CTO Realty Growth(CTO) - 2024 Q1 - Quarterly Results

First Quarter 2024 Highlights CTO Realty Growth reported strong Q1 2024 results, featuring financial growth, strategic investments, and positive leasing momentum Q1 2024 Key Performance Indicators | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Net Income per Diluted Share | $0.20 | From ($0.32) | | Core FFO per Diluted Share | $0.48 | +23.1% | | AFFO per Diluted Share | $0.52 | +20.9% | | Same-Property NOI | $15.1M | +6.0% | | Leased Occupancy | 94.3% | +1.0% (QoQ) | - Invested $71.0 million in two retail properties at a weighted-average going-in cash cap rate of 8.0%[3] - Sold one property for $20.0 million at an 8.2% exit cap rate, generating a $4.6 million gain[10] - Signed 15 comparable leases resulting in a 68.2% increase in comparable rent per square foot[4] - Increased the midpoint of full-year Core FFO and AFFO per diluted share guidance by 2.5% and 2.3%, respectively[13] CEO Comments CEO John P. Albright highlighted strong Q1 acquisitions and sales, attributing increased full-year guidance to positive leasing and NOI growth - Highlighted strong acquisition activity, including the $68.7 million Marketplace at Seminole Towne Center in Orlando, Florida[15] - Increased full-year Core FFO and AFFO guidance due to positive leasing momentum and strong Same-Property NOI growth[15] - Noted that over 200,000 square feet of new leases were signed in the last six months, contributing to the positive outlook[15] Quarterly Financial Results The company reported significant year-over-year financial improvement in Q1 2024, with net income turning positive and strong FFO/AFFO growth Q1 2024 vs Q1 2023 Financial Results (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | Variance | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Income Attributable to Common Stockholders | $4,655 | $(7,188) | $11,843 | 164.8% | | Net Income per Diluted Share | $0.20 | $(0.32) | $0.52 | 162.5% | | Core FFO per Common Share – Diluted | $0.48 | $0.39 | $0.09 | 23.1% | | AFFO per Common Share – Diluted | $0.52 | $0.43 | $0.09 | 20.9% | Portfolio and Operational Activities CTO actively managed its portfolio in Q1 2024 through strategic investments, dispositions, and robust leasing, boosting occupancy and rent growth Investments and Dispositions In Q1 2024, CTO invested $71.0 million in retail properties and originated a $10.0 million loan, while disposing of a mixed-use property for $20.0 million - Acquired two retail properties for $71.0 million, including the $68.7 million Marketplace at Seminole Towne Center in Orlando, Florida[17] - Originated a $10.0 million first mortgage retail development loan in Florida at a fixed interest rate of 11.0%[20] - Sold a mixed-use property in Santa Fe, New Mexico for $20.0 million, generating a gain of $4.6 million[21] Portfolio Summary As of March 31, 2024, CTO's portfolio comprised 20 properties totaling 3.9 million square feet, with 94.3% leased occupancy, primarily retail-focused Portfolio Composition by Property Type (as of March 31, 2024) | Property Type | of Properties | Square Feet (thousands) | % of Cash Base Rent | | :--- | :--- | :--- | :--- | | Retail | 15 | 2,467 | 62.1% | | Office | 1 | 210 | 4.7% | | Mixed-Use | 4 | 1,218 | 33.2% | | Total | 20 | 3,895 | 100% | - Portfolio leased occupancy was 94.3% and physical occupancy was 92.6% as of March 31, 2024[23] Same-Property Net Operating Income (NOI) Same-Property NOI increased by 6.0% to $15.1 million in Q1 2024, driven by strong growth in both single-tenant and multi-tenant portfolios Same-Property NOI Growth (Q1 2024 vs Q1 2023, in thousands) | Portfolio Segment | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Single Tenant | $1,148 | $949 | 21.0% | | Multi-Tenant | $13,966 | $13,305 | 5.0% | | Total | $15,114 | $14,254 | 6.0% | Leasing Activity In Q1 2024, CTO signed 19 leases totaling 104,114 square feet, with comparable leases showing a significant 68.2% increase in average cash base rent - On a comparable basis, 15 leases were signed totaling 94,699 sq. ft. at an average cash base rent of $26.09/sq. ft., representing a 68.2% growth over the previous rent of $15.51/sq. ft.