CTO Realty Growth Announces Acquisition of 318,000 Square Foot Retail Power Center in Orlando, Florida for $68.7 Million
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Insights
The acquisition of Marketplace at Seminole Towne Center by CTO Realty Growth represents a strategic expansion in the Orlando market, which is recognized for its growth potential. The mentioned going-in cap rate being within the company's current guidance suggests a careful consideration of investment yield relative to the initial cost. It's worth noting that a cap rate within the expected range indicates alignment with the company's investment strategy and risk profile.
The property's 98% occupancy rate and anchor tenants such as Burlington and Ross Dress for Less provide a diversified and stable income stream. The emphasis on below-market rents hints at a value-add strategy where rent increases could drive future revenue growth. Moreover, acquiring the property below replacement cost can be a sign of a potentially prudent investment, as it may offer a buffer against market fluctuations.
The use of a 1031 like-kind exchange and a reverse like-kind exchange is a tax-efficient method of reinvesting proceeds from prior real estate dispositions. This move likely maximizes the company's capital efficiency and preserves shareholder value. However, the use of debt financing through credit facilities introduces leverage, which can amplify both gains and losses.
CTO Realty Growth's investment in the Orlando Metropolitan Statistical Area (MSA) capitalizes on the region's robust demographic and economic indicators. The reference to The Urban Land Institute's ranking of the Orlando MSA underscores the market's desirability for real estate investments. A population of over 60,000 within a three-mile radius and an average household income of approximately $118,000 provide a solid consumer base for the retail tenants.
Furthermore, the strategic location along major transportation routes I-4 and SR 417 enhances visibility and accessibility, which are critical factors for retail success. The property's multi-tenant nature and mix of national brands contribute to its appeal and resilience against economic downturns. As Orlando becomes CTO's fourth-largest market, this acquisition demonstrates a focused approach to market penetration and scaling within a region.
From a financial perspective, the acquisition's funding structure deserves attention. The use of $24.1 million of restricted cash from previous property dispositions shows a reinvestment strategy that could lead to tax deferment benefits. Additionally, the draw from the company’s unsecured revolving credit facility indicates a strategic leverage choice that can enhance return on equity, assuming that the acquired asset performs as expected or better.
Investors should monitor the long-term impact of this acquisition on the company's balance sheet and liquidity, as well as the performance of the retail sector in the Orlando market. While the current economic indicators are positive, the retail industry is subject to shifts in consumer behavior and competition from e-commerce. The ability of CTO to adapt and manage these factors will be critical in realizing the projected long-term value to shareholders.
WINTER PARK, Fla., March 21, 2024 (GLOBE NEWSWIRE) -- CTO Realty Growth, Inc. (NYSE: CTO) (the “Company” or “CTO”) today announced the acquisition of Marketplace at Seminole Towne Center, a 318,000 square foot multi-tenant retail power center in the Sanford submarket of Orlando, Florida (the “Property”) for a purchase price of
"We are pleased to announce the acquisition of Marketplace at Seminole Towne Center, a premier retail destination near our headquarters in Orlando, Florida," said John P. Albright, President and Chief Executive Officer of CTO Realty Growth, Inc. "This dominant, Target shadow-anchored center allows us to increase our exposure to the high-growth Orlando market and existing top tenants such as Ross Dress for Less, TJX Companies, and Burlington. Seminole Towne Center provides a stable income stream and growth potential, and due to its prime location and strong community ties, we see attractive potential upside from below-market rents. We believe we acquired the property below replacement cost and this acquisition aligns with our commitment to expanding our footprint in high-quality, dynamic markets and underscores our dedication to delivering long-term value to our shareholders."
Seminole Towne Center is situated on 41 acres along I-4 and SR 417, just over 20 miles north of downtown Olando, Florida. The Property is
The Company purchased the Property through a 1031 like-kind exchange using
About CTO Realty Growth, Inc.
CTO Realty Growth, Inc. is a publicly traded real estate investment trust that owns and operates a portfolio of high-quality, retail-based properties located primarily in higher growth markets in the United States. CTO also externally manages and owns a meaningful interest in Alpine Income Property Trust, Inc. (NYSE: PINE), a publicly traded net lease REIT.
We encourage you to review our most recent investor presentation and supplemental financial information, which is available on our website at www.ctoreit.com.
Safe Harbor
Certain statements contained in this press release (other than statements of historical fact) are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can typically be identified by words such as “believe,” “estimate,” “expect,” “intend,” “anticipate,” “will,” “could,” “may,” “should,” “plan,” “potential,” “predict,” “forecast,” “project,” and similar expressions, as well as variations or negatives of these words.
Although forward-looking statements are made based upon management’s present expectations and reasonable beliefs concerning future developments and their potential effect upon the Company, a number of factors could cause the Company’s actual results to differ materially from those set forth in the forward-looking statements. Such factors may include, but are not limited to: the Company’s ability to remain qualified as a REIT; the Company’s exposure to U.S. federal and state income tax law changes, including changes to the REIT requirements; general adverse economic and real estate conditions; macroeconomic and geopolitical factors, including but not limited to inflationary pressures, interest rate volatility, distress in the banking sector, global supply chain disruptions, and ongoing geopolitical war; credit risk associated with the Company investing in structured investments; the ultimate geographic spread, severity and duration of pandemics such as the COVID-19 pandemic and its variants, actions that may be taken by governmental authorities to contain or address the impact of such pandemics, and the potential negative impacts of such pandemics on the global economy and the Company’s financial condition and results of operations; the inability of major tenants 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 PINE; the completion of 1031 exchange transactions; the availability of investment properties that meet the Company’s investment goals and criteria; the uncertainties associated with obtaining required governmental permits and satisfying other closing conditions for planned acquisitions and sales; and the uncertainties and risk factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and other risks and uncertainties discussed from time to time in the Company’s filings with the U.S. Securities and Exchange Commission.
There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of future developments on the Company will be those anticipated by management. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation to update the information contained in this press release to reflect subsequently occurring events or circumstances.
| Contact: | Matthew M. Partridge Senior Vice President, Chief Financial Officer, and Treasurer (407) 904-3324 mpartridge@ctoreit.com |
FAQ
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