[10-Q] CTO Realty Growth, Inc. Quarterly Earnings Report
CTO Realty Growth’s Q2-25 10-Q shows strong top-line expansion but a sharp swing to loss driven by balance-sheet actions. Total revenue rose 30% YoY to $37.6 million on larger income-property rent (+29%) and >100% jump in commercial-loan interest. Six-month revenue is up 29% to $73.4 million.
Higher depreciation, tax-true-up and a $20.4 million loss on early retirement of 2025 notes pushed operating income to a –$12.7 million versus +$5.4 million last year; GAAP net loss to common holders was –$25.3 million (–$0.77/sh) versus –$0.03. Year-to-date EPS is –$0.78 versus +$0.17. Cash-flow performance improved: operating cash rose 31% to $32.2 million, but the company invested $88.4 million in new properties and loans.
Leverage increased: long-term debt climbed 17% to $605 million and interest expense rose 22% to $6.9 million for the quarter. Equity fell 6% to $574 million, driven by losses, higher dividends (common $24.8 million YTD) and a $11.2 million mark-to-market loss on interest-rate swaps, trimming OCI to $1.3 million. Shares outstanding grew to 32.9 million after stock-settled note redemption.
Key takeaways:
- Revenue momentum remains solid across all segments.
- Debt refinancing removes 2025 maturity but generated a large one-time charge and dilutive share issuance.
- Balance-sheet leverage and rising interest costs pressure future earnings; dividend coverage is currently from cash flow, not GAAP earnings.
Il 10-Q del Q2-25 di CTO Realty Growth mostra una forte espansione dei ricavi ma una netta inversione in perdita dovuta ad azioni sul bilancio. Il fatturato totale è aumentato del 30% su base annua, raggiungendo 37,6 milioni di dollari grazie a un incremento degli affitti delle proprietà in gestione (+29%) e a un balzo superiore al 100% degli interessi sui prestiti commerciali. Il fatturato semestrale è cresciuto del 29%, arrivando a 73,4 milioni di dollari.
Una maggiore svalutazione, un adeguamento fiscale e una perdita di 20,4 milioni di dollari per il ritiro anticipato delle obbligazioni 2025 hanno portato il reddito operativo a -12,7 milioni di dollari rispetto a +5,4 milioni dell'anno precedente; la perdita netta GAAP attribuibile agli azionisti comuni è stata di -25,3 milioni di dollari (-0,77 dollari per azione) rispetto a -0,03. L'utile per azione da inizio anno è -0,78 contro +0,17. La performance del flusso di cassa è migliorata: il flusso operativo è aumentato del 31%, raggiungendo 32,2 milioni di dollari, ma la società ha investito 88,4 milioni in nuove proprietà e prestiti.
La leva finanziaria è aumentata: il debito a lungo termine è salito del 17% a 605 milioni di dollari e gli oneri finanziari sono cresciuti del 22% a 6,9 milioni per il trimestre. Il patrimonio netto è sceso del 6% a 574 milioni, influenzato dalle perdite, dai dividendi più elevati (24,8 milioni di dollari da inizio anno) e da una perdita mark-to-market di 11,2 milioni sugli swap sui tassi d'interesse, riducendo l'OCI a 1,3 milioni. Le azioni in circolazione sono aumentate a 32,9 milioni dopo il riscatto delle obbligazioni tramite azioni.
Punti chiave:
- La crescita dei ricavi rimane solida in tutti i segmenti.
- La rifinanziamento del debito elimina la scadenza del 2025 ma ha generato un onere una tantum significativo e un'emissione diluitiva di azioni.
- La leva finanziaria e l'aumento dei costi d'interesse pesano sugli utili futuri; la copertura del dividendo è attualmente garantita dal flusso di cassa, non dagli utili GAAP.
El 10-Q del segundo trimestre de 2025 de CTO Realty Growth muestra una fuerte expansión de ingresos pero un brusco giro a pérdidas impulsado por acciones en el balance. Los ingresos totales aumentaron un 30% interanual hasta 37,6 millones de dólares, debido a mayores rentas de propiedades de ingresos (+29%) y un salto superior al 100% en intereses de préstamos comerciales. Los ingresos de seis meses aumentaron un 29% hasta 73,4 millones de dólares.
Una mayor depreciación, ajustes fiscales y una pérdida de 20,4 millones de dólares por el retiro anticipado de notas 2025 llevaron el ingreso operativo a -12,7 millones de dólares frente a +5,4 millones del año anterior; la pérdida neta GAAP atribuible a los accionistas comunes fue de -25,3 millones de dólares (-0,77 dólares por acción) frente a -0,03. Las ganancias por acción acumuladas son -0,78 frente a +0,17. El flujo de caja operativo mejoró: aumentó un 31% hasta 32,2 millones de dólares, pero la compañía invirtió 88,4 millones en nuevas propiedades y préstamos.
El apalancamiento aumentó: la deuda a largo plazo subió un 17% hasta 605 millones de dólares y los gastos por intereses crecieron un 22% hasta 6,9 millones en el trimestre. El patrimonio cayó un 6% hasta 574 millones, impulsado por pérdidas, mayores dividendos (24,8 millones en el año) y una pérdida mark-to-market de 11,2 millones en swaps de tasas de interés, reduciendo el OCI a 1,3 millones. Las acciones en circulación aumentaron a 32,9 millones tras el canje de notas por acciones.
Puntos clave:
- El impulso de ingresos sigue sólido en todos los segmentos.
- La refinanciación de deuda elimina el vencimiento de 2025 pero generó un cargo único importante y emisión dilutiva de acciones.
- El apalancamiento y el aumento de costos de interés presionan las ganancias futuras; la cobertura del dividendo actualmente proviene del flujo de caja, no de ganancias GAAP.
CTO Realty Growth의 2025년 2분기 10-Q 보고서는 매출이 크게 확대되었으나, 대차대조표 조치로 인한 큰 손실 전환을 보여줍니다. 총 매출은 전년 대비 30% 증가한 3,760만 달러로, 임대 수익이 29% 증가했고 상업 대출 이자가 100% 이상 급증했습니다. 6개월 누적 매출은 29% 증가한 7,340만 달러입니다.
높아진 감가상각비, 세금 조정, 그리고 2025년 채권 조기 상환으로 인한 2,040만 달러 손실로 영업이익은 전년 540만 달러 흑자에서 1,270만 달러 적자로 전환되었습니다. 일반회계기준(GAAP) 기준 보통주주 순손실은 2,530만 달러(-주당 0.77달러)로 전년 -0.03달러에서 악화되었습니다. 연초 이후 주당순이익(EPS)은 -0.78달러로, 전년 0.17달러에서 하락했습니다. 현금흐름 성과는 개선되어 영업현금은 31% 증가한 3,220만 달러였으나, 회사는 신규 부동산 및 대출에 8,840만 달러를 투자했습니다.
레버리지는 증가하여 장기부채가 17% 증가한 6억 500만 달러가 되었고, 이자 비용은 분기 기준 22% 증가한 690만 달러를 기록했습니다. 자본은 손실, 증가한 배당금(연초 이후 2,480만 달러), 그리고 1,120만 달러의 이자율 스왑 평가손실로 6% 감소한 5억 7,400만 달러가 되었습니다. 기타포괄손익(OCI)은 130만 달러로 줄었으며, 주식 상환 후 발행 주식 수는 3,290만 주로 증가했습니다.
주요 내용:
- 모든 부문에서 매출 모멘텀이 견고하게 유지되고 있습니다.
- 부채 재융자는 2025년 만기를 제거했으나, 일회성 큰 비용과 희석성 주식 발행을 초래했습니다.
- 대차대조표 레버리지와 상승하는 이자 비용이 향후 수익에 부담을 주며, 배당금 지급은 현재 GAAP 이익이 아닌 현금 흐름에서 충당되고 있습니다.
Le rapport 10-Q du deuxième trimestre 2025 de CTO Realty Growth montre une forte croissance du chiffre d'affaires mais un net basculement en perte dû à des actions sur le bilan. Le chiffre d'affaires total a augmenté de 30 % en glissement annuel pour atteindre 37,6 millions de dollars, grâce à une hausse des loyers des propriétés à revenus (+29 %) et un bond de plus de 100 % des intérêts sur prêts commerciaux. Le chiffre d'affaires semestriel est en hausse de 29 % à 73,4 millions de dollars.
Une dépréciation plus élevée, un ajustement fiscal et une perte de 20,4 millions de dollars liée au remboursement anticipé des obligations 2025 ont fait chuter le résultat opérationnel à -12,7 millions de dollars contre +5,4 millions l'an passé ; la perte nette selon les normes GAAP attribuable aux actionnaires ordinaires s'est élevée à -25,3 millions de dollars (-0,77 $ par action) contre -0,03 $. Le bénéfice par action depuis le début de l'année est de -0,78 $ contre +0,17 $. La performance des flux de trésorerie s'est améliorée : la trésorerie opérationnelle a augmenté de 31 % pour atteindre 32,2 millions de dollars, mais la société a investi 88,4 millions dans de nouveaux biens et prêts.
L'endettement a augmenté : la dette à long terme a progressé de 17 % pour atteindre 605 millions de dollars, et les charges d'intérêts ont augmenté de 22 % au trimestre pour atteindre 6,9 millions. Les capitaux propres ont diminué de 6 % à 574 millions, impactés par les pertes, des dividendes plus élevés (24,8 millions depuis le début de l'année) et une perte de 11,2 millions liée à la juste valeur des swaps de taux d'intérêt, réduisant les autres éléments du résultat global à 1,3 million. Le nombre d'actions en circulation a augmenté à 32,9 millions après le remboursement des obligations par actions.
Points clés :
- La dynamique des revenus reste solide dans tous les segments.
- Le refinancement de la dette supprime l'échéance 2025 mais a généré une charge ponctuelle importante et une émission dilutive d'actions.
- L'endettement du bilan et la hausse des coûts d'intérêt pèsent sur les bénéfices futurs ; la couverture des dividendes provient actuellement des flux de trésorerie et non des bénéfices GAAP.
Der 10-Q-Bericht von CTO Realty Growth für das zweite Quartal 2025 zeigt ein starkes Umsatzwachstum, aber einen deutlichen Verlust aufgrund von Bilanzmaßnahmen. Der Gesamtumsatz stieg im Jahresvergleich um 30 % auf 37,6 Millionen US-Dollar, bedingt durch höhere Mieteinnahmen aus Immobilien (+29 %) und einen mehr als 100%igen Anstieg der Zinseinnahmen aus Gewerbekrediten. Der Umsatz für sechs Monate stieg um 29 % auf 73,4 Millionen US-Dollar.
