Good day, and thank you for standing by. Welcome to the CTO Realty Growth Q1 2026 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 the session, you will need to press star 11 on your telephone. You will then hear an automatic 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 now like to hand the conference over to your first speaker today, Jenna McKinney, Director of Finance. Please go ahead.

Good morning, everyone, and thank you for joining us today for the CTO Realty Growth First 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 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 presentation on our website at ctoreat.com. With that, I will turn the call over to John.

Thanks, Jenna, and good morning, everyone. We are pleased to report a strong quarter to start the year, highlighted by a robust leasing and strong same-store NOI growth, as well as the $81.6 million acquisition of a high-quality shopping center in Texas. Our strategic focus on shopping centers, located along growth corridors primarily in the southeast and southwest markets of the United States, along with the proactive asset management and leasing, continues to produce strong results. Starting with retail leasing, during the quarter, we executed leases, renewals, and extensions totaling 153,000 square feet, including 146,000 square feet of comparable leases at an average cash rent increase of 14%. Our leasing activity for the quarter was spread across our portfolio, but particularly positive at Millennia Crossing in Orlando, where we signed a lease with Williams-Sonoma to fill the former mattress firm space, and just after quarter end, we signed a lease with Pottery Barn kids to fill a space that had been vacant since we acquired the property. Combined, this activity has increased Millennia Crossing to 97% leased and improves the quality of the tenant roster and value of the asset. Further, our only shopping center with leased occupancy below 90% is now Carolina Pavilion at 83%, and we are in active negotiations with tenants for all the remaining vacancy. We look forward to providing announcements of this leasing activity at this shopping center in the future. We are also making strong progress with the six out parcel opportunities we discussed on our last call. During the quarter, we signed a lease with Swig for a drive-thru customized beverage store at Marketplace at Seminole Town Center located in Orlando. And just after quarter end, we signed a lease with Cooper's Hawk at Ashley Park located in Atlanta Market. In addition, we have executed LOIs or inactive lease negotiations for the remaining four out parcels. We continue to expect these six out parcels to generate low double-digit unlevered yield on approximately $30 million of investment. We anticipate that this $30 million will primarily be deployed and begin contributing to earnings in 2027 with the full benefit expected to be recognized in 2028 we also look forward to providing additional announcements related to this initiative in the coming quarters reflecting our leasing progress at quarter end our portfolio was 95.4 percent leased and our signed not open pipeline totaled 6.2 million of annual cash base rent representing approximately 5.5 percent of in-place annual cash-based rent. We believe this pipeline of new lease revenue will provide a meaningful earnings tailwind beginning as we move through 2026 and into 2027. Further, leasing activity completed over the prior year for which tenants have commenced paying rent is already beginning to benefit NOI. For the quarter, same property NOI for shopping centers increased 6.8 percent compared to the comparable prior year period excluding the benefit of certain non-reoccurring items same property noi for shopping centers grew at a healthy 4.2 percent moving to investment activity during the quarter we announced an acquisition of palms crossing at 399 000 square foot open air center located in mcallen texas for 81.6 million Palms Crossing is anchored by Best Buy, Hobby Lobby, Burlington Coat Factory, Barnes & Noble, and Nike. It is currently 98% leased and benefits from strong cross-border shopping. This property also provides the opportunity to bill up two additional out parcels beyond the six discussed earlier. With this acquisition, Texas is now our third-largest state by ABR, and combined contribution from Georgia, Florida, North Carolina, and Texas increased to 85% of total ABR. On the property recycling front, Madison Yards, located in Atlanta, is under contract with a non-refundable deposit, and we expect the sale to close in May. Madison Yards is 99% leased, and the anticipated sale would enable us to extract value from a stabilized asset while also reducing our AMC theater exposure to only two locations, which are both high-performing. Further, the anticipated sale, along with Palms Crossing Acquisition, would complete the recycling proceeds at a positive cap rate spread, contributing to future earnings growth. as we move forward we're evaluating additional property sales focusing on recycling capital from stabilized properties into assets at positive initial yield spread with the potential for value add opportunities and higher earnings growth in the future now turning to our structured investments during the quarter we received full repayment of our nine and a half percent thirty million dollar preferred investment in waters creek village this repayment was expected and represents the only structured investment scheduled to mature in 2026. More notably, just after the quarter end, we completed a $75 million preferred equity investment in a Class A premier retail property located in the Southwest. This preferred investment yields 12% and has a term of two years. This activity increased our structured investment portfolio by $45 million to $158 million subsequent to quarter end, with a weighted average yield of 11.6%. In summary, 2026 is off to a great start, and we are in great position to sustain our growth in quarters ahead. Our portfolio continues to perform well and is supported by embedded growth drivers, including in-place below-market rents, our signed-not-open pipeline, planned out-parcel developments, and disciplined capital recycling. Collectively, we believe that these initiatives can support meaningful earnings growth for several years to come and contribute to our increased guidance for core FFO and AFFO per diluted share to new ranges that imply approximately 12% growth at the midpoints. And with that, I will now hand the call over to Phil.

