Ladies and gentlemen, thank you for standing by. Welcome to CTO Realty Growth Third Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you would need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Jenna McKinney, Director of Finance. Please go ahead.

Good morning, everyone, and thank you for joining us today for the CTO Realty Growth Third Quarter 2025 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 that 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 significantly 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 presentations on our website at ctoREIT.com. With that, I will turn

the call over to John. Thanks, Jenna. We delivered another quarter of a strong operating performance driven by the strength of our leasing activity. Year-to-date through September 30th, we have completed 482,000 square feet of overall leasing activity, including 424,000 square feet of comparable leasing and a weighted average base rent spread of 21.7 percent. Contributing to this leasing performance was our third quarter, in which we executed 143,000 square feet of new retail leases renewals and extensions at an average base rent of twenty three dollars per square foot this includes a hundred twenty five thousand square feet of comparable leases a ten point three percent base rent spread notably just after the quarter we signed a significant lease at the shops at legacy a two hundred forty three thousand square foot mixed-use lifestyle center located in Dallas Texas I will share more details on this lease and the shops at legacy shortly. We also continue to make progress on backfilling our ten anchor spaces. Six of the ten vacant anchor spaces have been leased and we remain in active negotiations for the remaining four. Today we are encouraged by the rental upside and value creation these six leases represent and expect the new tenants to increase foot traffic relative to the former tenants. Furthermore, we remain on target to achieve our goal of positive cash leasing spread of 40 to 60% across these 10 anchor spaces and we look forward to providing additional updates on our progress. More broadly as of today our Sign Not Open or SNO pipeline stands at 5.5 million representing approximately 5.3% of annual cash base rents in place as of quarter in. We believe that this This pipeline positions us for meaningful earnings growth with approximately 76% of our ABR from the S&O pipeline anticipated to be recognized in 2026 and 100% in 2027. Now, I would like to share some exciting updates related to the Shops at Legacy. Just after the quarter end, we signed a 30,000 square foot lease with a co-working operator expected to open by year-end 2026. This lease, along with the 20,000-square-foot private members-only social club that we signed in the third quarter of 2024, substantially fills the space formerly leased to WeWork, marking a meaningful inflection point in our releasing efforts. In addition to these large leases, over the last two years, we have signed smaller shop leases for an aggregate of nearly 60,000 square feet for various restaurants, fitness, and retail concepts that we believe will further increase the vibrancy of the center today reflecting all this leasing activity the least percentage of shops that legacy stands at approximately 85% now moving to a recent agreement that we signed to acquire a shopping center in South Florida this is a property that I mentioned on our last call that we were targeting we believe this shopping Center offers value-add potential that aligns well with our leasing and operating strength and presents an opportunity to both acquire the asset and attract initial yield and drive long-term value creation through lease-up of acquired vacancy. We expect to close this transaction before year-end and look forward to providing more details when we close. From a financing perspective, as Phil will discuss in more detail, we recently termed down some debt and refreshed our revolving credit facility, providing enhanced liquidity. This will give us the ability to initially acquire the South Florida property using our line of credit. Ultimately, though, we anticipate funding this acquisition by recycling an asset around year end. Overall, we are pleased with our leasing progress and the value creation underway as we continue to execute our strategic priorities. And with that, I will hand the call over to Phil.