Höhere Abschreibungen, Steueranpassungen und ein Verlust von 20,4 Millionen US-Dollar durch vorzeitige Rückzahlung der 2025er Anleihen führten zu einem operativen Ergebnis von -12,7 Millionen US-Dollar gegenüber +5,4 Millionen im Vorjahr; der GAAP-Nettogewinn für Stammaktionäre betrug -25,3 Millionen US-Dollar (-0,77 US-Dollar je Aktie) gegenüber -0,03. Das Ergebnis je Aktie seit Jahresbeginn liegt bei -0,78 gegenüber +0,17. Der operative Cashflow verbesserte sich: Er stieg um 31 % auf 32,2 Millionen US-Dollar, aber das Unternehmen investierte 88,4 Millionen in neue Immobilien und Kredite.
Die Verschuldung stieg: Die langfristigen Schulden kletterten um 17 % auf 605 Millionen US-Dollar, und die Zinsaufwendungen stiegen im Quartal um 22 % auf 6,9 Millionen. Das Eigenkapital sank um 6 % auf 574 Millionen, bedingt durch Verluste, höhere Dividenden (24,8 Millionen seit Jahresbeginn) und einen mark-to-market-Verlust von 11,2 Millionen bei Zinsswaps, wodurch das OCI auf 1,3 Millionen schrumpfte. Die ausstehenden Aktien stiegen nach der aktienbasierten Einlösung von Anleihen auf 32,9 Millionen.
Wesentliche Erkenntnisse:
- Das Umsatzwachstum bleibt in allen Segmenten solide.
- Die Umschuldung beseitigt die Fälligkeit 2025, verursachte jedoch eine hohe Einmalbelastung und eine verwässernde Aktienausgabe.
- Die Bilanzhebelwirkung und steigende Zinskosten belasten die künftigen Gewinne; die Dividenden werden derzeit aus dem Cashflow und nicht aus GAAP-Gewinnen gedeckt.
- None.
- None.
Insights
TL;DR: Revenue up 30%, but note extinguishment and swap losses drove a surprise GAAP loss; leverage meaningfully higher.
Core property fundamentals remain healthy—occupancy gains translated into a 29% rent increase, and management-fee/loan income add diversification. However, retiring the 3.875% 2025 converts via cash premium and share issuance produced a $20.4 million charge and ~1.3 million new shares. Net debt/total assets climbed to 49% from 44%, and interest expense grew 22% despite hedge protection. The swap portfolio moved against the company, cutting OCI by $11.2 million. Dividend outlays exceeded GAAP earnings by $28.6 million YTD, drawing on operating cash and equity. While AFFO is not disclosed here, coverage will need close monitoring. Near-term catalysts are lease-up of recent acquisitions and potential refinance of variable-rate facilities. Overall tone skews negative until earnings recover.
TL;DR: Solid cash generation offsets accounting loss; asset base and scale growing, but leverage trend raises risk profile.
Operating cash flow beat last year by $7.6 million, more than funding dividends so far. Management opportunistically added $80 million of retail/mixed-use assets in high-growth Sunbelt markets, supporting long-run NOI. Stock-settled debt retirement avoided large cash drain and removed a near-term maturity. Nevertheless, higher debt and 150 bp SOFR rise make interest expense a headwind. Equity dilution was modest (~4%), yet EPS pressure is evident. Impactful but mixed: growth story intact, but credit metrics now demand tighter capital allocation.
Il 10-Q del Q2-25 di CTO Realty Growth mostra una forte espansione dei ricavi ma una netta inversione in perdita dovuta ad azioni sul bilancio. Il fatturato totale è aumentato del 30% su base annua, raggiungendo 37,6 milioni di dollari grazie a un incremento degli affitti delle proprietà in gestione (+29%) e a un balzo superiore al 100% degli interessi sui prestiti commerciali. Il fatturato semestrale è cresciuto del 29%, arrivando a 73,4 milioni di dollari.
Una maggiore svalutazione, un adeguamento fiscale e una perdita di 20,4 milioni di dollari per il ritiro anticipato delle obbligazioni 2025 hanno portato il reddito operativo a -12,7 milioni di dollari rispetto a +5,4 milioni dell'anno precedente; la perdita netta GAAP attribuibile agli azionisti comuni è stata di -25,3 milioni di dollari (-0,77 dollari per azione) rispetto a -0,03. L'utile per azione da inizio anno è -0,78 contro +0,17. La performance del flusso di cassa è migliorata: il flusso operativo è aumentato del 31%, raggiungendo 32,2 milioni di dollari, ma la società ha investito 88,4 milioni in nuove proprietà e prestiti.
La leva finanziaria è aumentata: il debito a lungo termine è salito del 17% a 605 milioni di dollari e gli oneri finanziari sono cresciuti del 22% a 6,9 milioni per il trimestre. Il patrimonio netto è sceso del 6% a 574 milioni, influenzato dalle perdite, dai dividendi più elevati (24,8 milioni di dollari da inizio anno) e da una perdita mark-to-market di 11,2 milioni sugli swap sui tassi d'interesse, riducendo l'OCI a 1,3 milioni. Le azioni in circolazione sono aumentate a 32,9 milioni dopo il riscatto delle obbligazioni tramite azioni.
Punti chiave:
- La crescita dei ricavi rimane solida in tutti i segmenti.
- La rifinanziamento del debito elimina la scadenza del 2025 ma ha generato un onere una tantum significativo e un'emissione diluitiva di azioni.
- La leva finanziaria e l'aumento dei costi d'interesse pesano sugli utili futuri; la copertura del dividendo è attualmente garantita dal flusso di cassa, non dagli utili GAAP.
El 10-Q del segundo trimestre de 2025 de CTO Realty Growth muestra una fuerte expansión de ingresos pero un brusco giro a pérdidas impulsado por acciones en el balance. Los ingresos totales aumentaron un 30% interanual hasta 37,6 millones de dólares, debido a mayores rentas de propiedades de ingresos (+29%) y un salto superior al 100% en intereses de préstamos comerciales. Los ingresos de seis meses aumentaron un 29% hasta 73,4 millones de dólares.
Una mayor depreciación, ajustes fiscales y una pérdida de 20,4 millones de dólares por el retiro anticipado de notas 2025 llevaron el ingreso operativo a -12,7 millones de dólares frente a +5,4 millones del año anterior; la pérdida neta GAAP atribuible a los accionistas comunes fue de -25,3 millones de dólares (-0,77 dólares por acción) frente a -0,03. Las ganancias por acción acumuladas son -0,78 frente a +0,17. El flujo de caja operativo mejoró: aumentó un 31% hasta 32,2 millones de dólares, pero la compañía invirtió 88,4 millones en nuevas propiedades y préstamos.
El apalancamiento aumentó: la deuda a largo plazo subió un 17% hasta 605 millones de dólares y los gastos por intereses crecieron un 22% hasta 6,9 millones en el trimestre. El patrimonio cayó un 6% hasta 574 millones, impulsado por pérdidas, mayores dividendos (24,8 millones en el año) y una pérdida mark-to-market de 11,2 millones en swaps de tasas de interés, reduciendo el OCI a 1,3 millones. Las acciones en circulación aumentaron a 32,9 millones tras el canje de notas por acciones.
Puntos clave:
- El impulso de ingresos sigue sólido en todos los segmentos.
- La refinanciación de deuda elimina el vencimiento de 2025 pero generó un cargo único importante y emisión dilutiva de acciones.
- El apalancamiento y el aumento de costos de interés presionan las ganancias futuras; la cobertura del dividendo actualmente proviene del flujo de caja, no de ganancias GAAP.
CTO Realty Growth의 2025년 2분기 10-Q 보고서는 매출이 크게 확대되었으나, 대차대조표 조치로 인한 큰 손실 전환을 보여줍니다. 총 매출은 전년 대비 30% 증가한 3,760만 달러로, 임대 수익이 29% 증가했고 상업 대출 이자가 100% 이상 급증했습니다. 6개월 누적 매출은 29% 증가한 7,340만 달러입니다.
높아진 감가상각비, 세금 조정, 그리고 2025년 채권 조기 상환으로 인한 2,040만 달러 손실로 영업이익은 전년 540만 달러 흑자에서 1,270만 달러 적자로 전환되었습니다. 일반회계기준(GAAP) 기준 보통주주 순손실은 2,530만 달러(-주당 0.77달러)로 전년 -0.03달러에서 악화되었습니다. 연초 이후 주당순이익(EPS)은 -0.78달러로, 전년 0.17달러에서 하락했습니다. 현금흐름 성과는 개선되어 영업현금은 31% 증가한 3,220만 달러였으나, 회사는 신규 부동산 및 대출에 8,840만 달러를 투자했습니다.
레버리지는 증가하여 장기부채가 17% 증가한 6억 500만 달러가 되었고, 이자 비용은 분기 기준 22% 증가한 690만 달러를 기록했습니다. 자본은 손실, 증가한 배당금(연초 이후 2,480만 달러), 그리고 1,120만 달러의 이자율 스왑 평가손실로 6% 감소한 5억 7,400만 달러가 되었습니다. 기타포괄손익(OCI)은 130만 달러로 줄었으며, 주식 상환 후 발행 주식 수는 3,290만 주로 증가했습니다.
주요 내용:
- 모든 부문에서 매출 모멘텀이 견고하게 유지되고 있습니다.
- 부채 재융자는 2025년 만기를 제거했으나, 일회성 큰 비용과 희석성 주식 발행을 초래했습니다.
- 대차대조표 레버리지와 상승하는 이자 비용이 향후 수익에 부담을 주며, 배당금 지급은 현재 GAAP 이익이 아닌 현금 흐름에서 충당되고 있습니다.
Le rapport 10-Q du deuxième trimestre 2025 de CTO Realty Growth montre une forte croissance du chiffre d'affaires mais un net basculement en perte dû à des actions sur le bilan. Le chiffre d'affaires total a augmenté de 30 % en glissement annuel pour atteindre 37,6 millions de dollars, grâce à une hausse des loyers des propriétés à revenus (+29 %) et un bond de plus de 100 % des intérêts sur prêts commerciaux. Le chiffre d'affaires semestriel est en hausse de 29 % à 73,4 millions de dollars.
Une dépréciation plus élevée, un ajustement fiscal et une perte de 20,4 millions de dollars liée au remboursement anticipé des obligations 2025 ont fait chuter le résultat opérationnel à -12,7 millions de dollars contre +5,4 millions l'an passé ; la perte nette selon les normes GAAP attribuable aux actionnaires ordinaires s'est élevée à -25,3 millions de dollars (-0,77 $ par action) contre -0,03 $. Le bénéfice par action depuis le début de l'année est de -0,78 $ contre +0,17 $. La performance des flux de trésorerie s'est améliorée : la trésorerie opérationnelle a augmenté de 31 % pour atteindre 32,2 millions de dollars, mais la société a investi 88,4 millions dans de nouveaux biens et prêts.
