers. We're seeing that in our portfolio now where we may have a large power center, but a grocer is looking at one of the boxes, and we've had that happen before where, unfortunately, we couldn't get one of the tenants out, that would have been a very national grocer that is very beloved in the nation. But unfortunately, we're couldn't get a book store out to accommodate them if you can imagine.

So we won't be chasing grocers just because the yield is way too low. We don't see a compelling return opportunity there. We do see it in areas where in the lifestyle and power where the yields are definitely higher, and there's not as much capital chasing them.

Great. That's helpful. And then maybe it's a little bit early here, but with 20% of your base rent, 2028 lease is coming off, have you started any discussions on what types and sort of opportunity that might present for FFO growth in the [ out year ]?

Yes. I mean, look, that's the great thing about this company set up right now is we've done so much work on the lease-up and kind of the ramp that -- and a lot of these tenants that -- or these properties that we bought, their leases are below market. And these tenants are doing well. And so most likely, they're going to exercise renewal options. But if not, there's definitely some mark-to-market opportunities. So we don't really have to do much here to grow our earnings, it's just really letting the portfolio play out. And so the setup is really great. We don't have to do anything special to have some really interesting growth here.

Thank you. And this does conclude today's Q&A session and conference call. I want to thank you for participating, and you may now disconnect.

Ladies and gentlemen, thank you for standing by. Welcome to CTO Realty Growth Third Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would like now to turn the conference over to Jenna McKinney, Director of Finance. Please go ahead.

Good morning, everyone, and thank you for joining us today for the CTO Realty Growth Third Quarter 2025 Operating Results Conference Call. Participating on the call this morning are John Albright, President and Chief Executive Officer; Philip Mays, Chief Financial Officer; and other members of the executive team that will be available to answer questions during the call.

I would like to remind everyone that many of our comments today are considered forward-looking statements under federal securities laws. The company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we undertake no duty to update these statements. Factors and risks that could cause actual results to differ materially from expectations are discussed from time to time in greater detail in the company's Form 10-K, Form 10-Q and other SEC filings. You can find our SEC reports, earnings release, supplemental and most recent investor presentation on our website at ctoreit.com.

With that, I will turn the call over to John.

Thanks, Jenna. We delivered another quarter of strong operating performance driven by the strength of our leasing activity. Year-to-date through September 30, we have completed 482,000 square feet of overall leasing activity, including 424,000 square feet of comparable leasing at a weighted average base rent spread of 21.7%.

Contributing to this leasing performance was our third quarter in which we executed 143,000 square feet of new retail leases, renewals and extensions at an average base rent of $23 per square foot. This includes 125,000 square feet of comparable leases, a 10.3% base rent spread. Notably, just after the quarter, we signed a significant lease at the Shops at Legacy, a 243,000 square foot mixed-use lifestyle center located in Dallas, Texas. I will share more details on this lease and the Shops at Legacy shortly.

We also continue to make progress on backfilling our 10 anchor spaces. Six of the 10 vacant anchor spaces have been leased, and we remain in active negotiations for the remaining 4. To date, we are encouraged by the rental upside and value creation these 6 leases represent and expect the new tenants to increase foot traffic relative to the former tenants.

Furthermore, we remain on target to achieve our goal of positive cash leasing spread of 40% to 60% across these 10 anchor spaces, and we look forward to providing additional updates on our progress.

More broadly, as of today, our signed-not-open, or SNO, pipeline stands at $5.5 million, representing approximately 5.3% of annual cash base rents in place as of quarter end. We believe that this pipeline positions us for meaningful earnings growth with approximately 76% of our ABR from the SNO pipeline anticipated to be recognized in 2026 and 100% in 2027.

Now I would like to share some exciting updates related to the Shops at Legacy. Just after the quarter end, we signed a 30,000 square foot lease with a co-working operator expected to open by year-end 2026. This lease, along with the 20,000 square foot private members-only social club that we signed in the third quarter of 2024, substantially fills the space formerly leased to WeWork, marking a meaningful inflection point in our re-leasing efforts.

In addition to these large leases, over the last 2 years, we have signed smaller shop leases for an aggregate of nearly 60,000 square feet for various restaurants, fitness and retail concepts that we believe will further increase the vibrancy of the center. Today, reflecting all this leasing activity, the lease percentage of Shops at Legacy stands at approximately 85%.

