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Overview of CTO Realty Growth Inc
CTO Realty Growth Inc (NYSE: CTO) is a publicly traded real estate investment trust (REIT) specializing in owning and managing income-generating properties across diversified markets in the United States. With a portfolio comprising approximately 2.7 million square feet of income properties, the company operates in multiple asset classes, including retail, office, and mixed-use commercial real estate. CTO’s strategic focus lies in creating a geographically dispersed portfolio that supports a predictable earnings pattern, catering to a wide range of tenants and industries.
Business Model and Core Operations
CTO Realty Growth Inc generates revenue through three primary channels: rental income from its income properties, property management services, and investments in commercial loans. The company’s income property portfolio includes 49 properties spread across 15 states, reflecting a commitment to diversification and risk mitigation. This approach helps CTO reduce dependency on any single market or tenant while enhancing its ability to adapt to regional economic dynamics. Additionally, the company holds approximately 5,300 acres of undeveloped land in the Daytona Beach area, which represents a potential long-term value driver through development or sale.
Portfolio Composition
The company’s income property portfolio is a cornerstone of its operations. These properties are strategically located in high-demand markets, targeting a mix of retail centers, office buildings, and other commercial spaces. This diversified asset base allows CTO to serve a broad spectrum of tenants, ranging from national retail chains to local businesses. The company also engages in strategic real estate investments, including commercial loans, which provide additional income streams and further diversify its revenue sources.
Strategic Focus and Market Position
CTO Realty Growth Inc positions itself as a REIT with a long-term focus on stable and predictable earnings. Its strategy emphasizes geographic diversification, mitigating risks associated with market-specific economic fluctuations. By maintaining a balanced portfolio of income-generating properties and undeveloped land, the company aligns its operations with both short-term revenue generation and long-term asset appreciation. This dual focus differentiates CTO from other REITs that may prioritize one over the other.
Competitive Landscape
Operating within the highly competitive REIT industry, CTO faces competition from both regional and national real estate companies. Key competitors include other diversified REITs and specialized players focusing on specific asset classes. CTO’s ability to differentiate itself lies in its geographically dispersed portfolio, strategic asset management, and focus on predictable earnings patterns. These factors enable the company to attract a diverse tenant base and maintain resilience in varying economic conditions.
Challenges and Opportunities
Like other REITs, CTO Realty Growth Inc navigates challenges such as economic cycles, tenant retention, and regulatory compliance. However, its diversified portfolio and strategic focus on high-demand markets position it to mitigate these risks effectively. The company’s undeveloped land holdings in Daytona Beach also present unique opportunities for future development or sale, potentially unlocking significant value.
Conclusion
CTO Realty Growth Inc represents a balanced approach to real estate investment, combining income-generating properties with strategic land holdings. Its diversified portfolio, geographic reach, and focus on predictable earnings make it a noteworthy player in the REIT industry. By aligning its operations with market demands and maintaining a long-term strategic vision, CTO continues to solidify its position as a reliable income-focused real estate investment trust.
CTO Realty Growth, Inc. (CTO) has announced the approval of a merger with its wholly owned subsidiary, CTO NEWCO REIT, Inc., as part of its conversion to a real estate investment trust (REIT). The merger, set to take effect after receiving necessary consents, will convert existing CTO shares into NEWCO shares. A special cash and stock distribution totaling $55.8 million (approx. $11.83 per share) has also been declared, aimed at distributing all previous undistributed earnings. The payment date is set for December 21, 2020, for shareholders of record by November 19, 2020.
CTO Realty Growth (CTO) reported a net loss of ($0.33) per share for Q3 2020, influenced by a ($0.23) loss per share from its investment in Alpine Income Property Trust, Inc. (PINE). The company collected 91% of contractual base rent during Q3 and sold 3,300 acres of land for $46 million. It declared a fourth-quarter dividend of $1.00 per share, a 150% increase from the previous quarter. Total revenues rose by 28.6% year-over-year to $14.57 million, driven by new property acquisitions. The expected special distribution for shareholders ranges from $52 million to $56 million.