Thanks, John. On this call, I will briefly highlight our earnings, provide an update on our balance sheet, and discuss our raised 2026 outlook, starting with operating results. For the first quarter, core FFO was $16.9 million, a $2.5 million increase compared to $14.4 million reported in the comparable quarter of the prior year. And on a diluted share basis, was $0.52 per share versus $0.46 per share. AFFO was $18.2 million for the quarter, an increase of $2.7 million compared to $15.5 million reported in the comparable quarter of the prior year, and on a diluted share basis was $0.56 per share versus $0.49 per share. The growth in both core FFO and AFFO was primarily driven by leases executed over the past year that have since commenced paying rent, although it did include approximately only one cent related to non-recurring recovery benefits from final 2025 CAM, real estate taxes, and insurance billings to tenants recorded in this quarter. With regards to property operations, as John mentioned, same property and alive for shopping centers increased 6.8% in the first quarter compared to the comparable quarter of the prior year. Excluding the non-recurring recovery benefits discussed earlier, same property and alive for our shopping centers still increased to healthy 4.2%. Given the relatively small size of our same property NOI, $200,000 impacts quarterly growth by approximately 100 basis points. Accordingly, unusual and non-recurring items like this can occasionally skew our same property NOI, so we want to highlight the impact of such items when appropriate. Notably, shopping center properties represented 97% of total same property NOI for the quarter. Total same property NOI, including our few non-corp properties, increased 3.4% for the quarter. This growth was impacted by one tenant, as previously announced, vacating 98,000 square feet at our Albuquerque property at the beginning of December 2025, which more than offset the non-recurring recovery benefits recorded. As a reminder, this vacancy has been fully leased to the state of New Mexico, which is expected to commence paying rent in late 2026. Moving to the balance sheet. At March 31, 2026, we had total debt of $651.8 million with a weighted average interest rate of 4.6%. Further, we ended the quarter with approximately $125 million of liquidity and leveraged at 6.4 times net debt to pro forma adjusted EBITDA, which is consistent with the end of 2025. During the quarter, we opportunistically utilized our common ATM program to issue approximately 733,900 common shares at an average price of $19.59 per share for total net proceeds of $14.2 million. Notably, these proceeds combined with the repayment of our $30 million Waters Creek Preferred Investment and higher NOI enabled us to maintain leverage at a consistent level even with the acquisition of Palm Crossing completed in this quarter. Now turning to guidance, For the full year 2026, we are increasing our core FFO outlook to a new range of $2.06 to $2.11 per diluted share, and our AFFO outlook to a new range of $2.19 to $2.24 per diluted Key assumptions reflected in our guidance include increased investment volume, including structured investments of $175 million to $250 million, same property NOI growth for shopping centers of 3.5% to 4.5%, and general and administrative expenses of $19.7 million to $20.2 million. And with that, operator, please open the line for questions. Thank you. At this time,

we will be conducting our question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand bar while we compile the Q&A roster. Our first question comes from the line of Jay Cornwright with Cantor, Fitzgerald & Company. Your line is now open.

Hey, thanks very much. I just wanted to start out with the new $75 million Southwest preferred equity investment at the 12% yield. What attracted you to that investment, and how do you anticipate the draw schedule occurring um sorry how do you how do you anticipate the drop schedule occurring going forward and in terms of funding sources for it and i guess you can use 30 million dollars from the um the waters investment which was prepaid but how do you think about funding the incremental 45 million dollars

yeah we uh we've already you know did the investment so it's like oh oh it was a one closing and so uh you know as you mentioned the waters creek was recycled into that and you know We'll basically have, as we mentioned, an asset sale coming up and so forth, which will bring down leverage. But otherwise, we just use the balance sheet for the balance of it.

Okay. And then, you know, just going back to the, you know, original 10 vacant anchor spaces that we've talked about, I think there's still three remaining to be signed. Can you just give an update on how those conversations are progressing and when you think you could get a lease signed and ultimately rent payment beginning?