Now moving to a recent agreement that we signed to acquire a shopping center in South Florida. This is a property that I mentioned on our last call that we were targeting. We believe this shopping center offers value-add potential that aligns well with our leasing and operating strength and presents an opportunity to both acquire the asset at an attractive initial yield and drive long-term value creation through lease-up of acquired vacancy. We expect to close this transaction before year-end and look forward to providing more details when we close.

From a financing perspective, as Phil will discuss in more detail, we recently termed out some debt and refreshed our revolving credit facility, providing enhanced liquidity. This will give us the ability to initially acquire the South Florida property using our line of credit. Ultimately, though, we anticipate funding this acquisition by recycling an asset around year-end. Overall, we are pleased with our leasing progress and the value creation underway as we continue to execute our strategic priorities.

And with that, I will hand the call over to Phil.

Thanks, John. On this call, I will discuss our balance sheet, earnings results and updated full year 2025 guidance.

Starting with the balance sheet. Just before quarter end, we closed $150 million in term loan financings, including a new 5-year $125 million term loan maturing in September of 2030 and a $25 million upsizing of our existing term loan maturing in September of 2029. Both term loans bear interest at SOFR plus a spread based on our leverage ratio. At closing, we utilized existing SOFR swap agreements, resulting in an initial fixed interest rate of approximately 4.2% for both loans.

In March of 2026, when certain of these applied SOFR swap agreements expire and are replaced by other existing forward swap agreements, the interest rate for both loans will adjust to approximately 4.7% based on the company's current leverage ratio. The proceeds from these new term loan financings were used to retire a $65 million term loan scheduled to mature in March of 2026 and to reduce the balance on our revolving credit facility, providing enhanced liquidity.

Reflecting this financing, we ended the quarter with approximately $170 million of liquidity, consisting of $161 million available under our revolving credit facility and $9 million in cash available for use.

Additionally, we have recently repurchased $9.3 million of common stock at a weighted average purchase price of $16.27 per share. These repurchases consisted of $4.3 million towards the end of the third quarter to close out our previous $5 million repurchase program and $5 million in October under our recently announced $10 million common stock repurchase program.

Reflecting this quarter's balance sheet activity, we ended the quarter with net debt to EBITDA of 6.7x, a slight improvement from 6.9x at the end of the second quarter. Further, we anticipate additional deleveraging as we successfully re-lease our vacant anchor boxes and tenants in our signed-not-open pipeline commence paying rent. And notably, with our recent completed term loan financing, we now only have $17.8 million of debt maturing in 2026.

Moving to operating results. Core FFO was $15.6 million for the quarter, a $3 million increase compared to $12.6 million in the comparable quarter of the prior year. On a per share basis, core FFO was $0.48 per share compared to $0.50 per share in the comparable quarter of the prior year. The change in core FFO per share reflects a reduction in leverage that took place from late third quarter of 2024 through the end of 2024 when we reduced net debt to EBITDA by approximately a full turn.

With regard to same-property NOI, our same-property NOI increased 2.3% during the quarter. This growth was driven by leasing activity across our portfolio, in particular, at Beaver Creek with Onelife Fitness replacing the former theater, along with strong small shop leasing at West Broad Village, Plaza at Rockwall and Ashford Lane.

Turning to guidance. We are raising both our core FFO and AFFO outlook for the full year of 2025. Our new core FFO range has increased to $1.84 to $1.87 per diluted share from the previous $1.80 to $1.86 per share. And our new AFFO range has increased to $1.96 to $1.99 per diluted share from the previous $1.93 to $1.98 per diluted share.

And with that, operator, please open the line for questions.

[Operator Instructions] The first question comes from Rob Stevenson with Janney Montgomery.

Phil, What's the pro forma debt-to-EBITDA look like once you complete the Florida acquisition and sell the existing asset and the near-term signed but not commenced leases start to drive revenue?

Yes. So as John discussed on the call, the Florida asset will be temporarily parked on the line, and we have plenty of liquidity there and capacity to do so, but will ultimately be funded with recycling and should not significantly change debt to EBITDA. The signed-not-open pipeline as it stands today, just coming online, would take off about half a turn as it comes online.

Okay. And what is the timing of the bulk of that revenue? Is that -- are you going to see any material amount in the fourth quarter? Is that a first or second quarter '26 event? How should we be thinking of that when we play around with our models in terms of when the bulk of that $5-plus million starts hitting revenue?