CTO Realty Growth has declared a quarterly cash dividend increase to $1.00 per share for Q4 2020, up from $0.40, reflecting a 150% increase. This dividend will be payable on November 30, 2020, for shareholders of record by November 16, 2020. The rise in dividend signifies the company's strength and growth, offering an annualized yield of approximately 9.5% based on its closing price on October 27, 2020. Additionally, CTO has introduced a Dividend Reinvestment and Direct Stock Purchase Plan to enhance shareholder engagement.
CTO Realty Growth, Inc. (NYSE American: CTO) will release its third-quarter 2020 operating results on October 28, 2020, after market close. A conference call to discuss these results is scheduled for October 29, 2020, at 9:00 AM ET. Interested parties can access the Earnings Call via teleconference at 1-888-317-6003 for the USA, or through a webcast available on the company’s website. CTO Realty Growth owns about 2.4 million square feet of income properties across the U.S. and a significant interest in Alpine Income Property Trust (NYSE: PINE).
CTO Realty Growth has completed the sale of a property in Jacksonville, Florida, leased to PDQ for approximately $2.5 million, with an exit cap rate of 6.1%. The company expects a gain of about $128,000, or $0.02 per share, after tax. This sale contributes to over $12 million held in Section 1031 like-kind exchange restricted cash. Year-to-date, CTO has sold seven single-tenant net lease properties and one multi-tenant retail property totaling more than $51 million in aggregate sales.
CTO Realty Growth, Inc. (NYSE American: CTO) has appointed Matthew M. Partridge as Senior Vice President and Chief Financial Officer. Partridge brings extensive experience from previous roles at Hutton and Agree Realty Corporation. He is expected to contribute significantly to the company's financial strategies. In addition, he will also hold the same position at Alpine Income Property Trust, Inc. (NYSE: PINE), which is managed by CTO. This strategic appointment aims to strengthen CTO's leadership team in the real estate investment sector.
CTO Realty Growth announced its Board of Directors' unanimous decision to elect REIT tax status starting December 31, 2020. This strategy aims to enhance its commercial real estate investments across multiple sectors. The company plans a one-time special distribution estimated between $46 million and $54 million to shareholders, payable in cash or stock. To maintain REIT qualification, CTO aims to distribute at least 90% of its taxable income. A proposed merger with CTO NEWCO REIT is anticipated, with shareholder approval sought in the fourth quarter of 2020.
CTO Realty Growth (CTO) has acquired a 120,000 square foot office property in Tampa, Florida, for approximately $26.9 million, leased 100% to Ford Motor Credit Company through March 2026. The acquisition yields around 8.4%, exceeding the company's 2020 guidance. In August 2020, CTO collected about 90% of expected base rents, but has deferred approximately 3% primarily related to 24 Hour Fitness. The company completed over $164 million in property acquisitions in 2020, maintaining a weighted average cap rate of 7.9%.
CTO Realty Growth (NYSE American: CTO) has completed the sale of approximately 98 acres for $2.8 million to JTD Land Company, marking a price of around $28,500 per acre. This transaction aligns with the distribution priority in the operating agreement of the Land Joint Venture (Land JV), in which CTO retains an interest. Since its inception in October 2019, the Land JV has achieved nearly $67 million in land sales, with seven additional agreements in the pipeline, potentially yielding $28.5 million. The sold property is poised for development as a 140-unit single-family project.
CTO Realty Growth announced the sale of a property in Austin, Texas, leased to Carrabba’s Italian Grill, for approximately $2.5 million. This sale reflects an exit cap rate of 6.4% and leaves an estimated loss of $94,000 after tax, translating to $0.02 per share. The company now has over $36 million in Section 1031 restricted cash. Year-to-date, CTO has sold six single-tenant and one multi-tenant properties for over $49 million. The proceeds from this transaction are planned for a future 1031 exchange.
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