Yeah, it's going really well as far as, you know, terms have been agreed upon, moving to leases, but these things with these large national companies go really slow. So I would say conservatively, I would say three months and hoping to do it before then. But, you know, every time you think these things would take, you know, 30 days it drags so uh but we are the the good thing is even though the lease may take that long we're we're working right away on uh basically engineering drawings and what needs to be done to outfit the the space for the tenants so that's not going to we're not going to wait for the lease to be signed to get that work done so the lease commencement uh will kind of stay you know kind Kind of probably take, you know, call it, you know, nine months or so to kind of get the tenant in place. But, you know, that part won't move, even though the lease may drag out.

Okay, I appreciate it. I'll hold it there.

Great.

Thank you so much. Our next question comes from the line of Matthew Erdner with Jones Trading. Your line is now open.

Hey, good morning, guys. Thanks for taking the question. I'm just curious what's going to lead you kind of towards the high range of the investment guidance versus the bottom end. You know, because I think if you lean towards the bottom end, it'll probably be one more structured investment. You know, and given the timing of Madison Yard, should we expect anything to kind of happen, you know, in the second half of the year from an investment perspective?

Phil, I'll let you kind of address that, but I'll start with some of the pipeline. We do have a structured investment that we are working on. It's relatively small, but that's something that could happen here in the next 30 days. And as far as acquisition pipeline, we do have our eyes on a couple things, but they're not going to happen until they're not even out in the market yet. They're being prepared for market. So we hope to be more active probably in the next kind of four months. And then we'll, as mentioned in our prepared remarks, we'll have some recycling going on, which will kind of happen in the next probably three months.

Yeah, Matt, it's Phil. And you're correct in your assumption. So the small structure investment John referred to would put us right around the low end of the range. And then if we complete some of the larger property acquisitions in the pipeline that would push us up towards the higher end of the range.

Got it. And then, you know, kind of as a follow-up to that, you know, are you guys assuming that, you know, out parcel at Foresight, those 10 extra acres there in the investment guidance for this year, or would that be additional?

Yeah, so they won't contribute to earnings in this year. It's one of the pads that we've identified. So part of the – where we've discussed, you know, $30 million of capital earning low double-digit yield unlevered. It's in that group, but any earnings from that will not be in this year, Matt. Okay, got it.

Thank you.

Thank you so much. One moment for our next question. Our next question comes from the line of Craig Kucera with Lucid Capital Markets. Your line is now open.

Thank you. With the preferred equity investment you made here in second quarter, and it sounds like you've got another potential small one, I think that's your bringing CTO's exposure to structured investments to around, you know, 11%, maybe closer to 15% when fully funded relative to undepreciated assets. Are you thinking about a cap or target on that as a percentage of the balance sheet similar to Pine?

Yeah, thanks for the question. And so I would say that most likely the cap will definitely be below 20% and maybe more in line with the 15%. And so as you've seen at Pine, sometimes it will go a little higher as we anticipate some payoffs happening. But roughly 15% feels like a good place for us.

Okay, great. Right. And thinking about investment guidance, you've done $156 million year-to-date. I think you started out the year guiding to sort of 8% to 8.5%. The preferred equity done here this quarter is 12%. Has that sort of yield range changed at all because of that?

Yeah. So the cap rates, I can kind of go into kind of what we're seeing on cap rates. and then as we see more visibility on what we'll be buying and kind of the structured finance kind of give you a better mix outcome. But in general, the acquisitions that we're seeing are kind of in the 7.5% to 8% range. And then with regards to structured finance, you know, something in the kind of 10% to 13% range. And so you kind of have that little blend.

okay great that's that's very helpful uh just a couple more for me um you know looking at your space that's expiring this year it looks like it's significantly above the average in the portfolio particularly on the anchor space or mostly on the anchor space um are you you had i think a 24 cash increase in rent spreads last year these i think you had 14 this quarter are you thinking something in the double digit range is possible this year or is that going to be a

little tougher. Yeah, I mean, I think the spreads, you would see them kind of continue in the range they've been, Craig. I mean, are you referring to 26 when you say this year, right? Yeah, in 26. Yeah, yeah, yeah. So the expiring rents are a little higher, right? I think they're closer to 25 where we've been signing a lot of leases. But, you know, we're not only working on 26, we're also working on 27. You know, you start early. So I think, you know, while the spreads could come down a little just because the average rent and the leases expiring in 26 could bring it down a little. But generally, it still should be close to where we've historically been recently. Obviously, any one quarter can bounce around a lot just because it's not a lot of GLA in one quarter, but for the full year should be pretty good. Okay, that's helpful. Just one more from you. There's fewer anchors in there, Craig. So that's what's left a small shop. So a little higher at ABR.