[27] Q1 2024 Leasing Summary | Lease Type | Square Feet (thousands) | Weighted Avg. Lease Term | Cash Rent Per Sq. Ft. | | :--- | :--- | :--- | :--- | | New Leases | 70 | 12.4 years | $26.09 | | Renewals & Extensions | 34 | 3.8 years | $29.26 | | Total / Weighted Avg. | 104 | 9.4 years | $27.12 | Other Activities CTO monetized non-core assets in Q1, selling subsurface rights for $5.0 million and mitigation credits for $1.0 million, generating significant gains - Sold remaining subsurface oil, gas, and mineral rights for $5.0 million, realizing a gain of $4.5 million[30] - Sold approximately 7.5 mitigation credits for $1.0 million, resulting in a gain of $0.2 million[31] Capital Structure and Shareholder Returns CTO actively managed its capital structure through share repurchases, ATM issuances, and a preferred stock offering, maintaining debt and declaring dividends Capital Markets and Balance Sheet CTO managed its balance sheet in Q1 2024 through share repurchases, ATM issuances, and a preferred stock offering, with total debt at $543.3 million and Net Debt to Pro Forma EBITDA of 7.6x - Subsequent to Q1, completed a public offering of Series A Preferred Stock, receiving net proceeds of $33.1 million[33] - As of March 31, 2024, Net Debt to Pro Forma EBITDA was 7.6x and the fixed charge coverage ratio was 2.7x[42] Long-Term Debt Summary (as of March 31, 2024) | Component | Principal | Interest Rate | Maturity Date | | :--- | :--- | :--- | :--- | | 2025 Convertible Senior Notes | $51.0 million | 3.875% | April 2025 | | 2026 Term Loan | $65.0 million | SOFR + 1.27% (swapped) + spread | March 2026 | | Mortgage Note | $17.8 million | 4.06% | August 2026 | | Revolving Credit Facility | $209.5 million | SOFR + spread | January 2027 | | 2027 Term Loan | $100.0 million | SOFR + 1.35% (swapped) + spread | January 2027 | | 2028 Term Loan | $100.0 million | SOFR + 3.78% (swapped) + spread | January 2028 | | Total Debt | $543.3 million | 4.52% (Weighted Avg.) | | Dividends The company declared Q1 2024 cash dividends of $0.38 per common share and $0.40 per preferred share, with a common stock dividend payout ratio of 73.1% of AFFO - Declared a Q1 2024 cash dividend of $0.38 per common share and $0.40 per Series A Preferred share[37] - The common stock dividend payout ratio was 73.1% of the company's Q1 2024 AFFO per diluted share[37] 2024 Outlook Reflecting strong Q1 performance, CTO raised its full-year 2024 guidance for Core FFO and AFFO per diluted share, with key assumptions including Same-Property NOI growth and year-end leased occupancy Updated Full Year 2024 Guidance (Per Diluted Share) | Metric | Low | High | | :--- | :--- | :--- | | Core FFO Per Diluted Share | $1.60 | $1.68 | | AFFO Per Diluted Share | $1.74 | $1.82 | - Key assumptions for 2024 guidance include: - Same-Property NOI growth: 2% to 4%[44] - Year-end leased occupancy: 95% to 96%[44] - Investments: $100 million to $150 million at 7.75% - 8.25% initial cash yield[45] - Dispositions: $50 million to $75 million at 7.50% - 8.25% exit cash yield[45] Appendix: Financial Statements and Reconciliations This appendix provides definitions for non-GAAP financial measures, unaudited consolidated financial statements, and detailed reconciliations for key metrics Consolidated Financial Statements This section presents the unaudited Consolidated Balance Sheets and Statements of Operations for specified periods - Presents the Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023[64] - Presents the Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023[69] Non-GAAP Reconciliations This section provides detailed reconciliations of GAAP Net Income to key non-GAAP measures, including Same-Property NOI, FFO, Core FFO, AFFO, and Net Debt to Pro Forma EBITDA - Provides a reconciliation of Net Income to Same-Property NOI[72] - Provides a reconciliation of Net Income to FFO, Core FFO, and AFFO[75] - Provides a reconciliation of Net Debt to Pro Forma EBITDA[77]