10-K: CTO Realty Growth Reports Strong 2025 Performance

CTO Realty Growth, Inc. reported significant revenue and operating income growth in its 2025 annual filing, driven by strategic property acquisitions and increased loan portfolio income.

Summary

• Total Revenue increased by 20.1% to $149.5 million in 2025 from $124.5 million in 2024.
• Operating Income surged by 93.2% to $34.0 million in 2025 from $17.6 million in 2024.
• Net Income Attributable to the Company was $10.1 million in 2025, a significant improvement from a net loss of $(2.0) million in 2024.
• Acquired two shopping centers for an aggregate purchase price of $144.9 million, with a total acquisition cost of $145.1 million in 2025.
• Sold four income properties for an aggregate sales price of $85.1 million, generating aggregate gains of $21.0 million in 2025.
• Interest income from Commercial Loans and Investments increased by $5.2 million (70.4%) to $12.5 million in 2025.
• FFO Attributable to Common Stockholders decreased to $41.1 million ($1.27 per share) in 2025 from $48.1 million ($1.89 per share) in 2024.
• Core FFO Attributable to Common Stockholders increased to $60.5 million ($1.87 per share) in 2025 from $47.9 million ($1.88 per share) in 2024.
• AFFO Attributable to Common Stockholders increased to $63.6 million ($1.97 per share) in 2025 from $50.8 million ($2.00 per share) in 2024.
• Settled $51.0 million aggregate principal amount of 2025 Convertible Notes, resulting in a $20.4 million loss on extinguishment of debt.
• Weighted average economic/leased occupancy for shopping centers improved to 92%/96% in 2025 from 90%/93% in 2024.
• A $10.0 million common stock repurchase program was approved on September 24, 2025, with $5.0 million remaining available as of December 31, 2025.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a generally positive report, demonstrating strong revenue and operating income growth, successful asset recycling, and a return to net profitability. The slight per-share FFO/AFFO dilution and the debt extinguishment loss are notable but do not overshadow the underlying operational improvements and strategic execution.

Positives

• Total revenue increased significantly by 20.1% to $149.5 million in 2025.
• Operating income saw a substantial increase of 93.2% to $34.0 million in 2025.
• The company returned to a net income of $10.1 million in 2025, reversing a net loss of $(2.0) million in 2024.
• Commercial Loans and Investments interest income grew robustly by 70.4% to $12.5 million.
• Successful disposition of four income properties generated $21.0 million in aggregate gains.
• Economic occupancy for shopping centers improved to 92% (leased 96%) in 2025.
• Core FFO and AFFO attributable to common stockholders increased in absolute terms to $60.5 million and $63.6 million, respectively.

Negatives

• Net Income Attributable to Common Stockholders remained low at $2.58 million ($0.08 per share).
• FFO per common share diluted decreased to $1.27 in 2025 from $1.89 in 2024.
• AFFO per common share diluted slightly decreased to $1.97 in 2025 from $2.00 in 2024.
• A $20.4 million loss on extinguishment of debt was incurred due to the settlement of 2025 Convertible Notes.
• Real estate operations revenue decreased by $2.0 million (100%) as all remaining Subsurface Interests and mitigation credits were sold in 2024.
• Economic occupancy for 'Other Properties' significantly declined to 61% in 2025 from 100% in 2024.
• General and administrative expenses increased by 13.9% due to higher employee count and compensation.
• Accumulated Other Comprehensive Income (Loss) shifted from a positive $12.5 million in 2024 to a negative $(0.4) million in 2025, primarily due to cash flow hedging derivatives.

