CTO Realty Growth Q3 2026 Earnings Call: FFO-Prognose angehoben, da Investitionen 472 Millionen USD erreichen

Kernaussagen

• CTO Realty Growth meldete für das dritte Quartal 2026 einen Core FFO von 0,53 US-Dollar je verwässerter Aktie, ein Plus von 10,4 % gegenüber 0,48 US-Dollar im Vorjahreszeitraum. Seit Jahresbeginn stieg der Core FFO um 13,8 % auf 1,57 US-Dollar je Aktie.
• Der flächenbereinigte NOI (Net Operating Income) im Bereich Einkaufszentren wuchs im Quartal um 3,8 % und seit Jahresbeginn um 6,2 %. Der flächenbereinigte Gesamt-NOI, der mehrere nicht strategische Immobilien beinhaltet, stieg im Quartal um 2,3 %.
• Das Unternehmen schloss im Quartal Mietverträge über 467.000 Quadratfuß ab. Das vergleichbare Vermietungsvolumen belief sich auf 396.000 Quadratfuß bei einer Barmietsteigerung von 7 %.
• Die Investitionen beliefen sich in den ersten neun Monaten auf insgesamt 336,5 Millionen US-Dollar bei einer gewichteten Durchschnittsrendite von 9,4 %. Nach weiteren Transaktionen nach Quartalsende erreichte das Investitionsvolumen für 2026 472 Millionen US-Dollar bei derselben gewichteten Durchschnittsrendite.
• Das Management hob seine Core-FFO-Prognose für 2026 auf 2,11 bis 2,14 US-Dollar je verwässerter Aktie und die AFFO-Prognose auf 2,22 bis 2,25 US-Dollar je verwässerter Aktie an.
• CTO beendete das Quartal mit einer Nettoverschuldung zum pro-forma-bereinigten EBITDA von 5,9x und einer Liquidität von rund 255 Millionen US-Dollar. Das Management rechnet damit, dass der Verschuldungsgrad nach den jüngsten Investitionen auf etwa 6,5x steigen wird, bevor er im Zuge der ersten Ertragsbeiträge bestehender Verträge wieder in den niedrigen 6er-Bereich sinken dürfte.

Wichtigste Finanzdaten

Geschäfts- und operative Entwicklung

CTO hat Lösungen für alle 11 frei gewordenen Ankerflächen gefunden. Neun wurden mit einer positiven Mietsteigerung von rund 70 % wiedervermietet, während für zwei ein Kaufvertrag über 20,7 Millionen US-Dollar mit einem landesweiten Einzelhändler vorliegt; der Abschluss wird im vierten Quartal erwartet.

Ohne Zona Rosa stieg die vermietete Belegungsquote von 95,4 % im Vorquartal auf 95,7 %. Unter Berücksichtigung von Zona Rosa, die beim Erwerb zu 67 % vermietet war, lag die vermietete Belegungsquote des Gesamtportfolios zum 30. September bei 92,4 %.

Es wird erwartet, dass die Pipeline vereinbarter, noch nicht eröffneter Mietverträge im Umfang von 5,6 Millionen US-Dollar das künftige Mietwachstum stützen wird. Laut Management dürften Mieteinnahmen von rund 3,2 Millionen US-Dollar im Laufe des Jahres 2027 anlaufen, größtenteils um die Jahresmitte, wobei bis 2028 nahezu die gesamte Pipeline aktiv sein soll. Diese Zahl beinhaltet keine Mietverträge, die nach Quartalsende im Pompano Citi Centre unterzeichnet wurden.

Im Pompano Citi Centre vereinbarte Amped Fitness eine Erweiterung um 19.000 Quadratfuß auf 53.000 Quadratfuß. Ein verbundenes Unternehmen mietete zudem 56.000 Quadratfuß für Forschungs-, Test- und Bürozwecke. Durch die zusätzliche Fläche erhöht sich die ausgewiesene Gesamtfläche der Immobilie auf 565.000 Quadratfuß.