L'endettement a augmenté : la dette à long terme a progressé de 17 % pour atteindre 605 millions de dollars, et les charges d'intérêts ont augmenté de 22 % au trimestre pour atteindre 6,9 millions. Les capitaux propres ont diminué de 6 % à 574 millions, impactés par les pertes, des dividendes plus élevés (24,8 millions depuis le début de l'année) et une perte de 11,2 millions liée à la juste valeur des swaps de taux d'intérêt, réduisant les autres éléments du résultat global à 1,3 million. Le nombre d'actions en circulation a augmenté à 32,9 millions après le remboursement des obligations par actions.
Points clés :
- La dynamique des revenus reste solide dans tous les segments.
- Le refinancement de la dette supprime l'échéance 2025 mais a généré une charge ponctuelle importante et une émission dilutive d'actions.
- L'endettement du bilan et la hausse des coûts d'intérêt pèsent sur les bénéfices futurs ; la couverture des dividendes provient actuellement des flux de trésorerie et non des bénéfices GAAP.
Der 10-Q-Bericht von CTO Realty Growth für das zweite Quartal 2025 zeigt ein starkes Umsatzwachstum, aber einen deutlichen Verlust aufgrund von Bilanzmaßnahmen. Der Gesamtumsatz stieg im Jahresvergleich um 30 % auf 37,6 Millionen US-Dollar, bedingt durch höhere Mieteinnahmen aus Immobilien (+29 %) und einen mehr als 100%igen Anstieg der Zinseinnahmen aus Gewerbekrediten. Der Umsatz für sechs Monate stieg um 29 % auf 73,4 Millionen US-Dollar.
Höhere Abschreibungen, Steueranpassungen und ein Verlust von 20,4 Millionen US-Dollar durch vorzeitige Rückzahlung der 2025er Anleihen führten zu einem operativen Ergebnis von -12,7 Millionen US-Dollar gegenüber +5,4 Millionen im Vorjahr; der GAAP-Nettogewinn für Stammaktionäre betrug -25,3 Millionen US-Dollar (-0,77 US-Dollar je Aktie) gegenüber -0,03. Das Ergebnis je Aktie seit Jahresbeginn liegt bei -0,78 gegenüber +0,17. Der operative Cashflow verbesserte sich: Er stieg um 31 % auf 32,2 Millionen US-Dollar, aber das Unternehmen investierte 88,4 Millionen in neue Immobilien und Kredite.
Die Verschuldung stieg: Die langfristigen Schulden kletterten um 17 % auf 605 Millionen US-Dollar, und die Zinsaufwendungen stiegen im Quartal um 22 % auf 6,9 Millionen. Das Eigenkapital sank um 6 % auf 574 Millionen, bedingt durch Verluste, höhere Dividenden (24,8 Millionen seit Jahresbeginn) und einen mark-to-market-Verlust von 11,2 Millionen bei Zinsswaps, wodurch das OCI auf 1,3 Millionen schrumpfte. Die ausstehenden Aktien stiegen nach der aktienbasierten Einlösung von Anleihen auf 32,9 Millionen.
Wesentliche Erkenntnisse:
- Das Umsatzwachstum bleibt in allen Segmenten solide.
- Die Umschuldung beseitigt die Fälligkeit 2025, verursachte jedoch eine hohe Einmalbelastung und eine verwässernde Aktienausgabe.
- Die Bilanzhebelwirkung und steigende Zinskosten belasten die künftigen Gewinne; die Dividenden werden derzeit aus dem Cashflow und nicht aus GAAP-Gewinnen gedeckt.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of | | (I.R.S. Employer |
incorporation or organization) | | Identification No.) |
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(Address of principal executive offices) | | (Zip Code) |
(
(Registrant’s telephone number, including area code)
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N/A |
(Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: |
| Trading Symbols |
| Name of each exchange on which registered: |
| | |||
| | | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer | ☐ | | ☒ | |
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Non-accelerated Filer | ☐ | | Smaller Reporting Company | |
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| | | Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes
As of July 24, 2025, there were
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INDEX
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| | Page |
|
| No. |
PART I—FINANCIAL INFORMATION | | |
| | |
Item 1. Financial Statements | | |
| | |
Consolidated Balance Sheets – June 30, 2025 (Unaudited) and December 31, 2024 | | 3 |
| | |
Consolidated Statements of Operations – Three and Six months ended June 30, 2025 and 2024 (Unaudited) | | 4 |
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Consolidated Statements of Comprehensive Income – Three and Six months ended June 30, 2025 and 2024 (Unaudited) | | 5 |
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Consolidated Statements of Stockholders’ Equity – Three and Six months ended June 30, 2025 and 2024 (Unaudited) | | 6 |
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Consolidated Statements of Cash Flows – Six months ended June 30, 2025 and 2024 (Unaudited) | | 8 |
| | |
Notes to Consolidated Financial Statements (Unaudited) | | 10 |
| | |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 42 |
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Item 3. Quantitative and Qualitative Disclosures About Market Risk | | 55 |
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Item 4. Controls and Procedures | | 55 |
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PART II—OTHER INFORMATION | | 55 |
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Item 1. Legal Proceedings | | 55 |
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Item 1A. Risk Factors | | 55 |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | | 56 |
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Item 3. Defaults Upon Senior Securities | | 56 |
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Item 4. Mine Safety Disclosures | | 56 |
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Item 5. Other Information | | 56 |
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Item 6. Exhibits | | 57 |
| | |
SIGNATURES | | 58 |
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PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CTO REALTY GROWTH, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
| | | | | | |
| | As of | ||||
|
| (Unaudited) |
| December 31, 2024 | ||
ASSETS | | | | | | |
Real Estate: | | | | | | |
Land, at Cost | | $ | | | $ | |
Building and Improvements, at Cost | | | | | | |
Other Furnishings and Equipment, at Cost | | | | | | |
Construction in Process, at Cost | | | | | | |
Total Real Estate, at Cost | | | | | | |
Less, Accumulated Depreciation | | | ( | | | ( |
Real Estate—Net | | | | | | |
Land and Development Costs | | | | | | |
Intangible Lease Assets—Net | | | | | | |
Investment in Alpine Income Property Trust, Inc. | | | | | | |
Commercial Loans and Investments | | | | | | |
Cash and Cash Equivalents | | | | | | |
Restricted Cash | | | | | | |
Refundable Income Taxes | | | - | | | |
Deferred Income Taxes—Net | | | | | | |
Other Assets—See Note 11 | | | | | | |
Total Assets | | $ | | | $ | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | |
Liabilities: | | | | | | |
Accounts Payable | | $ | | | $ | |
Accrued and Other Liabilities—See Note 17 | | | | | | |
Deferred Revenue—See Note 18 | | | | | | |
Intangible Lease Liabilities—Net | | | | | | |
Income Taxes Payable | | | | | | — |
Long-Term Debt—Net | | | | | | |
Total Liabilities | | | | | | |
Commitments and Contingencies—See Note 21 | | | | | | |
Stockholders’ Equity: | | | | | | |
Preferred Stock – | | | | | | |
Common Stock – | | | | | | |
Additional Paid-In Capital | | | | | | |
Retained Earnings | | | | | | |
Accumulated Other Comprehensive Income | | | | | | |
Total Stockholders’ Equity | | | | | | |
Total Liabilities and Stockholders’ Equity | | $ | | | $ | |
The accompanying notes are an integral part of these consolidated financial statements.
3
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CTO REALTY GROWTH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except share and per share data)
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | June 30, | | June 30, | | June 30, | | June 30, | ||||
|
| 2025 |
| 2024 |
| 2025 |
| 2024 | ||||
Revenues | | | | | | | | | | | | |
Income Properties | | $ | | | $ | | | $ | | | $ | |
Management Fee Income | | | | | | | | | | | | |
Interest Income From Commercial Loans and Investments | | | | | | | | | | | | |
Real Estate Operations | | | — | | | | | | — | | | |
Total Revenues | | | | | | | | | | | | |
Direct Cost of Revenues | | | | | | | | | | | | |
Income Properties | | | ( | | | ( | | | ( | | | ( |
Real Estate Operations | | | — | | | ( | | | — | | | ( |
Total Direct Cost of Revenues | | | ( | | | ( | | | ( | | | ( |
General and Administrative Expenses | | | ( | | | ( | | | ( | | | ( |
Provision for Impairment | | | — | | | ( | | | — | | | ( |
Depreciation and Amortization | | | ( | | | ( | | | ( | | | ( |
Total Operating Expenses | | | ( | | | ( | | | ( | | | ( |
Gain on Disposition of Assets | | | — | | | — | | | — | | | |
Loss on Extinguishment of Debt | | | ( | | | — | | | ( | | | — |
Other Gain (Loss) | | | ( | | | — | | | ( | | | |
Total Operating Income (Loss) | | | ( | | | | | | ( | | | |
Investment and Other Income (Loss) | | | ( | | | | | | ( | | | ( |
Interest Expense | | | ( | | | ( | | | ( | | | ( |
Income (Loss) Before Income Tax Benefit (Expense) | | | ( | | | | | | ( | | | |
Income Tax Benefit (Expense) | | | ( | | | ( | | | ( | | | |
Net Income (Loss) Attributable to the Company | | | ( | | | | | | ( | | | |
Distributions to Preferred Stockholders | | | ( | | | ( | | | ( | | | ( |
Net Income (Loss) Attributable to Common Stockholders | | $ | ( | | $ | ( | | $ | ( | | $ | |
| | | | | | | | | | | | |
Per Share Information—See Note 13: | | | | | | | | | | | | |
Basic and Diluted Net Income (Loss) Attributable to Common Stockholders | | $ | ( | | $ | ( | | $ | ( | | $ | |
| | | | | | | | | | | | |
Weighted Average Number of Common Shares | | | | | | | | | | | | |
Basic | | | | | | | | | | | | |
Diluted | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
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CTO REALTY GROWTH, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited, in thousands)
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | June 30, 2025 |
| June 30, 2024 |
| June 30, 2025 |
| June 30, 2024 | ||||
Net Income (Loss) Attributable to the Company | | $ | ( | | $ | | | $ | ( | | $ | |
Other Comprehensive Income (Loss): | | | | | | | | | | | | |
Cash Flow Hedging Derivative - Interest Rate Swaps | | | ( | | | | | | ( | | | |
Total Other Comprehensive Income (Loss) | | | ( | | | | | | ( | | | |
Total Comprehensive Income (Loss) | | $ | ( | | $ | | | $ | ( | | $ | |
The accompanying notes are an integral part of these consolidated financial statements.
