CTO Raises 2026 Core FFO Outlook After Q3 Revenue Growth

CTO Realty Growth Inc. (NYSE: CTO) increased its 2026 Core FFO guidance after reporting higher third-quarter property revenue and leasing gains, while expanding its investment activity through two Kansas City-area shopping-center acquisitions. The REIT now expects Core FFO of $2.11 to $2.14 per diluted share, compared with its previous range of $2.09 to $2.13.

The company maintained its forecast for 5% to 6% same-property NOI growth at shopping centers and set expected 2026 investment activity at $472 million, up from its previous assumption of $300 million to $400 million. CTO also expects AFFO of $2.22 to $2.25 per diluted share, compared with the prior range of $2.21 to $2.25. Its projected general and administrative expenses increased to $21.0 million to $21.5 million from $20.0 million to $20.2 million.

Core FFO and revenue rise despite GAAP loss

Third-quarter Core FFO attributable to common stockholders increased to $19.8 million, or $0.53 per diluted share, from $15.6 million, or $0.48 per share, a year earlier. AFFO rose to $20.9 million, or $0.55 per diluted share, from $16.3 million, or $0.50 per share.

Total revenue increased 24% to $46.9 million. Income-property revenue rose to $38.5 million from $33.4 million, while interest income from commercial loans and investments more than doubled to $6.9 million. Management fee income increased to $1.5 million from $1.2 million.

CTO nevertheless recorded a net loss attributable to common stockholders of $7.1 million, or $0.19 per share, compared with net income of $1.0 million, or $0.03 per share, in the prior-year quarter. The latest period included a $9.4 million investment and other loss. Depreciation and amortization also increased to $17.4 million from $14.9 million, and interest expense rose to $7.9 million from $6.8 million.

Shopping-center same-property NOI advanced 3.8% to $20.4 million. Across the portfolio, leased occupancy was 92.4%, 250 basis points above physical occupancy of 89.9%. CTO completed 396,000 square feet of comparable leasing activity at a 7% spread during the quarter.

The signed-not-open lease pipeline represented $5.6 million of annual cash base rent, equal to 4.6% of in-place cash rent. The company said most of that pipeline is expected to be recognized in 2027, providing potential revenue as tenants begin paying rent. The pipeline carried cash rent of $26.27 per square foot, with anchor tenants accounting for 37% of the total.

Kansas City investments expand the portfolio

CTO acquired Zona Rosa in September for $63.3 million, or $82 per square foot. The 768,000-square-foot mixed-use center was 67% leased at acquisition and includes 10 acres of entitled development land and 100,000 square feet of underused space. Management described the property as a multi-phase revitalization opportunity with leasing and repositioning potential.

After quarter-end, CTO purchased Summit Woods Crossing for $103 million, or $189 per square foot. The 545,000-square-foot power center was 99% occupied and is anchored by tenants including Lowe’s, Kohl’s, Best Buy, TJ Maxx and Total Wine. Because the transaction closed in October, Summit Woods is excluded from the company’s September 30 portfolio metrics.

At Carolina Pavilion, CTO said the re-leasing of three vacated anchor boxes increased annual cash base rent by approximately $900,000. Excluding two boxes under contract for sale, occupancy increased to 91% from 81% at the September 2024 acquisition date, while leased occupancy rose to 97% from 94%. In-place cash rent increased 12% to $16.28 per square foot.

The company is under contract to sell two Carolina Pavilion boxes totaling 76,500 square feet to a national retailer for $20.7 million, subject to customary closing conditions. At Pompano Citi Centre, post-quarter leasing with Amped Fitness and an affiliate increased leased occupancy to 94% from 92% at acquisition.

Development and investment income remain growth priorities

CTO has six outparcel projects underway and expects average yields on cost of 10% to 12%, excluding land-purchase costs. The projects are expected to require about $30 million across 2026 and 2027, with rent scheduled to begin commencing in mid-2027. The company cautioned that completion, costs, returns and stabilization timing are not guaranteed.

The structured-investment portfolio totaled $227.9 million at September 30 and carried a weighted average current yield of 11.45%. Including a $32 million preferred-equity investment originated in October, the pro forma portfolio would total $259.9 million with a 12.13% yield. CTO also expects approximately $9 million of annual management-fee and dividend income from its relationship with Alpine Income Property Trust, based on a fourth-quarter 2026 run rate.

CTO ended the quarter with $255 million of liquidity, including $8.8 million of cash and $245.8 million of undrawn revolving-credit commitments, subject to borrowing-base restrictions. Net debt was $714.2 million, equal to 5.9 times pro forma adjusted EBITDA and 44% of total enterprise value. The company reported a 4.67% weighted average interest rate on $723 million of debt, with no scheduled maturities before 2029 when extension options are included.

The outlook remains subject to leasing commencement and development execution, tenant or borrower defaults, commercial-loan and preferred-equity credit risk, acquisition and disposition closing conditions, interest-rate volatility, inflation and broader economic or real estate weakness. CTO also identified risks related to maintaining REIT qualification and to the performance of Alpine Income Property Trust.