Risks

• Risks related to the ownership of commercial real estate, including inability to collect rents, changes in local real estate conditions, consumer trends, competition, environmental issues, illiquidity, zoning, interest rates, natural disasters, and terrorism.
• Business is dependent upon tenants successfully operating their businesses; failure could materially and adversely affect the company.
• Competition that traditional retail tenants face from e-commerce retail sales could adversely affect the business.
• Loss of revenues from income property or commercial loans and investments portfolios or certain tenants or borrowers would adversely impact results.
• Retail properties often depend on anchor tenants; their failure or loss could adversely affect property success.
• Significant portion of revenue is concentrated in specific industry classifications and/or geographic locations (Georgia, Florida, North Carolina, Texas), making the company vulnerable to downturns in these areas.
• Revenues include management fees from Alpine Income Property Trust, Inc. (PINE); loss, failure, or decline in PINE's business or assets could substantially reduce revenues.
• Potential conflicts of interest exist in the relationship with PINE, including shared executive officers and/or directors.
• Commercial loans and investments involve credit risk, with borrowers potentially failing to pay scheduled contractual payments.
• Losses may occur when a borrower defaults on a loan and the value of the underlying collateral is less than the amount due.
• Real estate investments are generally illiquid, limiting the ability to make rapid portfolio adjustments.
• A decline in the fair value of real estate assets or investments could result in impairments.
• Inability to obtain debt or equity capital on favorable terms, or additional borrowings impacting liquidity.
• Servicing debt requires a significant amount of cash, and insufficient cash flow could lead to default.
• Operations and properties could be adversely affected by natural disasters, pandemics, or other significant disruptions.
• Environmental problems may require remediation or incurrence of significant costs.
• Failure to remain qualified as a REIT would cause the company to be taxed as a regular corporation, substantially reducing funds for distributions.
• REIT requirements may limit financial flexibility and hedging abilities.
• The prohibited transactions tax may limit the ability to dispose of properties.
• The Board's ability to revoke REIT qualification without stockholder approval may cause adverse consequences.
• If a transaction intended to qualify as a Section 1031 like-kind exchange is later determined to be taxable, or if suitable replacement property cannot be identified, adverse consequences may arise.
• Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends, potentially making REITs less attractive to individual investors.
• Potential adverse legislative or regulatory tax changes, possibly with retroactive effect.
• Stock ownership limits in the charter may inhibit market activity and business combination opportunities.
• Limited rights of stockholders to take action against directors and executive officers.
• Operations could be negatively impacted by the loss of key management personnel.
• Uninsured losses may adversely affect financial condition and results of operations.
• Property insurance costs may continue to increase, and in some cases, insurance may not be available.
• High dependence on information systems and third-party technology service providers; system failures could disrupt business.
• Requirement to make a number of judgments in applying accounting policies, with different estimates and assumptions potentially changing financial condition and results.
• Changes in accounting rules will affect financial reporting.
• Actions of the U.S. government to stabilize or reform financial markets may not achieve intended effect and could adversely affect the business.
• Compliance with the Americans with Disabilities Act (ADA) may be costly.
• Unintended consequences and market distortions from governmental intervention in the economic and financial system.
• Failure to maintain effective internal control over financial reporting could have a material adverse effect.
• Employee misconduct could harm the company by subjecting it to significant legal liability, reputational harm, and loss of business.
• Cybersecurity risks and cyber incidents could adversely affect the business and disrupt operations.
• Artificial intelligence and other machine learning techniques could increase competitive, operational, legal, and regulatory risks.
• The market value of common stock and preferred stock is subject to various factors that may cause significant fluctuations or volatility.
• Future sales of common stock or other securities convertible into common stock could cause the market value to decline and result in dilution.
• Significant legal proceedings may adversely affect results of operations or financial condition.
• An epidemic or pandemic could significantly disrupt tenant operations, ability to pay rent, or prevent the company from operating in the ordinary course.
• Risks related to corporate social responsibility (ESG) and evolving investor-related sentiment, including anti-ESG policies, could adversely affect the business.

Future Outlook

The company expects to fund future acquisitions using cash on hand, cash from operations, proceeds from the dispositions of income properties through Section 1031 like-kind exchanges, and borrowings on its Credit Facility and additional financing sources. Management's focus is to continue diversifying the portfolio by redeploying capital into income-producing properties, aiming for stabilized cash flows and strong risk-adjusted returns primarily in larger metropolitan areas and growth markets. No further revenue or operating income is expected from the real estate operations segment as its underlying assets were sold in 2024. The company believes it will have sufficient liquidity to fund its operations, capital requirements, maintenance, and debt service over the next twelve months and into the foreseeable future.

Management Comments

• "Management believes the expectations reflected in such forward-looking statements are based upon present expectations and reasonable assumptions."
• "Management's focus is to continue our strategy to diversify our portfolio by redeploying proceeds from like-kind exchange transactions and utilizing our Credit Facility to increase our portfolio of income-producing properties, providing stabilized cash flows with strong risk-adjusted returns primarily in larger metropolitan areas and growth markets."
• "The Board recognizes the critical importance of maintaining the trust and confidence of our tenants, borrowers and business partners. The Board plays an active role in overseeing management of our risks, and cybersecurity represents an important component of the Companys overall approach to risk management and oversight."
• "Our Senior Vice President, Chief Financial Officer and Treasurer, Senior Vice President, General Counsel and Corporate Secretary, and Senior Vice President and Chief Accounting Officer each hold degrees in their respective fields, and have approximately 20 years or more of experience managing risks at the Company and similar companies, including risks arising from cybersecurity threats."