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CTO REALTY GROWTH, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in thousands)
For the three months ended June 30, 2025:
| | | | | | | | | | | | | | | | | | |
| | Preferred Stock | | Common Stock | | Additional Paid-In Capital | | Retained Earnings | | Accumulated Other Comprehensive Income | | Stockholders' Equity | ||||||
Balance April 1, 2025 | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Net Loss Attributable to the Company | | | — | | | — | | | — | | | ( | | | — | | | ( |
Stock Repurchase | | | — | | | — | | | ( | | | — | | | — | | | ( |
Stock Issuance to Directors | | | — | | | — | | | | | | — | | | — | | | |
Stock Issuance, Settlement of 2025 Notes | | | — | | | | | | | | | — | | | — | | | |
Stock-Based Compensation Expense | | | — | | | — | | | | | | — | | | — | | | |
Preferred Stock Dividends Declared for the Period | | | — | | | — | | | — | | | ( | | | — | | | ( |
Common Stock Dividends Declared for the Period | | | — | | | — | | | — | | | ( | | | — | | | ( |
Other Comprehensive Loss | | | — | | | — | | | — | | | — | | | ( | | | ( |
Balance June 30, 2025 | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
For the three months ended June 30, 2024:
| | | | | | | | | | | | | | | | | | |
| | Preferred Stock | | Common Stock | | Additional Paid-In Capital | | Retained Earnings | | Accumulated Other Comprehensive Income | | Stockholders' Equity | ||||||
Balance April 1, 2024 | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Net Income Attributable to the Company | | | — | | | — | | | — | | | | | | — | | | |
Stock Issuance to Directors | | | — | | | — | | | | | | — | | | — | | | |
Issuance of Preferred Stock, Net of Underwriting Discount and Expenses | | | | | | — | | | | | | — | | | — | | | |
Stock Issuance, Net of Equity Issuance Costs | | | — | | | | | | | | | | | | — | | | |
Stock-Based Compensation Expense | | | — | | | — | | | | | | — | | | — | | | |
Preferred Stock Dividends Declared for the Period | | | — | | | — | | | — | | | ( | | | — | | | ( |
Common Stock Dividends Declared for the Period | | | — | | | — | | | — | | | ( | | | — | | | ( |
Other Comprehensive Income | | | — | | | — | | | — | | | — | | | | | | |
Balance June 30, 2024 | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
The accompanying notes are an integral part of these consolidated financial statements.
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CTO REALTY GROWTH, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)
(Unaudited, in thousands)
For the six months ended June 30, 2025:
| | | | | | | | | | | | | | | | | | |
| | Preferred Stock | | Common Stock | | Additional Paid-In Capital | | Retained Earnings | | Accumulated Other Comprehensive Income | | Stockholders' Equity | ||||||
Balance January 1, 2025 | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Net Loss Attributable to the Company | | | — | | | — | | | — | | | ( | | | — | | | ( |
Stock Repurchase | | | — | | | — | | | ( | | | — | | | — | | | ( |
Vested Restricted Stock and Performance Shares | | | — | | | | | | ( | | | — | | | — | | | ( |
Stock Issuance to Directors | | | — | | | — | | | | | | — | | | — | | | |
Payment of Equity Issuance Costs | | | — | | | — | | | ( | | | — | | | — | | | ( |
Stock Issuance, Settlement of 2025 Notes | | | — | | | | | | | | | — | | | — | | | |
Stock-Based Compensation Expense | | | — | | | — | | | | | | — | | | — | | | |
Preferred Stock Dividends Declared for the Period | | | — | | | — | | | — | | | ( | | | — | | | ( |
Common Stock Dividends Declared for the Period | | | — | | | — | | | — | | | ( | | | — | | | ( |
Other Comprehensive Loss | | | — | | | — | | | — | | | — | | | ( | | | ( |
Balance June 30, 2025 | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
For the six months ended June 30, 2024:
| | | | | | | | | | | | | | | | | | |
| | Preferred Stock | | Common Stock | | Additional Paid-In Capital | | Retained Earnings | | Accumulated Other Comprehensive Income | | Stockholders' Equity | ||||||
Balance January 1, 2024 | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
Net Income Attributable to the Company | | | — | | | — | | | — | | | | | | — | | | |
Stock Repurchase | | | — | | | — | | | ( | | | — | | | — | | | ( |
Vested Restricted Stock and Performance Shares | | | — | | | | | | ( | | | — | | | — | | | ( |
Stock Issuance to Directors | | | — | | | — | | | | | | — | | | — | | | |
Issuance of Preferred Stock, Net of Underwriting Discount and Expenses | | | | | | — | | | | | | — | | | — | | | |
Stock Issuance, Net of Equity Issuance Costs | | | — | | | | | | | | | | | | — | | | |
Stock-Based Compensation Expense | | | — | | | — | | | | | | — | | | — | | | |
Preferred Stock Dividends Declared for the Period | | | — | | | — | | | — | | | ( | | | — | | | ( |
Common Stock Dividends Declared for the Period | | | — | | | — | | | — | | | ( | | | — | | | ( |
Other Comprehensive Income | | | — | | | — | | | — | | | — | | | | | | |
Balance June 30, 2024 | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | |
The accompanying notes are an integral part of these consolidated financial statements.
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CTO REALTY GROWTH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
| | | | | | |
| | Six Months Ended | ||||
| | June 30, 2025 | | June 30, 2024 | ||
Cash Flow from Operating Activities: | | | | | | |
Net Income (Loss) Attributable to the Company | | $ | ( | | $ | |
Adjustments to Reconcile Net Income (Loss) Attributable to the Company to Net Cash Provided by Operating Activities: | | | | | | |
Depreciation and Amortization | | | | | ||
Amortization of Intangible Assets and Liabilities to Income Property Revenue | | | ( | | | |
Amortization of Deferred Financing Costs to Interest Expense | | | | | ||
Amortization of Discount on Convertible Debt | | | | | ||
Gain on Disposition of Real Estate and Intangible Lease Assets and Liabilities | | | — | | | ( |
Gain on Disposition of Subsurface Interests | | | — | | | ( |
Loss on Extinguishment of Debt | | | | | | — |
Provision for Impairment | | | — | | | |
Accretion of Commercial Loans and Investments Origination Fees | | | ( | | | ( |
Non-Cash Imputed Interest | | | ( | | | ( |
Deferred Income Taxes | | | ( | | | ( |
Unrealized Loss on Investment Securities | | | | | | |
Non-Cash Compensation | | | | | ||
Decrease (Increase) in Assets: | | | | | | |
Refundable Income Taxes | | | | | | |
Land and Development Costs | | | — | | | |
Mitigation Credits and Mitigation Credit Rights | | | — | | | |
Other Assets | | | ( | | | ( |
Increase (Decrease) in Liabilities: | | | | | | |
Accounts Payable | | | ( | | | ( |
Accrued and Other Liabilities | | | ( | | | ( |
Deferred Revenue | | | | | ||
Income Taxes Payable | | | | | — | |
Net Cash Provided By Operating Activities | | | | | ||
Cash Flow from Investing Activities: | | | | | | |
Acquisition of Real Estate and Intangible Lease Assets and Liabilities | | | ( | | | ( |
Investments in and Improvements to Real Estate | | | ( | | | ( |
Acquisition of Commercial Loans and Investments | | | ( | | | ( |
Proceeds from Disposition of Property, Plant, and Equipment, Net | | | — | | | |
Proceeds from Disposition of Subsurface Interests | | | — | | | |
Principal Payments Received on Commercial Loans and Investments | | | | | | |
Acquisition of Investment Securities | | | ( | | | ( |
Proceeds from the Sale of Investment Securities | | | | | | |
Net Cash Used In Investing Activities | | | ( | | | ( |
Cash Flow From Financing Activities: | | | | | | |
Proceeds from Long-Term Debt | | | | | ||
Payments on Long-Term Debt | | | ( | | | ( |
Cash Paid for Loan Fees | | | ( | | | ( |
Cash Proceeds from Common Stock Issuance | | | | | | |
Proceeds from Issuance of Preferred Stock, Net of Underwriting Discount and Expenses | | | — | | | |
Cash Used to Purchase Common and Preferred Stock | | | ( | | | ( |
Cash Paid for Vesting of Restricted Stock | | | ( | | | ( |
Proceeds from (Cash Paid for) Issuance of Common and Preferred Stock, Net | | | ( | | | |
Cash Paid for Premium Related to Settlement of 2025 Notes | | | ( | | | — |
Dividends Paid - Preferred Stock | | | ( | | | ( |
Dividends Paid - Common Stock | | | ( | | | ( |
Net Cash Provided By Financing Activities | | | | | ||
Net Decrease in Cash, Cash Equivalents and Restricted Cash | | | | | ( | |
Cash, Cash Equivalents and Restricted Cash, Beginning of Period | | | | | ||
Cash, Cash Equivalents and Restricted Cash, End of Period | | $ | | $ | ||
| | | | | | |
Reconciliation of Cash to the Consolidated Balance Sheets: | | | | | | |
Cash and Cash Equivalents | | $ | | $ | ||
Restricted Cash | | | | | ||
Total Cash | | $ | | $ | ||
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CTO REALTY GROWTH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited, in thousands)
| | | | | | |
| | Six Months Ended | ||||
| | June 30, 2025 | | June 30, 2024 | ||
Supplemental Disclosure of Cash Flow Information: | | | | | | |
Cash Paid for Taxes, Net of Refunds Received | | $ | | | $ | |
Cash Paid for Interest (1) | | $ | | | $ | |
| | | | | | |
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | | | | | | |
Unrealized Gain (Loss) on Cash Flow Hedges | | $ | ( | | $ | |
Common Stock Dividends Declared and Unpaid | | $ | | | $ | |
Principal Related to Settlement of 2025 Notes, Paid in Common Stock | | $ | | | $ | — |
Premium Related to Settlement of 2025 Notes, Paid in Common Stock | | $ | | | $ | — |
(1)
The accompanying notes are an integral part of these consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. DESCRIPTION OF BUSINESS
The terms “us,” “we,” “our,” and “the Company” as used in this report refer to CTO Realty Growth, Inc. together with our consolidated subsidiaries.
We are a publicly traded, self-managed equity REIT that focuses on the ownership, management, and repositioning of high-quality retail and mixed-use properties located primarily in what we believe to be faster growing, business-friendly markets exhibiting accommodative business tax policies, outsized relative job and population growth, and where retail demand exceeds supply. We have pursued our investment strategy by investing primarily through fee simple ownership of our properties, commercial loans and preferred equity.