It's going to start beginning of next year. The pipeline is $5.5 million of base rent. I think we said 75% of that is going to be recognized next year, so about $4 million. And the way I would ramp that up is about $0.5 million in the first quarter, $1 million in the second and $1 million in the third and then about $1.5 million in the fourth, so kind of growing throughout the year to a total of about $4 million as the pipeline stands today or about 75% of the pipeline with all of it being recognized in '27, everybody should be as currently projected operating in space, paying cash rent by the end of '26. So you get the full $5.5 million in '27.

Okay. That's helpful. And then, John, where is your most significant vacancy today that's not either under contract, letter of intent or pretty far down the road where you still have some work to do? Where is the opportunity for you guys, right now?

Yes. We have a 40,000 square foot vacancy at Carolina Pavilion. We've gone through a couple tenants -- prospective tenants where they were going to take so long that we decided to switch tack. And so we're kind of going down a route of either splitting the box or talking to a couple of different groups about taking the whole box again. So we've had some false starts with some groups that are just going to be really torturous as far as how long they're going to take to get through the process. And then that's really the largest vacancy and then we have a little bit left to go at Legacy, but not too much. So that's where our focus is.

All right. And then last one for me. You've got about $45 million of structured investments that are -- have maturity dates in the first part of '26. When you take a look at those today, are those likely to be redeemed around that point in time? Or are those likely to be extended? How are you guys thinking about that as the preferred -- I think it's Watters Creek and Founders Square.

Yes. Founders Creek will pay off. Watters -- I'm sorry, Founders Square will pay off and Watters Creek may extend, but may just pay off as well. So we're seeing where that plays out, just depending on their -- how they look at capitalizing that property going forward.

And the next question will come from Matthew Erdner with JonesTrading.

You guys touched on what I was going to ask a little bit with the Florida acquisition, but I'm just trying to think about how you guys are going about capital allocation moving forward kind of between buybacks and structured investments. Given where the stock is trading, are you guys going to continue to buy back shares down at this level?

Yes. So I mean, clearly, we're going to do as much as we can, given our credit facility sort of restrictions. So absolutely, given the stock price kind of where we're trading below a 9 multiple and 5-year lows and almost a 10% dividend yield, it's fairly ridiculous. So clearly, the best acquisition investments is our own stock.

Got it. And then as a follow-up to that, do you guys have any restrictions on investing more into PINE? And if not, is that something that you guys are considering doing just given that, that stock price is trading at similar multiples?

Yes. So we do have a little bit more room there without hitting our restrictions on what we can own of PINE. And of course, we're opportunistic. So just depending on what happens with the stock price there. But clearly, right now, feel like CTO is the double discount.

And the next question will come from Craig Kucera with Lucid.

You've been pretty active on the structured finance side at PINE. Are you seeing any pickup in potential loans that work for CTO? Or are property investments really more compelling right now?

Yes, not so much at CTO. As you mentioned, we're seeing it more at PINE. Given that the CMBS market has come back very strong for the shopping centers, seeing less need for structured finance there, but we're certainly keeping our eye out there. So yes, that's kind of where the market is right now.

Got it. Changing gears, you have a decent amount of leases expiring here in the fourth quarter, I think about 3% of ABR, one is an anchor. Can you talk about your expectations there?

Yes. We're not really seeing any risk as far as nonrenewal. As you know, a lot of these acquisitions had tenants way below market rent and some that we'd like to get back and replace with higher rents. But yes, there's no risk that we're kind of seeing out there on the renewal side.

Okay. Got it. Congrats on the Shops at Legacy leasing. I think that's been -- there's been some vacancy there for a while. Can you give a sense of how additive that is to the signed-not-open pipeline?

Yes, I'll let Phil touch on that. But yes, it has been a long time, longer than we would like, of course. And one thing that, that's going to bring to the property that people kind of miss out on a little bit is a lot of vibrancy, a lot of bodies coming in. And it's going to -- even though the restaurants have done really, really well on the leasing without that, just having that component for that property is really going to be an enhancement. But I'll let Phil talk about that.

Yes. Out of the entire signed-not-open pipeline of $5.5 million, Legacy is close to $1 million of that, Craig. In particular, the private members club and then the co-working lease that we just signed in October, those 2 in particular.

Okay. And just one more for me. Any change to the credit watch negative list? I know we've talked about maybe home goods or some of those things, but any change there?

Not this quarter. No, same sort of tenants. And if anything, kind of credits have gotten a little better, I think.