CTO rechnet damit, dass sein Entwicklungsprogramm für sechs Außenflächen eine ungehebelte Mischrendite im niedrigen zweistelligen Bereich auf Investitionen von rund 30 Millionen US-Dollar erzielen wird. Das Management erwartet erste Ergebnisbeiträge im Jahr 2027 und die volle Wirkung im Jahr 2028.

Akquisitionen in Kansas City

CTO stieg durch zwei Akquisitionen mit einer Gesamtfläche von rund 1,3 Millionen Quadratfuß in den Markt von Kansas City ein.

• Zona Rosa: Für rund 63 Millionen US-Dollar bzw. 82 US-Dollar je Quadratfuß erworben. Die Immobilie war zu 67 % vermietet und umfasst 10 Acres baurechtes Entwicklungsland sowie rund 100.000 Quadratfuß unzureichend genutzte Fläche innerhalb des Leerstands von insgesamt etwa 250.000 Quadratfuß. Das Management zielt auf Nutzungen in den Bereichen Gesundheit und Fitness, Unterhaltung, Gastronomie und Hotellerie ab, um die Frequentierung und Belegung zu steigern.
• Summit Woods Crossing: Nach Quartalsende für 103 Millionen US-Dollar bzw. 189 US-Dollar je Quadratfuß erworben. Das 545.000 Quadratfuß große Zentrum war zu 99 % belegt. Das Management bezeichnete das Objekt als hochwertige Immobilie mit mehreren unter dem Marktpreis liegenden Mietverträgen, darunter Lowe’s und Kohl’s.

Strukturierte Investitionen

CTO vergab im Juli ein Darlehen über 37 Millionen US-Dollar, wovon 29,8 Millionen US-Dollar bei Abschluss ausgezahlt wurden. Das zweijährige Darlehen ist durch ein Erbbaurecht an einer gemischt genutzten Immobilie in Austin besichert und bietet eine anfängliche Barrendite von 9,75 %.

Nach Quartalsende tätigte das Unternehmen eine Preferred-Equity-Investition in Höhe von 32 Millionen US-Dollar in ein Joint Venture, das 10 Einkaufszentren besitzt. Die dreijährige Investition bringt eine Rendite von 17 %, einschließlich 7 % Sachwertverzinsung (Payment-in-Kind). Das Management geht davon aus, die Position zu halten.

Das Portfolio strukturierter Investitionen beläuft sich nun auf insgesamt rund 260 Millionen US-Dollar bei einer Mischrendite von 12,1 %. Das Management gab an, dass Gewerbedarlehen nahe an der angestrebten Obergrenze des Unternehmens von etwa 15 % des ungeschriebenen Vermögens liegen.

Bilanz und Finanzierung

CTO schloss eine unbesicherte Kreditfazilität über 1 Milliarde US-Dollar ab, bestehend aus einer revolvierenden Kreditlinie über 400 Millionen US-Dollar und Laufzeitdarlehen über 600 Millionen US-Dollar mit Fälligkeiten von September 2029 bis März 2032. Die Transaktion brachte zusätzliche Zusagen und Liquidität in Höhe von 250 Millionen US-Dollar und verlängerte die gewichtete durchschnittliche Schuldenlaufzeit von 1,6 auf 4,3 Jahre.

Zudem nahm das Unternehmen über sein ATM-Programm Nettoerlöse von 27,3 Millionen US-Dollar zu einem durchschnittlichen Bruttopreis von 21,83 US-Dollar je Aktie auf. Nach der Rückzahlung seiner einzigen besicherten Hypothek sind nun alle Verbindlichkeiten unbesichert.

Laut Management ist das Unternehmen nicht auf seinen Aktienkurs angewiesen, um kurzfristige Aktivitäten zu finanzieren, und beabsichtigt, den Schwerpunkt auf opportunistisches Asset-Recycling zu legen. Es rechnet innerhalb der nächsten sechs Monate mit gewissen Umschichtungen, sofern akzeptable Preise erzielt werden können.

Prognose des Managements

Das Management gab an, dass der Mittelwert der Core-FFO-Prognose ein Wachstum von rund 14 % gegenüber 2025 darstellt. Die Ergebnisse des vierten Quartals innerhalb des Prognoserahmens hängen teilweise von den Zeitpunkten des Mietbeginns sowie von umsatzabhängigen Mieten ab.