Thanks, John. On this call, I will discuss our balance sheet, earnings results, and updated full year 2025 guidance. Starting with the balance sheet. Just before quarter end, we closed $150 million in term loan financing, including a new five-year $125 million term loan maturing in September of 2030 and a $25 million upsizing of our existing term loan maturing in September of 2029. Both term loans bear interest at SOFR plus a spread based on our leverage ratio. At closing, we utilize existing SOFR swap agreements resulting in an initial fixed interest rate of approximately 4.2% for both loans. In March of 2026, when certain of these applied SOFR swap agreements expire and are replaced by other existing forward swap agreements, The interest rate for both loans will adjust to approximately 4.7% based on the company's current leverage ratio. The proceeds from these new term loan financings were used to retire a $65 million term loan scheduled to mature in March of 2026 and to reduce the balance on our revolving credit facility, providing enhanced liquidity. Reflecting this financing, we ended the quarter with approximately $170 million of liquidity consisting of $161 million available under our revolving credit facility and $9 million in cash available for use. Additionally, we have recently repurchased $9.3 million of common stock at a weighted average purchase price of $16.27 per share. These repurchases consisted of $4.3 million towards the end of the third quarter to close out our previous $5 million repurchase program and five million dollars in October under our recently announced ten million dollar common stock repurchase program reflecting this quarter's balance sheet activity we ended the quarter with net debt to EBITDA of six point seven times a slight improvement from six point nine times at the end of the second quarter further we anticipate additional deleveraging as we successfully release our vacant anchor boxes and tenants in our sign-not-open pipeline commence paying rent. And notably, with our recent completed term loan financing, we now only have $17.8 million of debt maturing in 2026. Moving to operating results, core FFO was $15.6 million for the quarter, a $3 million increase compared to $12.6 million in the comparable quarter of the prior year. On a per-share basis, core FFO was $0.48 per share compared to $0.50 per share in the comparable quarter of the prior year. The change in core FFO per share reflects a reduction in leverage that took place from late third quarter of 2024 through the end of 2024 when we reduced net debt to EBITDA by approximately a full term. With regards to same property NOI, our same property NOI increased 2.3% during the quarter. This growth was driven by leasing activity across our portfolio, in particular at Beaver Creek with One Life Fitness replacing the former theater along with strong small shop leasing at West Broad Village, Plaza at Rockwall, and Ashford Lane. Turning to guidance, we are raising both our core FFO and AFFO outlook for the full year of 2025. Our new core FFO range has increased to $1.84 to $1.87 per diluted share from the previous $1.80 cents to one dollar and eighty six cents per share and our new AFF range has increased to one dollar ninety six cents to one dollar ninety nine cents per diluted share from the previous one dollar ninety three cents to one dollar ninety eight cents per diluted share and with that operator please open the line

for questions thank you as a reminder to ask a question please press star one one on your telephone and wait for your name to be announced and to withdraw your question, please press star 1-1 again. The first question comes from Rob Stevenson with Janie

Montgomery. Your line is open. Good morning, guys. Phil, what's the pro forma debt to EBITDA look like once you complete the Florida acquisition and sell the existing asset and the near-term signed-but-not-commenced leases start to drive revenue?

Yeah, so as John discussed on the call, the Florida asset, you know, will be temporarily parked on the line, and we have plenty of liquidity there and capacity to do so, but will ultimately be funded with recycling and should not significantly change debt to EBITDA. The sign-out open pipeline, as it stands today, just coming online, would take off about a half a turn as it comes online.

Okay. And what is the timing of the bulk of that revenue? Is that, you know, are you going to see any material amount in the fourth quarter? Is that a first or second quarter 26 event? How should we be thinking of that when we play around with our models in terms of when the bulk of that five-plus million dollars starts hitting revenue?

It's going to start beginning of next year. You know, the pipeline's 5.5 of base rent. I think we said 75% of that's going to be recognized next year, so about $4 million. And the way I would ramp that up is about a half a million in the first quarter, a million in the second, and a million in the third, and then about a million and a half in the fourth, so kind of growing throughout the year to a total of about $4 million as the pipeline stands today, or about 75% of the pipeline with all of it being recognized in 27. Everybody should be as currently projected, you know, operating in space, paying cash rent by the end of 26. So you get the full five and a half in 27.

Okay, that's helpful. And then, John, where is your most significant vacancy today that's not either under contract, letter of intent, or pretty far down the road where you still have some work to do? Where's the opportunity for you guys right now?

Well, we have a 40,000-square-foot vacancy at Carolina Pavilion. We've gone through a couple prospective tenants where they were going to take so long that we decided to switch tact. And so we're kind of going down a route of either splitting the box or talking to a couple different groups about taking the whole box again. And so we've had some, you know, false starts with some groups that are just going to be really torturous as far as how long they're going to take to get through the process. And then, yeah, that's really the largest vacancy. And then we have a little bit left to go at legacy, but not too much. So that's where focus is.