As of June 30, 2025, we own and manage, sometimes utilizing third-party property management companies,
Management Services: A fee-based management business that is engaged in managing Alpine Income Property Trust, Inc. (“PINE”), as well as: (i) a portfolio of assets pursuant to the Portfolio Management Agreement (hereinafter defined) and (ii) Subsurface Interests (hereinafter defined) pursuant to the Subsurface Management Agreement (hereinafter defined), as further described in Note 5, “Management Services Business”.
Commercial Loans and Investments: A portfolio of
Real Estate Operations: During the year ended December 31, 2024, the Company sold its portfolio of subsurface mineral interests associated with approximately
Investment in PINE: Our business also includes our investment in PINE. As of June 30, 2025, the fair value of our investment totaled $
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Information
The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. These unaudited consolidated financial statements do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements, and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended
The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of results to be expected for the year ending December 31, 2025.
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Principles of Consolidation
The consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and other entities in which we have a controlling interest. Any real estate entities or properties included in the consolidated financial statements have been consolidated only for the periods that such entities or properties were owned or under control by us. All inter-company balances and transactions have been eliminated in the consolidated financial statements. As of June 30, 2025, the Company has an equity investment in PINE.
Segment Reporting
ASC Topic 280, Segment Reporting, establishes standards related to the manner in which enterprises report operating segment information. The Company operates in
Real Estate
The Company’s real estate assets are stated at cost, less accumulated depreciation and amortization. Such assets are depreciated on a straight-line basis over their estimated useful lives. Renewals and betterments are capitalized to the applicable property accounts. The cost of maintenance and repairs is expensed as incurred. The cost of property retired or otherwise disposed of, and the related accumulated depreciation or amortization, are removed from the accounts, and any resulting gain or loss is recorded in the Company’s consolidated statement of operations. The amount of depreciation of real estate, exclusive of amortization related to intangible assets, recognized for the three months ended June 30, 2025 and June 30, 2024, was $
Long-Lived Assets
The Company follows FASB ASC Topic 360-10, Property, Plant, and Equipment in conducting its impairment analyses. The Company reviews the recoverability of long-lived assets, including land and development costs, real estate held for sale, and property, plant, and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Examples of situations considered to be triggering events include: a substantial decline in operating cash flows during the period, a current or projected loss from operations, an income property not fully leased or leased at rates that are less than current market rates, and any other quantitative or qualitative events deemed significant by our management. Long-lived assets are evaluated for impairment by using an undiscounted cash flow approach, which considers future estimated capital expenditures. Impairment of long-lived assets is measured at fair value less cost to sell.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Among other factors, fluctuating market conditions that can exist in the national real estate markets and the volatility and uncertainty in the financial and credit markets make it possible that the estimates and assumptions, most notably those related to the Company’s investments in income properties, could change materially due to continued volatility in the real estate and financial markets, or as a result of a significant dislocation in those markets.
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Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, bank demand accounts, and money market accounts having original maturities of 90 days or less. The Company’s bank balances as of June 30, 2025 and December 31, 2024 include certain amounts over the Federal Deposit Insurance Corporation limits.
Restricted Cash
Restricted cash totaled $
Derivative Financial Instruments and Hedging Activity
The Company accounts for its cash flow hedging derivatives in accordance with FASB ASC Topic 815-20, Derivatives and Hedging. Depending upon the hedge’s value at each balance sheet date, the derivatives are included in either other assets or accrued and other liabilities on the consolidated balance sheet at their fair value. On the date each interest rate swap was entered into, the Company designated the derivatives as a hedge of the variability of cash flows to be paid related to the recognized long-term debt liabilities.
The Company documented the relationship between the hedging instruments and the hedged item, as well as its risk-management objective and strategy for undertaking the hedge transactions. At the hedges’ inception, the Company assessed whether the derivatives that are used in hedging the transactions are highly effective in offsetting changes in cash flows of the hedged items, and we have continued and will continue to do so on a quarterly basis.
Changes in fair value of the hedging instruments that are highly effective and designated and qualified as cash-flow hedges are recorded in other comprehensive income and loss, until earnings are affected by the variability in cash flows of the designated hedged items (see Note 16, “Interest Rate Swaps”).
Fair Value of Financial Instruments
The carrying amounts of the Company’s financial assets and liabilities including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued and other liabilities at June 30, 2025 and December 31, 2024, approximate fair value because of the short maturity of these instruments. The carrying value of the Company’s Credit Facility (hereinafter defined) as of June 30, 2025 and December 31, 2024, approximates current market rates for revolving credit arrangements with similar risks and maturities. The face value of the Company’s fixed rate commercial loans and investments, the 2026 Term Loan (hereinafter defined), the 2027 Term Loan (hereinafter defined), the 2028 Term Loan (hereinafter defined), the 2029 Term Loan (hereinafter defined), mortgage note, and convertible debt held as of June 30, 2025 and December 31, 2024 are measured at fair value based on current market rates for financial instruments with similar risks and maturities (see Note 8, “Fair Value of Financial Instruments”).
Fair Value Measurements
The Company’s estimates of fair value of financial and non-financial assets and liabilities is based on the framework established by U.S. GAAP. The framework specifies a hierarchy of valuation inputs which was established to increase consistency, clarity and comparability in fair value measurements and related disclosures. U.S. GAAP describes a fair value hierarchy based upon three levels of inputs that may be used to measure fair value, two of which are considered observable and one that is considered unobservable. The following describes the three levels:
| ● | Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities. |
| ● | Level 2 – Valuation is based upon inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
| ● | Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market |
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| participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques. |
Recognition of Interest Income from Commercial Loans and Investments
Interest income on commercial loans and investments includes interest payments made by the borrower and the accretion of purchase discounts and loan origination fees, offset by the amortization of loan costs. Interest payments are accrued based on the actual coupon rate and the outstanding principal balance, and purchase discounts and loan origination fees are accreted into income using the effective yield method, adjusted for prepayments.
Accounts Receivable
Accounts receivable related to income properties, which are classified in other assets on the consolidated balance sheets, primarily consist of accrued tenant reimbursable expenses and other tenant receivables. Receivables related to income property tenants totaled $
The collectability of the aforementioned receivables shall be considered and adjusted through an allowance for doubtful accounts which is included in income property revenue on the consolidated statements of operations. As of June 30, 2025 and December 31, 2024, the Company’s allowance for doubtful accounts totaled $
Purchase Accounting for Acquisitions of Real Estate Subject to a Lease
Investments in real estate are carried at cost less accumulated depreciation and impairment losses, if any. The cost of investments in real estate reflects their purchase price or development cost. We evaluate each acquisition transaction to determine whether the acquired asset meets the definition of a business. Under ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, an acquisition does not qualify as a business when there is no substantive process acquired or substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets or the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay. Transaction costs related to acquisitions that are asset acquisitions are capitalized as part of the cost basis of the acquired assets, while transaction costs for acquisitions that are deemed to be acquisitions of a business are expensed as incurred. Improvements and replacements are capitalized when they extend the useful life or improve the productive capacity of the asset. Costs of repairs and maintenance are expensed as incurred.
In accordance with FASB guidance, the fair value of the real estate acquired with in-place leases is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, the value of in-place leases, and the value of leasing costs, based in each case on their relative fair values. In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded as other assets or liabilities based on the present value. The capitalized above-market lease values are amortized as a reduction of rental income over the remaining terms of the respective leases. The capitalized below-market lease values are amortized as an increase to rental income over the initial term unless management believes the lease includes bargain renewal options that are likely to be exercised, in which case the Company includes such renewal periods in the amortization period utilized. The Company considers both qualitative and quantitative factors in considering if a lease contains a bargain renewal option and the likelihood of a tenant exercising such option. The value of in-place leases and leasing costs are amortized to expense over the remaining non-cancelable periods of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be written off.
The Company incurs costs related to the development and leasing of its properties. Such costs include, but are not limited to, tenant improvements, leasing commissions, rebranding, facility expansion and other capital improvements, and are included in construction in progress during the development period. When a construction project is considered to be substantially complete, the capitalized costs are reclassified to the appropriate real estate asset and depreciation begins. The Company assesses the level of construction activity to determine the amount, if any, of interest expense to be capitalized to the underlying construction projects.
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Sales of Real Estate
When income properties are disposed of, the related cost basis of the real estate, intangible lease assets, and intangible lease liabilities, net of accumulated depreciation and/or amortization, and any accrued straight-line rental income balance for the underlying operating leases are removed, and gains or losses from the dispositions are reflected in net income within gain (loss) on disposition of assets. In accordance with the FASB guidance, gains or losses on sales of real estate are generally recognized using the full accrual method.
Gains and losses on land sales, in addition to the sale of Subsurface Interests and mitigation credits, are accounted for as required by FASB ASC Topic 606, Revenue from Contracts with Customers. The Company recognizes revenue from such sales when the Company transfers the promised goods in the contract based on the transaction price allocated to the performance obligations within the contract. As market information becomes available, the underlying cost basis is analyzed and recorded at the lower of cost or market.
Income Taxes
The Company elected to be taxed as a REIT for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”) commencing with its taxable year ended December 31, 2020. The Company believes that, commencing with such taxable year, it has been organized and has operated in such a manner as to qualify for taxation as a REIT under the U.S. federal income tax laws. The Company intends to continue to operate in such a manner. As a REIT, the Company will be subject to U.S. federal and state income taxation at corporate rates on its net taxable income; the Company, however, may claim a deduction for the amount of dividends paid to its stockholders. Amounts distributed as dividends by the Company will be subject to taxation at the stockholder level only. While the Company must distribute at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, to qualify as a REIT, the Company intends to distribute all of its net taxable income. The Company is allowed certain other non-cash deductions or adjustments, such as depreciation expense, when computing its REIT taxable income and distribution requirement. These deductions permit the Company to reduce its dividend payout requirement under U.S. federal income tax laws. Certain states may impose minimum franchise taxes. To comply with certain REIT requirements, the Company holds certain of its non-REIT assets and operations through a TRS and subsidiaries of a TRS, which are subject to applicable U.S. federal, state and local corporate income tax on their taxable income. As of January 1, 2024, the Company owns
The Company uses the asset and liability method to account for income taxes for the Company’s TRS. Deferred income taxes result primarily from the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes (see Note 20, “Income Taxes”). In June 2006, the FASB issued additional guidance, which clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements included in income taxes. The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The interpretation also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, and disclosure and transition. In accordance with FASB guidance included in income taxes, the Company has analyzed its various federal and state filing positions and believes that its income tax filing positions and deductions are well documented and supported. Additionally, the Company believes that its accruals for tax liabilities are adequate. Therefore,
Concentration of Credit Risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents.