Risiken und wichtige Beobachtungspunkte

• Das Management rechnet damit, dass der Verschuldungsgrad nach den jüngsten Transaktionen von 5,9x zum Quartalsende auf etwa 6,5x steigen wird. Die Pipeline vereinbarter, noch nicht eröffneter Mietverträge und Erträge aus Außenflächen könnten den Verschuldungsgrad in der Folge um etwa 0,2x senken.
• Ein Zinsswap im Volumen von rund 100 Millionen US-Dollar läuft 2027 aus, was den maßgeblichen Zinssatz um etwa 180 Basispunkte erhöht. Das Management erwartet für 2028 keinen vergleichbar erheblichen Druck durch Zinsswaps.
• Der Wechsel von Harkins Theatres zu Crunch Fitness im Crossroads Towne Center wird voraussichtlich zu einem Ausfall von etwa 12 Monaten führen zwischen dem Auszug von Harkins Anfang 2027 und dem Beginn der Mietzahlungen durch Crunch im Jahr 2028.
• Zona Rosa bietet erhebliches Nachvermietungspotenzial, gehört aber mit einer Belegungsquote von 67 % zum Portfolio. Laut Management stellen mieterbezogene Investitionen und nicht etwa Instandhaltungsrückstaus den primären Kapitalbedarf dar.
• Höhere Zinssätze haben laut Management die Käufernachfrage nach Einkaufszentren nicht beseitigt, könnten jedoch zu Preisanpassungen von etwa 25 bis 30 Basispunkten im Vergleich zu vor sechs Monaten führen.

Highlights der Analysten-Runde (Q&A)

Das Management beschrieb die Vermietungsnachfrage als konstant und durch hochwertige Mieter gestützt, bezeichnete den Markt jedoch nicht als Ansturm auf verfügbare Flächen.

Für die Büroimmobilie in Albuquerque plant CTO, den künftigen Flächenbedarf von Fidelity zu bewerten und die neue Regierung von New Mexico abzuwarten, bevor das Objekt 2027 optimiert wird. Das Management betonte, man wolle nicht voreilig verkaufen und potenziellen Wert ungenutzt lassen.

Blickend auf die Mietvertragsausläufe im Jahr 2028 hob das Management den mietgünstigen JCPenney-Mietvertrag in Rockwall, die Fläche von Fidelity in Albuquerque sowie den bereits an Crunch Fitness vorvermieteten Harkins-Standort hervor. Verlängerungen bei kleineren Ladenlokalen dürften zusätzliche Chancen für Mietwachstum bieten.

Laut Management wird die Nachfrage nach Einkaufszentren weiterhin durch Core-Kapital gestützt. CTO beabsichtigt, Veräußerungen selektiv zu verfolgen, insbesondere bei stabilisierten, langsamer wachsenden Immobilien, bei denen Spitzenpreise erzielt werden können.

Vollständiges Transkript des Earnings Calls

Vollständiges Transkript der Telefonkonferenz

Ausführungen des Managements

Operator

Good day and thank you for standing by. Welcome to the CTO Realty Growth 2026 Quarter 3 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. Jenna, please go ahead.

Jenna McKinney

Good morning, everyone and thank you for joining us today for the CTO Realty Growth Third 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 who 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 materially 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.

John Albright

Thanks, Jenna and good morning, everyone. The third quarter was very productive for CTO as we continued our strong leasing and investment momentum. During the quarter, we signed 467,000 square feet of leases and completed $102.3 million of investments at a weighted average yield of 9.1%. That brings our 9-month total to 833,000 square feet of leasing and $336.5 million of investments at a weighted average yield of 9.4%. This activity drove core FFO per diluted share growth of 10.4% for the quarter and 13.8% for the 9 months. We have now addressed all 11 of our vacated anchor spaces. And just after the quarter end, we signed approximately 75,000 square feet of new leases at Pompano Citi Centre and completed an additional $135.8 million of investments, bringing year-to-date investments to $472 million at a weighted average yield of 9.4%.