Got it. And just one more for me. You know, I think last quarter the implied ABR recognition in the sign-not open pipeline was about $2.9 million for 2026. I think now we're looking at $1.8 million in the updated deck. Can you give us a sense of how you're anticipating the timing of that $1.8 million in 26 and sort of how we should think about modeling 27 from a sign-not-open pipeline recognition perspective?

Yeah, so about a million and a half rolled off the pipeline from last time and commenced. And then with new leases, you know, we kind of filled that back up, signing about a million and a half. So the total of the sign-not-open pipeline did not move much. What did go in went in relatively closer to the beginning of the quarter. So it was in there for most of the quarter, and it reflected in the quarter's run rate. With what's left in the sign-not-open pipeline, I think it'll be a little more Q3, Q4 weighted. and then generally almost all of it is in place albeit maybe later in the year prior to 27 so you should get you know pretty much the full impact of the cyanide open pipeline in 27 i think there's one tenant that that pushes to early 28 but almost everything should be recognized in 27

i'm sorry are you saying recognized as of sort of the early 27 or throughout 27

Early 27, so it should, just other than one tenant, I think they're all, you should get the full benefit of the sign-out open pipeline for 27. There's one tenant you won't get the full benefit of until 28, because they'll open during 27. But what's left for 26 will be later in the year, and then you'll get the full benefit in 27. All right, that's helpful. Thank you.

thank you so much our next question comes from the line of john masoka with the riley securities

your line is now open good morning um let me be thinking about the madison disposition and we can kind of back into the numbers a little bit on our own given your disclosure but is it right to think that that's at about a six percent cap rate i know it kind of depends a little bit on the NOI margin at that specific asset, but does that sound roughly correct?

It's a little higher than that because of the AMC theater.

All right. And then maybe to kind of more big picture as you're thinking about your leasing pipeline and some of the vacancy that's left, and I know a lot of that's been addressed because a lot of it's in Carolina Pavilion, but is there any kind of hesitancy you've seen in retailers and, frankly, in recent weeks around signing deals, just given some of the macro uncertainty out there, some of the uncertainty about how some of the headline stuff maybe impacts the consumer. Just curious how the kind of leasing trajectory has been on a super recent basis.

There's been no hesitancy with pushing forward on leases. We have not seen any pullback whatsoever on any category.

And then with the in-place portfolio, any new tenants or any new kind of notable increase to the watch list? I'm just curious if there's any kind of pushes and pulls there. Anything coming out of the watch list even, too?

No. I mean, really, as I've said in prior calls, you know, really, you know, it's really some of the smaller type tenants and maybe restaurant-oriented, but there's been no notable change one way or the other on the watch list.

Okay. And then last one, you know, there's been a decent amount of M&A in the space in kind of recent years, including a notable comp to you all recently. How does that impact kind of your disposition and acquisition outlook? Is there stuff that maybe comes out of those transactions or the competitor maybe not being in the space that increases the likelihood of you closing certain deals? Does it indicate something you can do on the capital recycling side that is interesting? I'm just kind of curious if those events outside of your control kind of changed the dynamics around how you're operating the business.

Yeah, I would just say that there's just a lot more capital out there, and that price point of that transaction was, you know, fairly aggressive. So it's helpful on our recycling side for sure, but not helpful on our acquisition side. uh so you know we we proud ourselves on being you know fast to uh kind of address an acquisition we can move fast and uh the groups that are out there on on the acquisition hunt are much larger kind of institutional and they take a lot longer so uh just being a little bit nimble is is an advantage for us okay uh that's it for me thank you very much great thanks appreciate it thank you

so much our next question comes from the line of gurov meta with alliance global partners your

line is now open yeah thank you good morning i i wanted to ask you on the on the acquisition that you made and crossing this quarter on the value add upside can you maybe talk about where the rents are on that property versus where the market trends are yeah i mean the market rents are are

below market but you know there's not really any sort of play where uh we're going to get a tenant out and we're going to have a huge mark to market on on the lease up um i would just say that you know we do have a little bit vacancy and we have an out parcel that we didn't pay any money for that we're working on uh so that's where the growth is going to come uh over and beyond what we what we bought uh but you know the they are below market but you know not something that you can kind of get to anytime soon okay second question on the guidance just a

clarification on the Madison yard I didn't see that listed in the guidance assumption is that included in your guidance the disposition no I mean we

didn't put a disposition of volume out there currently that's the only near term and plan disposition though okay all right thank you that's all I had thank you thank you

so much 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 you may now disconnect