The Company also has certain properties within our income property portfolio that make up more than 10% of our geographic concentration and/or revenues, as described below:
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| ● | Square Footage Concentrations. As of June 30, 2025, a total of |
| ● | Tenant Concentrations. We did not have any tenants that accounted for more than 10% of total revenues during the six months ended June 30, 2025 or 2024. |
| ● | Base Rent Concentrations. A total of |
Recently Issued Accounting Standards
Income Taxes. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires annual disclosure of specific categories in the rate reconciliation and the provision of additional information for reconciling items that meet a quantitative threshold within the rate reconciliation. In addition, ASU 2023-09 requires annual disclosure of income taxes paid disaggregated by federal, state and foreign jurisdictions as well as individual jurisdictions in which income taxes paid is equal to or greater than 5 percent of total income taxes paid. ASU 2023-09 is
NOTE 3. INCOME PROPERTIES
Leasing revenue consists of long-term rental revenue from retail, office, and commercial income properties, which is recognized as earned, using the straight-line method over the life of each lease. Lease payments below include straight-line base rental revenue as well as the non-cash accretion of above and below market lease amortization. The variable lease payments are primarily comprised of percentage rents, reimbursements from tenants for common area maintenance, insurance, real estate taxes, other operating expenses, and termination fee payments.
The components of leasing revenue are as follows (in thousands):
| | | | | | | | | | | |
| Three Months Ended | | Six Months Ended | ||||||||
| June 30, 2025 | | June 30, 2024 | | June 30, 2025 | | June 30, 2024 | ||||
Leasing Revenue | | | | | | | | | | | |
Lease Payments | $ | | | $ | | | $ | | | $ | |
Variable Lease Payments | | | | | | | | | | | |
Total Leasing Revenue | $ | | | $ | | | $ | | | $ | |
Minimum future base rental receipts under non-cancelable operating leases, excluding percentage rent and other lease payments that are not fixed and determinable, having remaining terms in excess of one year subsequent to June 30, 2025, are summarized as follows (in thousands):
| | | |
Year Ending December 31, |
| Amounts | |
Remainder of 2025 | | $ | |
2026 | | | |
2027 | | | |
2028 | | | |
2029 | | | |
2030 | | | |
2031 and Thereafter (Cumulative) | | | |
Total | | $ | |
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2025 Acquisitions. During the six months ended June 30, 2025, the Company acquired Ashley Park, a multi-tenant income property located in Newnan, GA, for a purchase price of $
2025 Dispositions.
2024 Acquisitions. During the six months ended June 30, 2024, the Company acquired
| ● | The Marketplace at Seminole Towne Center, a multi-tenant income property located in Sanford, Florida, for a purchase price of $ |
| ● |
| ● | A vacant land parcel, for future development, within the previously acquired West Broad Village property, located in the Short Pump submarket of Richmond, Virginia, for a purchase price of $ |
Of the aggregate $
2024 Dispositions. During the six months ended June 30, 2024, the Company sold
NOTE 4. COMMERCIAL LOANS AND INVESTMENTS
Our investments in commercial loans or similarly structured investments, such as preferred equity, mezzanine loans or other subordinated debt, have been and are expected to continue to be secured by real estate or the borrower’s pledge of its ownership interest in the entity that owns the real estate. The investments are associated with commercial real estate located in the United States and its territories, and are current or performing with either a fixed or floating rate. Some of these loans may be syndicated in either a pari-passu or senior/subordinated structure. Commercial first mortgage loans generally provide for a higher recovery rate due to their senior position in the underlying collateral. Commercial mezzanine loans are typically secured by a pledge of the borrower’s equity ownership in the underlying commercial real estate. Unlike a mortgage, a mezzanine loan is not secured by a lien on the property. An investor’s rights in a mezzanine loan are usually governed by an intercreditor agreement that provides holders with the rights to cure defaults and exercise control on certain decisions of any senior debt secured by the same commercial property.
2025 Activity. During the six months ended June 30, 2025,
2024 Activity. During the six months ended June 30, 2024, the Company originated
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as of June 30, 2024. During the six months ended June 30, 2024, the Company received $
Other Activity. Certain commercial loans and investments outstanding as of June 30, 2025 required determinations, at origination, related to variable interest entity matters as described herein:
| ● | Series A Preferred Investment. On July 11, 2024, the Company funded $ |
| ● | Watters Creek Investment. On April 7, 2022, the Company entered into a preferred equity agreement to provide $ |
The Company’s commercial loans and investments were comprised of the following at June 30, 2025 (in thousands):
| | | | | | | | | | | | | | | |
Description |
| Date of Investment |
| Maturity Date |
| Original Face Amount |
| Current Face Amount |
| Carrying Value |
| Coupon Rate | |||
Preferred Investment – Watters Creek – Allen, TX | | April 2022 | | April 2026 | | $ | | | $ | | | $ | | | |
Mortgage Note – Founders Square – Dallas, TX | | March 2023 | | March 2026 | | | | | | | | | | | |
Promissory Note – Main Street – Daytona Beach, FL | | June 2023 | | May 2033 | | | | | | | | | | | |
Series A Preferred Investment | | July 2024 | | July 2029 | | | | | | | | | | | |
Mortgage Note - Rivana - Herndon, VA | | September 2024 | | September 2026 | | | | | | | | | | | |
Construction Loan - Whole Foods - Forsyth, GA | | November 2024 | | May 2027 | | | | | | | | | | | |
| | | | | | $ | | | $ | | | $ | | | |
CECL Reserve | | | | | | | | | | | | | ( | | |
Total Commercial Loans and Investments | | | | | | | | | | | | $ | | | |
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The Company’s commercial loans and investments were comprised of the following at December 31, 2024 (in thousands):
| | | | | | | | | | | | | | | |
Description |
| Date of Investment |
| Maturity Date |
| Original Face Amount |
| Current Face Amount |
| Carrying Value |
| Coupon Rate | |||
Preferred Investment – Watters Creek – Allen, TX | | April 2022 | | April 2025 | | $ | | | $ | | | $ | | | |
Mortgage Note – Founders Square – Dallas, TX | | March 2023 | | March 2026 | | | | | | | | | | | |
Promissory Note – Main Street – Daytona Beach, FL | | June 2023 | | May 2033 | | | | | | | | | | | |
Construction Loan - Hypoluxo - Lake Worth, FL | | March 2024 | | June 2025 | | | | | | | | | | | |
Series A Preferred Investment | | July 2024 | | July 2029 | | | | | | | | | | | |
Mortgage Note - Rivana - Herndon, VA | | September 2024 | | September 2026 | | | | | | | | | | | |
Construction Loan - Whole Foods - Forsyth, GA | | November 2024 | | May 2027 | | | | | | | | | | | |
| | | | | | $ | | | $ | | | $ | | | |
CECL Reserve | | | | | | | | | | | | | ( | | |
Total Commercial Loans and Investments | | | | | | | | | | | | $ | | | |
The carrying value of the commercial loans and investments portfolio at June 30, 2025 and December 31, 2024 consisted of the following (in thousands):
| | | | | | |
| | As of | ||||
|
| June 30, 2025 |
| December 31, 2024 | ||
Current Face Amount | | $ | | | $ | |
Unaccreted Origination Fees | | | ( | | | ( |
CECL Reserve | | | ( | | | ( |
Total Commercial Loans and Investments | | $ | | | $ | |
NOTE 5. MANAGEMENT SERVICES BUSINESS
The Company’s management fee income is within the scope of FASB ASC Topic 606, Revenue from Contracts with Customers. Management fee income is recognized as revenue over time, over the period the services are performed.
Alpine Income Property Trust. Pursuant to the Company’s management agreement with PINE, the Company generates a base management fee equal to
During the three months ended June 30, 2025 and 2024, the Company earned management fee revenue from PINE totaling $
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The following table represents amounts due from PINE as of June 30, 2025 and December 31, 2024 which are included in other assets on the consolidated balance sheets (in thousands):
| | | | | | |
| | As of | ||||
Description |
| June 30, 2025 | | December 31, 2024 | ||
Management Services Fee Due From PINE | | $ | | | $ | |
Dividend Receivable | | | | | | |
Other | | | ( | | | |
Total | | $ | | | $ | |
On November 26, 2019, as part of PINE’s IPO, the Company sold PINE
On October 26, 2021, the Board authorized the purchase by the Company of up to $
On February 16, 2023, the Board cancelled the Prior PINE Share Purchase Authorization and authorized the purchase by the Company of up to $
On December 12, 2023, the Board authorized the purchase by the Company of up to $
As of June 30, 2025, CTO owns, in the aggregate,
Portfolio Management Agreement. On December 4, 2023, the Company entered into an asset management agreement with a third party to manage a portfolio of multi-tenant and single-tenant assets (the “Portfolio Management Agreement”). Although the Company has no direct relationship with the third party, PINE is a lender to the third-party pursuant to a mortgage note originated by PINE which is secured by the portfolio. The Company receives (or expects to receive) asset management fees, disposition management fees, leasing commissions, and other fees related to the Company’s management and administration of the portfolio pursuant to the Portfolio Management Agreement. The Company also entered into a revenue sharing agreement with PINE whereby PINE will receive the portion of fees earned by the Company under the Portfolio Management Agreement which are attributable to the single tenant properties within the portfolio. Pursuant to the Portfolio Management Agreement, which is included in management fee income on the Company’s consolidated statements of operations, the Company recognized $
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Asset Management Agreement. On February 16, 2024, the Company entered into the Subsurface Management Agreement with a third party in conjunction with the sale of the Company’s remaining Subsurface Interests as further described in Note 6, “Real Estate Operations” below. The Company receives management and other fees pursuant to the Subsurface Management Agreement. The Company recognized less than $
NOTE 6. REAL ESTATE OPERATIONS
Real Estate Operations
Land and development costs at June 30, 2025 and December 31, 2024 were as follows (in thousands):
| | | | | | |
| | As of | ||||
|
| June 30, 2025 |
| December 31, 2024 | ||
Land and Development Costs | | $ | | | $ | |
Total Land and Development Costs | | $ | | | $ | |
Subsurface Interests. The Company sold its remaining
The Company historically released surface entry rights or other rights upon request of a surface owner for a negotiated release fee typically based on a percentage of the surface value. Cash payments for the release of surface entry rights for the six months ended June 30, 2024 totaled $
Mitigation Credits. Revenues and the cost of sales of mitigation credit sales are reported as revenues from, and direct costs of, real estate operations, respectively, in the consolidated statements of operations. During the six months ended June 30, 2024,
NOTE 7. INVESTMENT SECURITIES
As of June 30, 2025, the Company owns, in the aggregate and on a fully diluted basis,
The Company calculates the unrealized gain or loss based on the closing stock price of PINE at each respective balance sheet date. The unrealized, non-cash gains and losses resulting from the changes in the closing stock price of PINE are included in investment and other income (loss) in the accompanying consolidated statements of operations.