Reflecting all of this activity, we are raising our 2026 core FFO guidance, which Phil will walk through shortly. Starting with leasing, our third quarter activity included 396,000 square feet of comparable leases at a 7% cash rent spread. Year-to-date comparable leasing totals 726,000 square feet at a 9% cash rent spread. Regarding the vacated anchor spaces, we addressed the last remaining box this quarter by subdividing the former Conn's space at Carolina Pavilion in Charlotte and signing leases with Cavender's and 2nd & Charles. We're pleased with how this all played out. Of the 11 spaces, 9 have been re-leased at approximately 70% positive spread. The remaining 2, as previously announced, are under contract to be sold to a national retailer for $20.7 million with closing expected in the fourth quarter. We expect these new anchors to bring more traffic to our centers and benefit the adjacent small shop space.

A few other leasing highlights. First, we signed a 55,000 square foot lease with Crunch Fitness at Crossroads Towne Center in Phoenix to replace Harkins Theatres. Although the Harkins lease runs through late 2028, we had negotiated an early termination right. That let us proactively backfill the space at a positive cash spread with a view that it will drive more foot traffic. We expect roughly 12 months of downtime between Harkins vacating early 2027 and the Crunch lease commencing in 2028. Second, just after the quarter end, Amped Fitness signed a lease to expand by 19,000 square feet at Pompano Citi Centre, bringing this immersive experience-driven fitness destination to 53,000 square feet.

An Amped affiliate also leased 56,000 square feet for research, development and testing of gym equipment and experiential rooms as well as office operations. This space is part of the 62,000 square feet of unfinished second floor shell space we identified as upside when we acquired the property last December. Because the space isn't currently in the center's square footage, the lease will increase Pompano Citi Centre to 565,000 square feet. Third, our outparcel program. This quarter, we signed 4 leases at multi-tenant buildings in 2 outparcel developments, T-Mobile at The Plaza at Rockwall and Jason's Deli, Acapella Nail Spa and Nothing Bundt Cakes at Beaver Creek in Raleigh. Together with the Swig and Cooper's Hawk leases signed earlier this year, we're making steady progress.

We continue to expect a blended low double-digit unlevered yield on about $30 million of investments across these 6 outparcels with earnings contribution beginning in 2027 and the full benefit in 2028.

Turning to occupancy. Excluding Zona Rosa, leased occupancy increased to 95.7% from 95.4% last quarter. Including Zona Rosa, which was 67% leased when we acquired it, the total portfolio was 92.4% leased at September 30. Zona Rosa gives us real room to grow, which I'll come back to in a moment. At quarter end, our signed-not-open pipeline was $5.6 million or about 4.6% of in-place cash rent. That's down modestly from last quarter, mainly because the State of New Mexico began paying rent at our Albuquerque property in September, though new leasing during the quarter offset most of this impact. We expect the majority of the signed-not-open pipeline to commence rent over the course of 2027.

Moving to investments. On our last call, we said we expected to close at least one more acquisition this year. We closed 2, both in Kansas City, a new market for CTO with more than 2.2 million people in a pro-business climate. Together, these 2 centers, both in strong local submarkets, add about 1.3 million square feet to our portfolio. First, Zona Rosa, which we acquired in the third quarter for approximately $63 million or $82 per square foot, well below replacement costs. It's a top lifestyle center in Kansas City's Northland submarket with about 5.5 million annual visits and is anchored by DICK's Sporting Goods, Barnes & Noble, Old Navy, Burlington and DSW.

Beyond the lease-up opportunity, the property includes 10 acres of entitled development land and about 100,000 square feet of underutilized space we can reposition. Second, Summit Woods Crossing, which we acquired in early October for $103 million or $189 per square foot, also well below replacement cost. It's a 545,000 square foot power center in Lee's Summit, one of the metro's most affluent submarket. It's 99% occupied and anchored by Lowe's, Kohl's, Best Buy, T.J. Maxx and Total Wine with a SuperTarget on the site that we don't own. With about 7.3 million annual visits, it's among the most visited shopping centers in the Kansas City metro area. These 2 acquisitions also strengthened our tenant credit with Dick's and Best Buy, both investment grade becoming our 2 largest tenants.

