8-K: CTO Realty Growth Reports Strong Q4, Full-Year 2025 Results

CTO Realty Growth announced robust fourth quarter and full-year 2025 operating results, driven by record leasing activity and strategic investments, while providing a positive 2026 outlook.

Summary

• Net Income attributable to common stockholders was $0.82 per diluted share for the fourth quarter of 2025, and $0.08 per diluted share for the full year 2025.
• Core Funds from Operations (FFO) attributable to common stockholders was $0.49 per diluted share for the fourth quarter of 2025, and $1.87 per diluted share for the full year 2025.
• Adjusted Funds from Operations (AFFO) attributable to common stockholders was $0.51 per diluted share for the fourth quarter of 2025, and $1.97 per diluted share for the full year 2025.
• Shopping center same-property net operating income (NOI) increased by 4.3% for the fourth quarter of 2025, and 4.4% for the full year 2025.
• Executed 592,000 square feet of comparable retail leases in 2025 at a record cash rent spread increase of 24%.
• Acquired Pompano Citi Centre for $65.2 million in Q4 2025, contributing to $165.9 million of total investments for the full year 2025.
• Sold the Shops at Legacy North for $78.0 million in Q4 2025, contributing to $85.1 million of total dispositions for the full year 2025, generating aggregate gains of $20.9 million.
• Leased occupancy reached an all-time high of 95.9% at year-end 2025, up 250 basis points compared to December 31, 2024.
• The signed-not-open pipeline stands at $6.1 million, representing 5.8% of in-place ABR.
• Under contract to acquire a 384,000 square foot shopping center in South Texas for a gross purchase price of $82.6 million.
• Total liquidity as of December 31, 2025, was $167.1 million, consisting of $149.0 million of undrawn commitments and $18.1 million of cash on hand.
• Net debt to Pro Forma Adjusted EBITDA was 6.4 times as of December 31, 2025.
• Repurchased $9.3 million of common stock in 2025 at a weighted average purchase price of $16.27 per share.
• The Board of Directors authorized a quarterly cash dividend of $0.38 per share of common stock and $0.39844 per share of 6.375% Series A Cumulative Redeemable Preferred Stock for the first quarter of 2026.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong performance, marked by significant improvements in net income, robust leasing activity, and a positive outlook for 2026, despite a relatively high debt-to-EBITDA ratio.

Positives

• Net Income attributable to common stockholders significantly improved to $0.82 per diluted share in Q4 2025 from a loss of $0.56 per diluted share in Q4 2024, and turned positive for the full year 2025 at $0.08 per diluted share from a loss of $0.35 per diluted share in 2024.
• Core FFO per diluted share increased to $0.49 in Q4 2025 from $0.46 in Q4 2024, and AFFO per diluted share increased to $0.51 in Q4 2025 from $0.49 in Q4 2024.
• Shopping center same-property NOI demonstrated strong growth of 4.3% for Q4 2025 and 4.4% for the full year 2025.
• Record 24% increase in cash base rent for comparable retail leases (592,000 square feet) in 2025 highlights strong demand and pricing power.
• Leased occupancy reached an all-time high of 95.9% at year-end 2025, indicating robust tenant retention and property demand.
• A substantial signed-not-open pipeline of $6.1 million (5.8% of in-place ABR) positions the company for future revenue growth.
• Strategic investments totaling $165.9 million in 2025 were made at an attractive weighted average initial cash yield of 9.0%.
• The company maintains healthy total liquidity of $167.1 million, providing financial flexibility.
• Only $17.8 million mortgage note payable matures in 2026, indicating a manageable debt maturity schedule for the near term.
• The 2026 outlook projects Core FFO per diluted share growth of 7.2% and AFFO per diluted share growth of 8.4% at the midpoint, signaling continued positive momentum.
• The portfolio benefits from high-quality demographics, with 88% of ABR from ULI's Top 30 Markets, an average 5-mile population of 193,000, and an average 5-mile household income of $140,000.
• 91% of leases by ABR include contractual rent bumps, providing a stable and growing revenue stream.
• Six outparcel development opportunities are expected to generate a blended low double-digit yield on cost (10-12%), enhancing future property value and income.

Negatives

• Net debt to Pro Forma Adjusted EBITDA of 6.4x is relatively high for a REIT, suggesting a leveraged balance sheet.
• Same-property NOI for other/non-core properties was impacted by one tenant vacating 98,000 square feet of the Albuquerque, NM property on December 1, 2025.
• The weighted average rate for the 2029 and 2030 Term Loans is expected to increase by approximately 50 basis points, and the fixed portion of the credit facility by approximately 70 basis points, due to SOFR swap agreements maturing in March 2026.