And our next question is going to come from Gaurav Mehta with Alliance Global.

I wanted to ask you on the nonrecurring items. I think you reported $0.5 million of nonrecurring this quarter and also raised your G&A guidance a little bit. Just want to get some color on what those items were.

Yes. So on the nonrecurring, those kind of tend to run -- fluctuate between $100,000 and $300,000 a quarter, generally averaged around $250,000. You're correct, it was closer to about $0.5 million, I believe, this quarter. So it was slightly elevated. And we tend to get a quarter like that every 3 or 4 quarters, it kind of tends to pop up to that number. But generally, for like a good run rate, it's typically closer to $250 million. G&A, I think, for the fourth quarter will be similar to this quarter, if you're just looking to model that.

Okay. Second question I have is on tenant improvement allowances. It seems like it was higher this quarter than last few quarters. How should we think about that line item as you sign new leases?

Yes. So it was very light in the first half of the year. That volume and that size kind of tends to fluctuate as anchors get moved in and complete their construction and get open. So this quarter, you had Onelife at Beaver Creek, and they have to support -- provide invoices and stuff. So they can get in and get open. But by the time we reimburse them, it can lag a little. But you had Onelife at Beaver Creek. You had Boot Barn and Barnes at Rockwell. So it was elevated this quarter. Currently, I would expect the fourth quarter to also be elevated and be similar to the third quarter. But again, that's just going to depend on timing on individual anchors and when they get open and when they get their paperwork submitted for their TI reimbursements. But we do have a lot of anchors lined up, and I would expect the fourth quarter to be pretty elevated again.

Okay. And then lastly, on the asset recycling that you talked about to fund the acquisition. Is that expected to happen this year or that's expected to happen next year?

We think that something will happen this year, but you just never know as far as some things kind of come up and need extensions and so forth, but we're probably at the end of the year.

And the next question comes from John Massocca with B. Riley Securities.

As you think about the anchor box re-leasing in the $4 million to $4.5 million of potential new base rent there, how much of that is already set with the 6 leases you've closed? And how much is still contingent on the 4 leases that you're negotiating or trying to close here in the next couple of months?

Yes. So out of the anchors, the 6 that are done, about -- they represent about $2.5 million currently. So with the ones that are left, that would be a remaining $2 million.

Okay. And then maybe switching gears a little bit on the investment front. Anything else in the pipeline you're seeing that might close in 2025 beyond the kind of Florida shopping center transaction you talked about earlier?

Given that we're getting kind of tight on time, I wouldn't expect it, but we're not also kind of -- if one of the things that we're looking at, we are bidding on quite a bit of assets that we like, but not sure how competitive we'll be, but we're certainly saying that we can close by year-end if it's important for a seller. So hopeful, but I wouldn't expect an additional one.

Okay. And then in terms of 2026, what's the acquisition environment look like today? And I guess maybe to the extent you would do new investments, how do you think about funding it? And is there additional assets within the portfolio that you think are targets for capital recycling beyond the assets you're going to use to fund the Florida acquisition?

Yes. I mean that's the easy part. If we find a good acquisition candidate, we do have some stabilized assets given how much leasing we've done over the last couple of years. And so taking advantage of that lower cap rate sale, maybe slower growth asset and recycling into kind of value-add, higher growth asset, higher yielding. So we definitely have a nice pipeline of potential sale opportunities. I just want to match that up with something we feel really good about.

You think the Fidelity property or the New Mexico property is a potential candidate for that capital recycling, either for the acquisition we talked about earlier on the call or 2026 investment activity?

For sure. We just need to get the lease settled up with the state and then it will be in condition to sell. So that's probably early '26. I think maybe previously this year, I mentioned late this year, but it takes a while to settle the lease expansion and so forth. So we're probably looking at early '26 on selling that asset. But yes, that's definitely a candidate.

Okay. And then lastly, the Shops at Legacy, the kind of remaining square footage to be leased once you bring in the co-working tenant, what kind of is that? Just big picture, is it all kind of small shop space? Is there any kind of anchor space still left in that property? Just kind of curious what that looks like.

Yes. It's more small shop space that we've gone through literally 3 different tenants that we just didn't get there, whether we didn't like their financials or too much TI. So we're being a little picky on it. And then we have a little bit of WeWork space left, but we feel like the -- when the private club opens, they express some interest that, that might be an expansion opportunity for them. So everything is very manageable. We're just trying to kind of be picky about who we put in.

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