And then last one for me, you've got about $45 million of structured investments. that have maturity dates in the first part of 26. You know, when you take a look at those today, are those likely to be redeemed around that point in time? Are those likely to be extended? How are you guys thinking about that as the preferred – I think it's Waters Creek and Founders Square.

Yeah, Founders Creek will pay off. I'm sorry, Founders Square will pay off, and Waters Creek may extend, but may just pay off as well. So we're seeing where that plays out just depending on how they look at capitalizing that property going forward.

Okay, that's helpful. Appreciate the time this morning.

And the next question will come from Matthew Erdner with Jones Trading. Your line is open.

Hey, good morning, guys. Thanks for taking the question. You know, you guys touched on what I was going to ask a little bit with the Florida acquisition. But, you know, I'm just trying to think about how you guys are going about capital allocation moving forward, you know, kind of between buybacks and structured investments. You know, given where the stock's trading, you know, are you guys going to continue to buy back shares down at this level?

Yeah, so, I mean, clearly, we're going to do as much as we can, given our credit facility sort of restrictions. So, you know, absolutely, you know, given the stock price, kind of where we're trading below a nine multiple and five-year lows and almost a 10 dividend yield is fairly ridiculous. So clearly the best acquisition investments is our own stock.

Got it. And then as a follow-up to that, you know, do you guys have any restrictions on, you know, investing more into Pine? You know, and if not, you know, is that something that you guys are considering doing just given that that stock price is trading at similar multiples?

Yeah, so we do have a little bit more room there without hitting our restrictions on what we can own at Pine. and of course we're opportunistic so you know just just depending on what happens with the stock price there but you know clearly right now feel like

CTO is the double discount got it that's helpful thank you guys thank you and the

next question will come from Craig Kusara with lucid your line is open yeah

Good morning, guys. You've been pretty active on the structured finance side at Pine. Are you seeing any pickup in potential loans that work for CTO or are property investments really more

compelling right now? Yeah, not so much at CTO. As you mentioned, we're seeing it more at Pine. Given that the CNBS market has come back very strong for these shopping centers, We're seeing less need for structured finance there, but we're certainly keeping our eye out there. So, yeah, that's kind of where the market is right now.

Got it. Changing gears, you have a decent amount of leases expiring here in the fourth quarter, I think about 3% of ABR. One is an anchor. Can you talk about your expectations there?

Yeah, we're not really seeing any risk as far as non-renewal. You know, as you know, a lot of these acquisitions had tenants, you know, way below market rent and, you know, some that we'd like to get back and, you know, replace with higher rents. But, yeah, there's no risk that we're kind of seeing out there on the renewal side.

Okay, got it. But congrats on the shops at Legacy Leasing. I think there's been some vacancies there for a while. Can you give a sense of how additive that is to the sign-not-open pipeline?

Yeah, I'll let Phil touch on that. But, yeah, it has been a long time, longer than we would like, of course. And, you know, one thing that, you know, that's going to bring to the property that, you know, people kind of miss out on a little bit is, you know, a lot of vibrancy, a lot of bodies coming in, and it's going to, even though the restaurants have done really, really well on the leasing, without that, just having that component for that property is really going to be an enhancement, Bill, talk about that.

Yeah, out of the entire Sunnet open pipeline of five and a half legacy, it's close to one million of that, Craig. In particular, the private members club, and then the co-working lease that

we just signed in October, those two in particular. Okay. And just one more for me, you know, any change to the credit watch negative list? I know we've talked about, you know, maybe home goods or some

of those things, but any change there? Not this quarter, no. Same, you know, same sort of tenants and you know if anything kind of credits have gotten a little better I

think okay thank you great thank you and our next question is going to come from Gaurav Mehta with Alliance Global your line is open yeah thank you good

morning but I wanted to ask you on the non-recurring items I think you reported half from 0.5 million dollars of non-recurring at this order and also raise your DNA guidance a little bit just want to get some color on what those items were

yeah so on the non-recurring those kind of tend to run you know fluctuate between a hundred and three hundred thousand a quarter generally average around 250 you're correct it was closer to about half a million I believe this quarter so it's slightly elevated and we tend to get a quarter like that every three or four quarters it kind of tends to pop up to that number but generally for like a good run rate you know it's typically closer to 250. GNA I think you know for the fourth quarter will be similar to this quarter if you're just