On the structured investment side, in July, we originated a $37 million loan, of which $29.8 million was funded at closing. It's secured by a leasehold interest in a mixed-use property in Austin, Texas, has a 2-year term and carries a 9.75% initial cash yield. Then after quarter end, we closed a $32 million preferred equity investment in a joint venture that owns 10 shopping centers. It is fully funded at closing, has a 3-year term and yields 17%, including 7% pay in kind. Our structured investment portfolio now totals approximately $260 million at a blended rate of 12.1%.

Finally, during the quarter, we closed a new expanded credit facility that gives us ample capacity to fund this activity. Phil will cover the details. In summary, we're very pleased with the 9 months of 2026. We believe our embedded growth drivers, including below-market in-place rents, the signed-not-open pipeline, lease-up opportunities, outparcel developments and disciplined capital recycling positions CTO for meaningful earnings growth.

With that, I'll turn the call over to Phil.

Philip Mays

Thanks, John. On this call, I will briefly highlight our quarterly results and provide an update on our balance sheet and revised full year outlook. Starting with operating results. For the third quarter, core FFO was $0.53 per diluted share, up 10.4% from $0.48 a year ago. Growth was driven primarily by leases that commenced paying rent over the past year, along with contributions from our property acquisitions and structured investments. Year-to-date, core FFO was $1.57 per diluted share, up 13.8%. Shopping center same-property NOI grew 3.8% for the quarter and 6.2% for the year-to-date.

As we flagged on our last call, growth moderated as several anchors that opened in late 2025 moved into the prior year comparable period. Including a few noncore properties, total same-property NOI grew 2.3% for the quarter. This reflects the downtime at our last significant noncore property in Albuquerque, where space vacated last December is now leased to the State of New Mexico, which recently commenced paying rent, as John noted. Turning to PINE. Income from our management agreement and equity investment was $2.2 million for the quarter and our annualized run rate is now $9 million, consisting of $5.8 million of management fees and $3.2 million of dividend income.

Moving to the balance sheet. During the quarter, we closed a $1 billion unsecured credit facility, consisting of a $400 million revolver and $600 million of term loans with maturities ranging from September 2029 to March 2032. The facility added $250 million of commitments and liquidity and extended our weighted average debt maturity to 4.3 years from 1.6 years. Also during the quarter, we raised $27.3 million of net proceeds through our ATM program at an average gross price of $21.83 per share and repaid our only secured mortgage. Our debt is now entirely unsecured.

We ended the quarter with net debt to pro forma adjusted EBITDA of 5.9x, essentially in line with the last quarter and down from 6.7x a year ago and approximately $255 million of liquidity. Total debt was $723 million at a weighted average interest rate of 4.7%. Finally, turning to guidance. We're raising our 2026 core FFO guidance to a range of $2.11 to $2.14 per diluted share, up from $2.09 to $2.13. At the midpoint, that represents approximately 14% growth over 2025. We're also raising the low end of our AFFO guidance to a new range of $2.22 to $2.25 per diluted share, up from $2.21 to $2.25. Key assumptions in our revised guidance include shopping center same-property NOI growth of 5% to 6%, investment volumes, including commercial loans and structured investments of approximately $472 million, up from our prior range of $300 million to $400 million and general and administrative expenses of $21 million to $21.5 million.

With that, operator, please open the line for questions.

Operator

[Operator Instructions] Our first question comes from Jay Kornreich of Cantor Fitzgerald.

Fragen und Antworten

Jay Kornreich

Can you talk just about the general supply-demand fundamentals you're seeing across the portfolio? I guess, are the power centers currently a landlord's market via pricing power? And if so, is that a trend you expect to continue throughout 2027?

John Albright

Yes. Thanks, Jay. Yes, we're seeing still good activity on the leasing front from really good quality tenants. I wouldn't say that it's like a mad grab for space or anything like that but good consistent demand and the type of tenants you want.

Jay Kornreich

Okay. And then maybe just shifting to the office property in New Mexico. Just curious if there's any update there for opportunities to start marketing that asset and any update to timing when a potential sale could happen?