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The Company’s available-for-sale securities as of June 30, 2025 and December 31, 2024 are summarized below (in thousands):
| | | | | | | | | | | | |
|
| Cost |
| Unrealized Gains in |
| Unrealized |
| Estimated | ||||
June 30, 2025 | | | | | | | | | | | | |
Common Stock | | $ | | | $ | — | | $ | ( | | $ | |
Operating Units | | | | | | — | | | ( | | | |
Total Equity Securities | | $ | | | $ | — | | $ | ( | | $ | |
| | | | | | | | | | | | |
December 31, 2024 | | | | | | | | | | | | |
Common Stock | | $ | | | $ | — | | $ | ( | | $ | |
Operating Units | | | | | | — | | | ( | | | |
Total Equity Securities | | $ | | | $ | — | | $ | ( | | $ | |
NOTE 8. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying value and estimated fair value of the Company’s financial instruments not carried at fair value on the consolidated balance sheets at June 30, 2025 and December 31, 2024 (in thousands):
| | | | | | | | | | | | |
| | June 30, 2025 | | December 31, 2024 | ||||||||
|
| Carrying Value |
| Estimated Fair Value |
| Carrying Value |
| Estimated Fair Value | ||||
Cash and Cash Equivalents - Level 1 | | $ | | | $ | | | $ | | | $ | |
Restricted Cash - Level 1 | | $ | | | $ | | | $ | | | $ | |
Commercial Loans and Investments - Level 2 | | $ | | | $ | | | $ | | | $ | |
Long-Term Debt - Level 2 | | $ | | | $ | | | $ | | | $ | |
To determine estimated fair values of the financial instruments listed above, market rates of interest, which include credit assumptions, were used to discount contractual cash flows. The estimated fair values are not necessarily indicative of the amount the Company could realize on disposition of the financial instruments. The use of different market assumptions or estimation methodologies could have a material effect on the estimated fair value amounts.
| | | | | | | | | | | | |
| | | | | Fair Value at Reporting Date Using | |||||||
| | Fair Value |
| Quoted Prices in Active Markets for Identical Assets |
| Significant Other Observable Inputs |
| Significant Unobservable Inputs | ||||
June 30, 2025 | | | | | | | | | | | | |
Cash Flow Hedge - 2026 Term Loan Interest Rate Swaps | | $ | |
| $ | — |
| $ | |
| $ | — |
Cash Flow Hedge - 2027 Term Loan Interest Rate Swaps | | $ | |
| $ | — |
| $ | |
| $ | — |
Cash Flow Hedge - 2028 Term Loan Interest Rate Swaps | | $ | ( |
| $ | — |
| $ | ( |
| $ | — |
Cash Flow Hedge - 2029 Term Loan Interest Rate Swaps | | $ | |
| $ | — |
| $ | |
| $ | — |
Cash Flow Hedge - Credit Facility Interest Rate Swaps | | $ | ( |
| $ | — |
| $ | ( |
| $ | — |
Investment Securities | | $ | |
| $ | |
| $ | — |
| $ | — |
December 31, 2024 | | | | | | | | | | | | |
Cash Flow Hedge - 2026 Term Loan Interest Rate Swaps | | $ | |
| $ | — |
| $ | |
| $ | — |
Cash Flow Hedge - 2027 Term Loan Interest Rate Swaps | | $ | |
| $ | — |
| $ | |
| $ | — |
Cash Flow Hedge - 2028 Term Loan Interest Rate Swaps | | $ | |
| $ | — |
| $ | |
| $ | — |
Cash Flow Hedge - 2029 Term Loan Interest Rate Swaps | | $ | | | $ | — | | $ | | | $ | — |
Cash Flow Hedge - Credit Facility Interest Rate Swaps | | $ | |
| $ | — | | $ | | | $ | — |
Investment Securities | | $ | |
| $ | |
| $ | — |
| $ | — |
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NOTE 9. INTANGIBLE ASSETS AND LIABILITIES
Intangible assets and liabilities consist of the value of above-market and below-market leases, the value of in-place leases, and the value of leasing costs, based in each case on their fair values. The gross values of certain intangible lease assets and liabilities that were fully amortized as of December 31, 2024, and the related accumulated amortization, were adjusted in the disclosure below. There was no impact to Intangible Lease Assets-Net or Intangible Lease Liabilities-Net as reported in the consolidated balance sheets as of December 31, 2024 as a result of the disclosure adjustment.
| | | | | | |
| | As of | ||||
|
| June 30, |
| December 31, | ||
Intangible Lease Assets: | | | | | | |
Value of In-Place Leases | | $ | | | $ | |
Value of Above Market In-Place Leases | | | | | | |
Value of Intangible Leasing Costs | | | | | | |
Sub-total Intangible Lease Assets | | | | | | |
Accumulated Amortization | | | ( | | | ( |
Sub-total Intangible Lease Assets—Net | | | | | | |
Intangible Lease Liabilities: | | | | | | |
Value of Below Market In-Place Leases | | | ( | | | ( |
Sub-total Intangible Lease Liabilities | | | ( | | | ( |
Accumulated Amortization | | | | | | |
Sub-total Intangible Lease Liabilities—Net | | | ( | | | ( |
Total Intangible Assets and Liabilities—Net | | $ | | | $ | |
The following table reflects the net amortization of intangible assets and liabilities during the three and six months ended June 30, 2025 and 2024 (in thousands):
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | June 30, | | June 30, | | June 30, | | June 30, | ||||
Amortization Expense | | $ | | | $ | | | $ | | | $ | |
Accretion to Income Properties Revenue | | | ( | | | | | | ( | | | |
Net Amortization of Intangible Assets and Liabilities | | $ | | | $ | | | $ | | | $ | |
Amortization Expense for the three and six months ended June 30, 2025 includes $
The estimated future amortization expense (income) related to net intangible assets and liabilities is as follows (in thousands):
| | | | | | | | | |
Year Ending December 31, |
| Future Amortization Amount |
| Future Accretion to Income Property Revenue |
| Net Future Amortization of Intangible Assets and Liabilities | |||
Remainder of | | $ | | | $ | ( | | $ | |
2026 | | | | | | ( | | | |
2027 | | | | | | ( | | | |
2028 | | | | | | ( | | | |
2029 | | | | | | ( | | | |
2030 | | | | | | ( | | | |
2031 and Thereafter | | | | | | ( | | | |
Total | | $ | | | $ | ( | | $ | |
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As of June 30, 2025, the weighted average amortization period of total intangible assets and liabilities was
NOTE 10. PROVISION FOR IMPAIRMENT
Income Properties. The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The fair value of long-lived assets required to be assessed for impairment is determined on a non-recurring basis using Level 3 inputs in the fair value hierarchy. These Level 3 inputs may include, but are not limited to, executed purchase and sale agreements on specific properties, third party valuations, discounted cash flow models, and other model-based techniques.
There were
Commercial Loans and Investments. Pursuant to ASC 326, Financial Instruments - Credit Losses, the Company measures and records a provision for current expected credit losses (“CECL”) each time a new investment is made or a loan is repaid, as well as if changes to estimates occur during a quarterly measurement period. We are unable to use historical data to estimate expected credit losses, as we have incurred no losses to date. Management utilizes a loss-rate method and considers macroeconomic factors to estimate its CECL allowance, which is calculated based on the amortized cost basis of the commercial loans.
NOTE 11. OTHER ASSETS
Other assets consisted of the following as of June 30, 2025 and December 31, 2024 (in thousands):
| | | | | | |
| | As of | ||||
|
| June 30, 2025 |
| December 31, 2024 | ||
Income Property Tenant Receivables, Net of Allowance for Doubtful Accounts (1) | | $ | | | $ | |
Income Property Straight-line Rent Adjustment | | | | | | |
Income Property Leasing Commissions and Costs, Net | | | | | | |
Operating Leases - Right-of-Use Asset | | | | | | |
Cash Flow Hedge - Interest Rate Swap | | | | | | |
Infrastructure Reimbursement Receivables | | | | | | |
Prepaid Expenses, Deposits, and Other | | | | | | |
Due from Alpine Income Property Trust, Inc. | | | | | | |
Financing Costs, Net of Accumulated Amortization | | | | | | |
Total Other Assets | | $ | | | $ | |
(1) | Allowance for doubtful accounts was $ |
NOTE 12. EQUITY
SHELF REGISTRATION
On October 11, 2022, the Company filed a shelf registration statement on Form S-3, relating to the registration and potential issuance of its common stock, preferred stock, debt securities, warrants, rights, and units with a maximum aggregate offering price of up to $
On October 16, 2024, the Company filed a new shelf registration statement on Form S-3, relating to the registration and potential issuance of its common stock, preferred stock, debt securities, warrants, rights, and units with a maximum aggregate offering price of up to $
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Commission declared the 2024 Registration Statement effective on November 12, 2024. The 2022 Registration Statement was terminated concurrently with the effectiveness of the 2024 Registration Statement.
EQUITY OFFERING
On December 5, 2022, the Company completed a follow-on public offering of
ATM PROGRAM
On April 30, 2021, the Company implemented a $
On October 28, 2022, the Company implemented a $
In the aggregate, under the 2021 ATM Program and 2022 ATM Program, during the year ended December 31, 2022,
the Company sold
On November 12, 2024, the Company implemented a $
The Company was not active under the 2024 ATM Program during the six months ended June 30, 2025. As of June 30, 2025, $
PREFERRED STOCK
On June 28, 2021, the Company priced a public offering of
discount and expenses.
On April 4, 2024, the Company priced a public offering of
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11, 2024,
On August 23, 2024, the Company implemented a $
The Series A Preferred Stock ranks senior to the Company’s common stock with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Company. The Series A Preferred Stock has no maturity date and will remain outstanding unless redeemed.
The Series A Preferred Stock is not redeemable by the Company prior to July 6, 2026 except under limited circumstances intended to preserve the Company’s qualification as a REIT for U.S. federal income tax purposes or upon the occurrence of a change of control, as defined in the Articles Supplementary designating the Series A Preferred Stock (the “Articles Supplementary”). Upon such change in control, the Company may redeem, at its election, the Series A Preferred Stock at a redemption price of $
See Note 14, “Share Repurchases” for the Company’s Series A Preferred Stock repurchase activity.
DIVIDENDS
The Company elected to be taxed as a REIT for U.S. federal income tax purposes under the Code commencing with its taxable year ended December 31, 2020. In order to maintain its qualification as a REIT, the Company must annually distribute, at a minimum, an amount equal to 90% of its taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, and must distribute 100% of its taxable income (including net capital gains) to eliminate U.S. federal income taxes payable by the Company. Because taxable income differs from cash flow from operations due to non-cash revenues and expenses (such as depreciation and other items), in certain circumstances, the Company may generate operating cash flow in excess of its dividends, or alternatively, may need to make dividend payments in excess of operating cash flows.