Risks

• The company's ability to remain qualified as a REIT.
• Exposure to U.S. federal and state income tax law changes, including changes to REIT requirements.
• General adverse economic and real estate conditions.
• Macroeconomic and geopolitical factors, including inflationary pressures, interest rate volatility, distress in the banking sector, global supply chain disruptions, and ongoing geopolitical war.
• Credit risk associated with investing in commercial loans and similarly structured investments.
• The ultimate geographic spread, severity, and duration of pandemics (e.g., COVID-19) and their potential negative impacts on the global economy and the company's financial condition and operations.
• The inability of major tenants or borrowers to continue paying their rent or obligations due to bankruptcy, insolvency, or a general downturn in their business.
• The loss or failure, or decline in the business or assets of Alpine Income Property Trust, Inc. (PINE).
• The completion of 1031 exchange transactions.
• The availability of investment properties that meet the company's investment goals and criteria.
• Uncertainties associated with obtaining required governmental permits and satisfying other closing conditions for planned acquisitions and sales.
• Other risks and uncertainties discussed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and other filings with the U.S. Securities and Exchange Commission.

Future Outlook

CTO Realty Growth projects 2026 Core FFO per diluted share between $1.98 and $2.03, and AFFO per diluted share between $2.11 and $2.16. This outlook assumes investment volume of $100 million to $200 million at an initial cash yield of 8.0% to 8.5%, and shopping center same-property NOI growth of 3.5% to 4.5%.

Management Comments

• "We continued our momentum in 2025, ending the year with a signed-not-open pipeline of $6.1 million, representing 5.8% of in-place ABR and positioning the Company for growth in 2026 and 2027."
• "Further, we completed over 670,000 square feet of leasing in 2025, a record for the Company, which helped drive leased occupancy to an all-time high of 95.9% at year-end."

Industry Context

StockSavvy.ai notes that CTO Realty Growth's focus on open-air shopping centers in higher-growth markets in the Southeast and Southwest U.S. aligns with current demographic shifts and retail resilience trends. The strong leasing spreads and high occupancy rates suggest effective asset management and demand for well-located retail spaces, contrasting with broader concerns about traditional retail's viability.

Comparison to Industry Standards

• CTO's 2026E Core FFO Multiple of 9.1x is significantly lower than the peer average of 12.5x, suggesting it may be undervalued relative to peers like AKR (16.8x), SKT (13.8x), and FRT (13.6x).
• CTO's Annualized Dividend Yield of 7.2% is substantially higher than the peer average of 4.6%, indicating a more attractive income proposition compared to companies like AKR (3.9%), SKT (3.5%), and FRT (4.5%).
• The 24% cash rent spread increase on comparable retail leases for the full year 2025 demonstrates strong pricing power and demand, outperforming typical market rent growth rates.
• Leased occupancy of 95.9% is robust and competitive within the shopping center REIT sector, indicating strong tenant retention and demand for its properties.

Corporate Governance

Related Party Transactions

• CTO externally manages and owns a meaningful interest in Alpine Income Property Trust, Inc. (NYSE: PINE).
• CTO's investment in Alpine Income Property Trust is $50.0 million as of February 18, 2026, representing 15.4% ownership interest.
• CTO generates approximately $7.3 million of income and dividends annually from managing Alpine Income Property Trust.

Stakeholder Impact

• Shareholders: Positive impact due to strong financial performance, increased dividends, stock repurchases, and a positive 2026 outlook, suggesting potential for capital appreciation and continued income.
• Tenants: Strong leasing activity and high occupancy rates indicate a healthy demand for CTO's properties, potentially leading to stable or increasing rents and a vibrant retail environment.
• Employees: Stable company performance and growth could lead to job security and potential career opportunities.
• Creditors: Stable financial health, managed debt maturities, and strong operational performance indicate a lower risk profile for lenders.
• Customers (Shoppers): Continued investment in properties and strategic locations aim to enhance the shopping experience and attract diverse retail offerings.

Next Steps

• Close the acquisition of a 384,000 square foot shopping center located in South Texas for $82.6 million in the near-term.
• Host an earnings conference call and webcast on Friday, February 20, 2026, at 9:00 AM ET.
• Pay the quarterly cash dividend of $0.38 per share of common stock on March 31, 2026.
• Pay the quarterly cash dividend of $0.39844 per share of 6.375% Series A Cumulative Redeemable Preferred Stock on March 31, 2026.
• Manage the maturity of a $17.8 million mortgage note payable in 2026.
• Execute on planned investment volume of $100 million to $200 million in 2026.
• Continue outparcel development opportunities with expected rent commencement in mid-2027.
• Address the maturity of $65 million of SOFR swap agreements in March 2026, which will be replaced by $50 million of forward SOFR swap agreements.

Key Dates

Recommendation

The company delivered a significant turnaround in net income, strong operational metrics including record leasing and high occupancy, and provided an optimistic 2026 outlook with projected FFO and AFFO growth. The current valuation appears attractive relative to peers based on dividend yield and FFO multiple, suggesting undervaluation. Strategic investments in high-growth markets and a healthy liquidity position further support a strong buy recommendation for long-term investors. The relatively high debt-to-EBITDA ratio is a point to monitor but is offset by strong operational performance and managed maturities.

Keywords

REIT, shopping centers, real estate, commercial real estate, retail leasing, FFO, AFFO, NOI, property acquisitions, property dispositions, dividend, Florida real estate, Georgia real estate, Texas real estate, North Carolina real estate, CTO Realty Growth