John Albright

Sure. So basically, State of New Mexico is now in, so that's great. We're talking to the other tenant, Fidelity, about kind of what their space needs are going forward and then waiting for the new administration in the State of New Mexico to come online next year. So basically, next year, we'll kind of basically optimize the property rather than hastily sell it when it might be leaving some easy money on the table.

Operator

Our next question comes from Matthew Erdner of Jones.

Matthew Erdner

I'd like to kind of touch on the 2 recent acquisitions in Kansas City. You touched a little bit on why you like the environment there. But I guess what's the opportunity that you kind of see at Zona Rosa, just the amount that you guys are able to kind of bring online over the next couple of years?

John Albright

Yes. So the property had been owned by a entity that had foreclosed on it. So there wasn't very much outreach on the leasing side. And so I feel like -- the property has some very high-performing tenants. So we've done this many times before and I think that there's a lot of opportunity on the health and fitness side, on the entertainment side, on the restaurant side and then also talked to hotel developers about the pad sites. And so just really attacking on all sides. And given that we bought it at a nice opportunistic current yield and with all that vacancy opportunity to lease up, it's -- we're really excited about the opportunity there.

Matthew Erdner

Yes, that's good to hear. And then as it relates to kind of the leasing opportunity through '28, it's about 25% of ABR right now. I guess how much of that is attributable to Zona Rosa and kind of the newer acquisitions? And then again, just the opportunity to kind of drive spreads higher there?

John Albright

I'll let Phil address that.

Philip Mays

On the -- you're asking on the '28 expirations, how much is attributable to Zona Rosa?

Matthew Erdner

Yes.

Philip Mays

There's not too much in there. What is in there, we feel really good about. There's the JCPenney's renewal at Rockwall. It's a very, very low rent. So we feel good they'll renew. There's actually Fidelity's renewal, which is in there, which John was talking about earlier at Albuquerque. They've recently generally rightsized. So we feel good about that. And then the other really large one in there is Harkins at Crossroads, which John talked about. We've already kind of proactively re-leased that with Crunch Fitness. Those are the larger ones in there. After that, a lot of small shops. Some have contractual extensions, some don't. So that will be where we'll kind of grow our rents, is in those small shop renewals.

Operator

Our next question comes from Rob Stevenson of Huntington.

Robert Stevenson

How are you thinking about equity funding in the near and intermediate term with the stock now sort of sub-20 at this point?

John Albright

Yes. I mean, obviously, we don't think the stock is at the right price. And now that we've done the investments -- a lot of investments this year, almost sort of getting close to the market cap of the company. We're not like needing to expect that the stock price to be at a certain level to raise equity here. So we've done enough investments. We're definitely looking at the recycling side. Can we get premium pricing on some of the assets that are now stabilized and slower growing? And so you probably see more of that. So we don't really need to rely on the equity price to be at a certain level.

Robert Stevenson

Okay. I guess given that comment, John, how are higher rates impacting the demand for some of the assets that you want to sell at this point? Are you still seeing decent demand and the brokers think that you could achieve the pricing? Is it a situation where people have sort of pulled back, waiting to see what winds up happening over the next couple of months in terms of moves, et cetera? How would you characterize that today?

John Albright

Yes. You still have a large capital base of capital that wants to get back into the space or get into the space as far as the retail shopping centers. And they're going to plow through no matter kind of what. Now they'll have pricing adjustments based on rates but it's not going to inhibit the demand for sure. So the demand is there from the right capital being very core capital. And of course, there'll be a little pricing adjustment, whether it's probably 25 bps, 30 bps from 6 months ago, something like that but nothing dramatic.

Robert Stevenson

Okay. And then, Phil, what is the pace of the $5.6 million signed-not-open? It doesn't sound like Crunch starts until 2028 but when do the big pieces of that $5.6 million start to hit the revenue line for you guys?

Philip Mays

Yes. So we actually put in our investor presentation there. We schedule it out by year. So that might be helpful. But of the $5.6 million, about $3.2 million comes online in '27. And pretty much all of it is online for '28. So we get really the full benefit in '28, a little over half the benefit in '27.

Robert Stevenson

And then last one for...