looking to model that. Okay second question I have is on tenant improvement allowances it seems like it was higher this quarter than last few quarters how should we think about that line item as you sign newly did? Yeah so it was very

light the first half of the year, you know, that volume and that size kind of tends to fluctuate as anchors get moved in, complete their construction and get open. So this quarter you had one life at Beaver Creek and they have to support, you know, provide invoices and stuff so they can get in and get open. But by the time we reimburse them, it can lag a little, but you had one life at Beaver Creek. You had Boot Barn and Barnes at Rockwell, so it was elevated this quarter. Currently, I would expect the fourth quarter to also be elevated and be similar to the third quarter. But again, that's just going to depend on timing on individual anchors and when they get open and when they get, you know, their paperwork submitted for their TI reimbursements. But we do have a lot of anchors lined up and I would expect the fourth quarter to be pretty elevated again.

Okay. And then lastly, on the asset recycling that you talked about to fund the acquisition, Is that expected to happen this year or that's expected to happen next year?

You know, we think that, you know, something will happen this year. But, you know, you just never know as far as, you know, some things kind of come up and need extensions and so forth. But probably at the end of the year.

Okay, thank you. That's all I have.

Thank you.

And the next question comes from John Masaka with B-Riley Securities. Your line is open.

Good morning. As you think about the AnchorBox releasing in the $4 to $4.5 million of potential new base rent there, how much of that is already set with the six leases you've closed, and how much is still contingent on the four leases that you're negotiating or trying to close here in the next couple of months?

yeah so out of the anchors the six that are done about uh they represent about two and a half um currently um so with the ones that are left you know that would be a remaining two

um and then maybe switching gears a little bit on the investment front um anything else in the pipeline you're seeing uh that might close in 2025 beyond the the kind of florida shopping center transaction you talked about earlier?

You know, given that we're getting kind of tied on time, I wouldn't expect it, but we're not also, you know, kind of, if one of the things that we're looking at, we are bidding on quite a bit of assets that we like, but not sure how competitive we'll be, but we're certainly saying that we can close by year-end if it's important for a seller, so hopeful, but I wouldn't expect an additional one.

And then in terms of 2026, what's the acquisition environment look like today? And I guess maybe to the extent you would do new investments, how do you think about funding it? And is there additional assets within the portfolio that you think are targets for capital recycling beyond the assets you're going to use to fund the Florida acquisition?

Yeah, I mean, that's the easy part. You know, if we find a good acquisition candidate, we do have some stabilized assets given how much leasing we've done over the last couple of years. And so taking advantage of that, you know, lower cap rate sell, maybe slower growth asset and recycling into, you know, kind of value add, you know, higher growth asset, higher yielding. So we definitely have a nice pipeline of potential sell opportunities. Just want to match that up with something we feel really good about.

Do you think the Fidelity property or the New Mexico property is a potential candidate for that capital recycling, either for, you know, the acquisition we talked about earlier on the call or, you know, 2026 investment activity?

For sure. We just need to get the lease settled up with the state. And then it will be in condition to sell, so that's probably early 26. I think maybe previously this year, I mentioned late this year, but, you know, it takes a while to, you know, settle the lease expansion and so forth. So we're, you know, probably looking at early 26 on selling that asset. But, yeah, that's definitely a candidate.

okay um and then lastly uh the shops at legacy the kind of remaining um square footage to be leased once you bring in the co-working tenant um what kind of is that just big picture is it all kind of small shop space is there any kind of anchor space still left in that uh property just

kind of curious you know what that looks like yeah it's more small small shop uh space uh that We've gone through literally three different tenets that we just didn't get there, whether we didn't like their financials or too much TI, so we're being a little picky on it. And then we have a little bit of we work space left, but we feel like when the private club opens, they've expressed some interest that that might be an expansion opportunity for them. So, you know, everything's very manageable. We're just trying to kind of be picky about, you know, who we put in. Okay. That's it for me. Thank you very much. Thank you.

This concludes today's Q&A session and today's conference call. Thank you for participating. You may now disconnect.