Industry Context

StockSavvy.ai notes that CTO Realty Growth's continued focus on acquiring shopping centers in 'faster growing, business-friendly markets' aligns with a broader REIT industry trend of targeting resilient retail segments and demographic shifts. The increase in commercial loan and investment income also reflects a strategy to diversify revenue streams beyond traditional property leasing, a common approach for REITs seeking enhanced risk-adjusted yields in a dynamic real estate market. The significant decline in 'Other Properties' economic occupancy, while shopping center occupancy improved, highlights the ongoing challenges in certain non-core asset classes within the broader commercial real estate sector.

Comparison to Industry Standards

• The increase in shopping center economic occupancy to 92% (leased 96%) in 2025 is generally competitive within the retail REIT sector, where strong operators often maintain high occupancy rates in desirable locations, comparable to peers like Regency Centers Corp (REG) or Federal Realty Investment Trust (FRT).
• The 70.4% increase in commercial loan and investment income suggests a successful expansion of this segment, potentially outperforming some peers solely focused on traditional property income in a fluctuating interest rate environment.
• The decrease in FFO per share, despite increases in total revenue and operating income, indicates potential dilution from equity issuances or increased preferred dividends, which warrants closer examination compared to peer REITs that prioritize consistent FFO growth.

Corporate Governance

Legal Proceedings

• The company is not currently a party to any pending or threatened legal proceedings that are believed to have a material adverse effect on its business or financial condition.

Related Party Transactions

• The company provides management services to Alpine Income Property Trust, Inc. (PINE), earning $4.4 million in management fees in 2025.
• The company holds an investment in PINE valued at $41.3 million as of December 31, 2025, representing 15.4% of PINE's outstanding common equity.
• A revenue sharing agreement exists with PINE for a portion of fees earned under the Portfolio Management Agreement attributable to single-tenant properties.
• PINE is a lender to a third-party managed under the Portfolio Management Agreement.
• Executive officers and/or directors of CTO also serve as officers and/or directors of PINE, creating potential conflicts of interest.
• The company purchased 109,081 shares of PINE common stock for $1.6 million in 2025.
• Alpine Income Property Manager, LLC waived a portion of the Base Management Fee for PINE related to the inclusion of net cash proceeds from PINE's Series A Preferred Stock issuance in PINE's Total Equity, reducing the rate on this incremental equity to 0.75% per annum from 1.50%.

Stakeholder Impact

• Shareholders: Potential for increased long-term returns through strategic acquisitions and portfolio diversification. Consistent dividend payments, but per-share FFO/AFFO dilution and a one-time debt extinguishment loss are noted. Share repurchase programs aim to return value.
• Employees: Increased employee count and compensation, indicating growth and investment in human capital. Stock-based compensation plans are in place.
• Tenants: Focus on high-quality retail and mixed-use properties in growing markets aims to attract and retain strong tenants. However, dependence on tenant success and competition from e-commerce remain risks.
• Creditors: Increased long-term debt, but the company reports compliance with all debt covenants as of December 31, 2025. Liquidity appears sufficient to meet debt service obligations.
• Alpine Income Property Trust, Inc. (PINE): Benefits from continued management services and investment relationship with CTO. The waiver of a portion of management fees related to PINE's preferred stock issuance directly benefits PINE.

Next Steps

• Continue diversifying the portfolio by redeploying proceeds from like-kind exchange transactions.
• Utilize the Credit Facility to increase the portfolio of income-producing properties.
• Fund future acquisitions using cash on hand, cash from operations, and additional financing sources.
• The Board and management will consistently review the allocation of capital with the goal of providing the best long-term return for stockholders.
• The Board will annually review the business plan and corporate strategies and make adjustments as circumstances warrant.

Key Dates

Recommendation

CTO Realty Growth demonstrates solid operational growth in revenue and operating income, driven by strategic acquisitions and a growing commercial loan portfolio. The return to net profitability and increased Core FFO/AFFO in absolute terms are positive indicators. However, the per-share FFO/AFFO dilution and the significant one-time loss from debt extinguishment warrant a cautious approach. The company's strategy to diversify and focus on high-growth markets is sound, but the competitive landscape and interest rate risks remain. A 'Hold' recommendation allows investors to observe the sustained impact of these strategic initiatives on per-share profitability and the effective management of its increased debt load.

Keywords

REIT, Commercial Real Estate, Retail Properties, Shopping Centers, Commercial Loans, Property Management, SEC Filing, 10-K, Financial Performance, Dividends, Stock Repurchase, Asset Acquisition, Asset Disposition, Corporate Governance, Risk Management, Equity Incentive Plan, Preferred Stock, Convertible Notes, Florida Real Estate, Georgia Real Estate, North Carolina Real Estate, Texas Real Estate