Philip Mays

That doesn't reflect the leasing of Pompano that John talked about that happened just after the end of the quarter. And so that will be a little more incremental positive on top of what's in the signed-not-open pipeline currently.

Robert Stevenson

Okay. And should we -- that $3.2 million in '27, is that sort of throughout the weighted throughout the -- weighted fairly evenly throughout the year? Or is there like a big chunk in any specific quarters that we need to be aware of in the back half?

Philip Mays

Kind of back-end leases, it's right around the middle of the year.

Robert Stevenson

Okay. And then last one for me. So the guidance today, what gets you sort of at the high end? I mean the low end of the guidance range for both core and AFFO is about $0.01 better than what you did in the third quarter. But the high end of that range is a few pennies higher than that. What's the sort of variable that gets you from the sort of low end to the high end of the guidance range for the year?

Philip Mays

Yes. I mean it's a few things. A lot of it's signed-not-open rent commencement. Some of that could come online late this year and that would bump us up. That's probably -- that -- there's always in the fourth quarter, there's percent rent, right? And we have a significant amount that happens in the fourth quarter. So it's really just rent commencement dates, percent rent and where those shake out in the fourth quarter.

Operator

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

Craig Kucera

I want to circle back to Zona Rosa, which is a pretty interesting acquisition. I guess you have about 250,000 square feet of vacancy there and you mentioned you also had 100,000 square feet of underutilized space. Can you -- are those -- those are independent of each other, correct?

Philip Mays

The 100,000 is part of the 250,000. Yes. So it's in total but there's 100,000 that's just very underutilized where it sits and not really activated because there's not an anchor to really drive people back there currently. And we're working on finding ways to implement and activate that part of the center to get some leasing momentum for that 100,000 specifically. But it's in -- the 250,000 includes that, Craig.

Craig Kucera

Okay. That's helpful. And are you expecting a meaningful amount of CapEx to reposition this acquisition? Or is there a lot of low-hanging fruit maybe like we saw at Carolina Pavilion?

John Albright

Yes, there's not a lot of capital needed to do to -- basically deferred maintenance or anything. There definitely is deferred maintenance but it's not a huge amount. And we're working on all that landscaping, painting, that sort of thing. But the real capital will come with tenants. So very much revenue-producing sort of capital yielding investment.

Craig Kucera

Right. That makes sense. And as far as repositioning there, is this a situation where some of the tenants are paying way below market and you can kind of replace them with markets? Or is it really more what you alluded to before, I think about bringing in like health and fitness and a restaurant, maybe hotels on the pads?

John Albright

Yes, it's more about activating the property to its potential. So there's not any huge mark-to-market. It's just a lot of vacancy opportunity and missing uses.

Craig Kucera

Okay. That makes sense. Changing gears with the $32 million preferred equity investment you made earlier this quarter, are you likely to keep that whole investment or sell a portion similar to what you did at PINE for some of the higher-yielding investments you have there?

John Albright

Yes. That one, we're really lucky to have and happy to help out on the transaction that transpired as a -- on a portfolio that we tried to buy. And so we lost on the transaction but was able to do this preferred investment at a lower basis than where we were willing to buy the portfolio. So we expect that to be a hold.

Craig Kucera

Okay. And Phil, is the swap on the 2030 term loan, is the only swap expiring next year?

Philip Mays

Yes, there's one swap maturing. It's on about $100 million and it rolls up about 180 basis points. I can't remember, Craig, if that's on the 2030 or the 2032 loan but either way, it's 2032 loan. It's $100 million and it will roll up 180 basis points. That's the only one we have changing in '27. In '28, we got a couple but they're fairly close to market. So there won't be a significant drag in '28 from any swaps expiring.

Craig Kucera

Okay. And just one more for me. You mentioned the lease termination at Harkins. How much was that fee? And was that recognized in the third quarter? Or will be recognized this quarter or in the future?

Philip Mays

Yes. There was -- that was really more -- we just got an early termination option. So we actually just in order to get that and have the flexibility to exercise it on timing that works with Crunch coming in and limiting the downtime. We just actually just gave them a little bit of break in rent. We didn't get any income and then we got that option in exchange for that break in rent. And Crunch is well underway of working to get all their approvals and everything. And then we'll hit that option at the most opportune time to limit the downtime there. So there's no kind of onetime income this quarter related to that.

