CTO Realty Growth(US:CTO) GlobeNewswire News Room·2025-08-09 14:00Core Viewpoint - A class action lawsuit has been filed against CTO Realty Growth, Inc. and certain officers for alleged violations of federal securities laws during the Class Period from February 18, 2021, to June 24, 2025, seeking damages for misleading statements regarding the company's financial health and dividend sustainability [1][6]. Company Overview - CTO Realty Growth, Inc. is a publicly traded real estate investment trust (REIT) that owns and operates a portfolio of retail-based properties primarily in higher growth markets in the U.S. The company converted to a REIT in February 2021 and owned 23 income properties across seven states as of December 31, 2024 [4]. - REITs are required to distribute at least 90% of their taxable profits as dividends to benefit from corporate income tax exemptions. CTO claims that its REIT structure allows for tax-efficient operations and sustainable dividends [5]. Allegations and Financial Concerns - The lawsuit alleges that CTO's dividends were less sustainable than represented, and the company used deceptive practices to inflate its Adjusted Funds from Operations (AFFO) and overstate profitability, particularly regarding the Ashford Lane property [6]. - A report by Wolfpack Research criticized CTO for not generating sufficient cash to cover recurring capital expenditures and dividends since its conversion to a REIT, indicating a reliance on share dilution to address a $38 million dividend shortfall from 2021 to 2024 [7]. - The report highlighted that CTO's AFFO definition excluded recurring capital expenditures, which is inconsistent with industry peers, and noted that the company faced significant financial challenges, including only $8.4 million in cash against quarterly dividends of $14 million and additional capital expenditures [7]. Market Reaction - Following the release of the Wolfpack Report, CTO's stock price fell by $0.98 per share, or 5.42%, closing at $17.10 per share on June 25, 2025 [8].