CTO Realty Growth Series A Preferred: 7.5% Yield Plus Appreciation Potential In Anticipation Of Declining Interest Rates

Company Overview - CTO Realty Growth (CTO) is undergoing a transformation with a focus on retail real estate, having reported strong leasing activity and impressive 2Q24 operating results [4][6] - The company has engaged in $1.2 billion of investment activity in acquiring new retail assets while disposing of $0.7 billion in non-core/non-retail assets [6] Financial Performance - CTO's 2024 AFFO per share guidance is set at $1.975, which positions the company at a 9.93x multiple, significantly lower than the retail REIT peer average of 14.4x [6] - The stock price increased over 12% in July due to a favorable market view of REITs [6] Preferred Shares - The Series A preferred shares (CTO.PR.A) offer a fixed 6.375% coupon, resulting in annual dividend payments of $1.59375, yielding 7.59% against a backdrop of rising interest rates [7][11] - The anticipated decline in Fed Funds Rate could lead to increased demand for yield, potentially driving up the price of CTO.PR.A shares [12][13] Investment Opportunity - The current pricing of CTO.PR.A shares presents an opportunity for capital appreciation, with potential gains of $4 per share (+19%) if interest rates decline significantly [13] - The strong performance in retail real estate leasing trends supports a positive outlook for CTO, making it an attractive option for fixed-income portfolios [14]