Operator

Our next question comes from Gaurav Mehta at Alliance Global Partners.

Gaurav Mehta

I wanted to follow up on the $32 million loan that you guys did in 4Q. Why is the yield at 17% higher than, I guess, some of the other loans that you've done in the past?

John Albright

Just because the complexity of the transaction, is fast moving, needed to be done by a date certain. It gave them some flexibility on when they can kind of repay us, expect it to be more of a 2-year duration sort of investment. So it was just really -- they had to have the capital by a certain time and didn't have a lot of time to go shop around. So we -- because we, as I mentioned before, tried to acquire the portfolio, we had already underwritten it. And if they went out to other people that would need time to underwrite it, it would be impossible for them to have something closed in the timing they needed to have it closed.

Gaurav Mehta

Okay. Second question, your commercial loan investments seem like they're 14% of undepreciated assets. Can you remind us what the target is for the loan investment portfolio?

John Albright

Yes. I mean this is basically the level, 15%, I think we mentioned before. So I don't anticipate this going higher than the level where it is right now.

Operator

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

John Massocca

So maybe just given some moving pieces, particularly happening subsequent to quarter end and your outlook on the capital markets, how are you thinking about leverage currently? And I guess you mentioned it a little bit to one of the earlier questions but does that kind of set up for some more maybe systematic dispositions next year? Or are you kind of happy at this level or maybe more opportunistic with sales?

Philip Mays

Yes. I'll take the leverage piece, John. So at the end of the quarter, we were a little under 6x. With all that activity, I think we go up to maybe 6.5x debt-to-EBITDA. And then keep in mind, we have a really robust signed-not-open pipeline. We have these pads. I'm not going to take it down 0.5 turn or anything but they will incrementally bring it down 0.2 turn or so, right? So we'd be in the low 6s. So it's a level we're comfortable with. But that said, we'll be -- we can always look to recycle depending on the opportunities we're seeing. On the market side, I'll let John answer.

John Albright

Yes. I mean I think, as I mentioned before, we'll opportunistically recycle if we get the right pricing for some of the assets. So I expect something to happen in the next 6 months on the recycling side but -- so expect a little bit of that.

John Massocca

Okay. And then on the Summit Woods transaction, anything to be aware of that could be kind of additive there, either kind of re-tenanting or re-leasing? Or is it just kind of a very attractive day 1 yield for the quality of asset you purchased?

John Albright

Yes. I would say it's the latter. That is a really high-quality property with solid tenant quality but there are very below-market leases on that property. The Kohl's and the Lowe's are really low rents. So almost sort of like a covered land play, if you will. But yes, we like the solid nature of the asset.

John Massocca

Okay. And then on Pompano Citi Centre, you're kind of adding square footage with the new tenant. Is there any more opportunities for that with some of the second floor space if you can activate it? Or is that kind of going to be fully utilized post that lease-up?

John Albright

No, we still have room to go there. There's still opportunity there on the leasing side and we're getting really good traction. So we're excited about the runway at Pompano. So the Amped expansion is going to do a lot for just driving more energy there. And we're taking out -- they're taking over corridor space. So expenses that we were paying on sort of dead space, that's going to go away. So it's all kind of lining up really well for us.

John Massocca

And I mean how much more square footage could kind of be added either as the cost of what Amped is doing or just absolutely?

Philip Mays

Yes. No. So the lease at the end of the quarter was low 90s percent like 92%, 93%. So there's a lot of runway just there and that's on the existing square feet. Amped took the vast majority of that unfinished space and for lack of a better way to describe it, it was like enclosed structure parking. I mean -- and they took 55,000 square feet and that space was, I think, right around 60,000 square feet. And we had underwritten that at 0. And while we -- as -- while we tend to do that to be conservative on our underwriting, John and our Head of Leasing take it very personal and they went out and found a creative use for it there. So that unfinished space now is largely filled with Amped but we still have a lot of runway just on the property itself because it's relatively, on a relative basis, low leased.

Operator

I am 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 and you may now disconnect.