The following table outlines dividends declared and paid for the Series A Preferred Stock and the Company’s common stock during the three and six months ended June 30, 2025 and 2024 (in thousands, except per share data):
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
|
| June 30, |
| June 30, |
| June 30, |
| June 30, | ||||
Series A Preferred Stock | | | | | | | | | | | | |
Dividends | | $ | | | $ | | | $ | | | $ | |
Per Share | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
Common Stock | | | | | | | | | | | | |
Dividends | | $ | | | $ | | | $ | | | $ | |
Per Share | | $ | | | $ | | | $ | | | $ | |
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NOTE 13. COMMON STOCK AND EARNINGS PER SHARE
Basic earnings per common share is computed by dividing net income attributable to common stockholders during the period by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is based on the assumption of the vesting of restricted stock at the beginning of each period using the treasury stock method at average cost for the periods. Effective as of January 1, 2022, diluted earnings per common share also reflects the 2025 Notes (hereinafter defined) on an if-converted basis.
The following is a reconciliation of basic and diluted earnings per common share for each of the periods presented (in thousands, except share and per share data):
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
|
| June 30, |
| June 30, |
| June 30, |
| June 30, | ||||
Basic and Diluted Earnings: | | | | | | | | | | | | |
Net Income (Loss) Attributable to Common Stockholders, Used in Basic EPS | | $ | ( | | $ | ( | | $ | ( | | $ | |
Add Back: Effect of Dilutive Interest Related to 2025 Notes (1) | | | — | | | — | | | — | | | — |
Net Income (Loss) Attributable to Common Stockholders, Used in Diluted EPS | | $ | ( | | $ | ( | | $ | ( | | $ | |
| | | | | | | | | | | | |
Basic and Diluted Shares: | | | | | | | | | | | | |
Weighted Average Shares Outstanding, Basic | | | | | | | | | | | | |
Common Shares Applicable to Unvested Restricted Stock Using the Treasury Stock Method | | | | | | | | | | | | |
Common Shares Applicable to Dilutive Effect of 2025 Notes (2) | | | — | | | — | | | — | | | — |
Weighted Average Shares Outstanding, Diluted | | | | | | | | | | | | |
| | | | | | | | | | | | |
Per Share Information: | | | | | | | | | | | | |
Net Income (Loss) Attributable to Common Stockholders | | | | | | | | | | | | |
Basic and Diluted | | $ | ( | | $ | ( | | $ | ( | | $ | |
(1) | The 2025 Notes were settled during the three and six months ended June 30, 2025. As applicable, includes interest expense, amortization of discount, amortization of fees, and other changes in net income or loss that would result from the assumed conversion of the 2025 Notes to derive FFO (as defined herein) effective January 1, 2022 due to the implementation of ASU 2020-06 which requires presentation on an if-converted basis. For the three and six months ended June 30, 2025, a total of $ |
(2) | The 2025 Notes were settled during the three and six months ended June 30, 2025. During the three and six months ended June 30, 2025, the Company issued |
There were
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NOTE 14. SHARE REPURCHASES
COMMON STOCK REPURCHASE PROGRAM
In February 2020, the Company’s Board approved a $
On February 16, 2023, the Company’s Board of Directors approved a common stock repurchase program (the “February 2023 $
On April 25, 2023, the Company’s Board of Directors approved a common stock repurchase program, (the “April 2023 $
On December 12, 2023, the Company’s Board of Directors approved a common stock repurchase program, which is expected to be in effect until the approved dollar amount has been used to repurchase shares (the “December 2023 $
SERIES A PREFERRED STOCK REPURCHASE PROGRAM
On February 16, 2023, the Company’s Board of Directors approved a Series A Preferred Stock repurchase program, which is expected to be in effect until the approved dollar amount has been used to repurchase shares (the “Series A Preferred Stock Repurchase Program”). Pursuant to the Series A Preferred Stock Repurchase Program, the Company may repurchase shares of its Series A Preferred Stock for a total purchase price of up to $
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year ended December 31, 2023, the Company repurchased
NOTE 15. LONG-TERM DEBT
As of June 30, 2025, the Company’s outstanding indebtedness, at face value, was as follows (in thousands):
| | | | | | | | | | | |
| Face Value Debt |
| Maturity Date |
| Interest Rate |
| Wtd. Avg. Rate | ||||
Credit Facility (1) | $ | | | January 2027 | | | SOFR + | | | ||
2026 Term Loan (2) | | | | March 2026 | | | SOFR + | | | ||
2027 Term Loan (3) | | | | January 2027 | | | SOFR + | | | ||
2028 Term Loan (4) | | | | January 2028 | | | SOFR + | | | ||
2029 Term Loan (5) | | | | September 2029 | | | SOFR + | | | ||
Mortgage Note Payable | | | | August 2026 | | | | | |||
Total Long-Term Face Value Debt | $ | | | | | | | | | | |
(1) | The Company utilized interest rate swaps on $ |
(2) The Company utilized interest rate swaps on the $
(3) | The Company utilized interest rate swaps on the $ |
(4) | The Company utilized interest rate swaps on the $ |
(5) | The Company utilized interest rate swaps on the $ |
Credit Facility. The Credit Facility, with Bank of Montreal (“BMO”) as the administrative agent for the lenders thereunder, is unsecured with regard to our income property portfolio but is guaranteed by certain wholly owned subsidiaries of the Company. The Credit Facility bank group is led by BMO and also includes Truist Bank and Wells Fargo. On September 7, 2017, the Company executed the second amendment and restatement of the Credit Facility (the “2017 Amended Credit Facility” and, as amended, the “Credit Agreement”). As a result of the March 2021 Revolver Amendment and the Eighth Amendment, both as defined below, The Huntington National Bank, PNC Bank, National Association, and Regions Bank, were added as lenders to the Company’s Credit Facility.
On May 24, 2019, the Company executed the second amendment to the 2017 Amended Credit Facility (the “May 2019 Revolver Amendment”). As a result of the May 2019 Revolver Amendment, the Credit Facility had a total borrowing capacity of $
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On November 26, 2019, the Company entered into the third amendment to the 2017 Amended Credit Facility (the “November 2019 Revolver Amendment”), which further amends the 2017 Amended Credit Facility. The November 2019 Revolver Amendment included, among other things, an adjustment of certain financial maintenance covenants, including a temporary reduction of the minimum fixed charge coverage ratio to allow the Company to redeploy the proceeds received from the sale of certain income properties to PINE, and an increase in the maximum amount the Company may invest in stock and stock equivalents of real estate investment trusts to allow the Company to invest in PINE’s common stock and OP Units.
On July 1, 2020, the Company entered into the fourth amendment to the 2017 Amended Credit Facility (the “July 2020 Revolver Amendment”) whereby the tangible net worth covenant was adjusted to be more reflective of market terms. The July 2020 Revolver Amendment was effective as of March 31, 2020.
On November 12, 2020, the Company entered into the fifth amendment to the 2017 Amended Credit Facility (the “November 2020 Revolver Amendment”). The November 2020 Revolver Amendment provided that, among other things, (i) the Company must comply with certain adjusted additional financial maintenance requirements, including (x) a new restricted payments covenant which limits the type and amount of cash distributions that may be made by the Company and (y) an adjusted fix charges ratio, which now excludes certain onetime expenses for purposes of calculation and (ii) the Company must, from and after the date that the Company elects to qualify as a REIT, maintain its status as a REIT.
On March 10, 2021, the Company entered into the sixth amendment to the 2017 Amended Credit Facility (the “March 2021 Revolver Amendment”). The March 2021 Revolver Amendment included, among other things, (i) increase of the revolving credit commitment from $
On November 5, 2021, the Company entered into the seventh amendment to the 2017 Amended Credit Facility (the “November 2021 Revolver Amendment”). The November 2021 Revolver Amendment included, among other things, (i) addition of a term loan in the aggregate amount of $
On September 20, 2022, the Company entered into the eighth amendment to the 2017 Amended Credit Facility (the “Eighth Amendment”), which includes among other things: (i) the origination of a term loan, in the amount of $
On December 20, 2023, the Company entered into the ninth amendment to the 2017 Amended Credit Facility (the “Ninth Amendment”), which revises certain non-monetary limitations as described in more detail in the Ninth Amendment.
At June 30, 2025, the current commitment level under the Credit Facility was $
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The Credit Facility is subject to customary restrictive covenants including, but not limited to, limitations on the Company’s ability to: (a) incur indebtedness; (b) make certain investments; (c) incur certain liens; (d) engage in certain affiliate transactions; and (e) engage in certain major transactions such as mergers. In addition, the Company is subject to various financial maintenance covenants including, but not limited to, a maximum indebtedness ratio, a maximum secured indebtedness ratio, and a minimum fixed charge coverage ratio. The Credit Facility also contains affirmative covenants and events of default including, but not limited to, a cross default to the Company’s other indebtedness and upon the occurrence of a change in control. The Company’s failure to comply with these covenants or the occurrence of an event of default could result in acceleration of the Company’s debt and other financial obligations under the Credit Facility.
2029 Term Loan. On September 30, 2024, the Company and certain subsidiaries of the Company entered into a credit agreement with KeyBank National Association, as administrative agent, and certain other lenders named therein, for a term loan (the “2029 Term Loan”) in an aggregate principal amount of $
Mortgage Notes Payable. On March 3, 2022, in connection with the acquisition of Price Plaza Shopping Center, the Company assumed an existing $
Convertible Debt. The Company initially issued $
The 2025 Notes represented senior unsecured obligations of the Company and paid interest semi-annually in arrears on each April 15th and October 15th, commencing on April 15, 2020, at a rate of
On January 15, 2025, the 2025 Notes became freely convertible at the option of each holder at any time until the close of business on the business day immediately preceding the stated maturity date. On April 3, 2025, the Company completed privately negotiated transactions with holders of $
At maturity on April 15, 2025, the Company completed the payoff of the remaining 2025 Notes in an aggregate principal amount of $
In the aggregate, the settlement of the $
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Long-term debt consisted of the following (in thousands):
| | | | | | | | | | | |
| June 30, 2025 | | December 31, 2024 | ||||||||
| Total |
| Due Within One Year |
| Total |
| Due Within One Year | ||||
Credit Facility | $ | | | $ | — | | $ | | | $ | — |
2026 Term Loan | | | | | | | | | | | — |
2027 Term Loan | | | | | — | | | | | | — |
2028 Term Loan | | | | | — | | | | | | — |
2029 Term Loan | | | | | — | | | | | | — |
| — | | | — | | | | | | | |
Mortgage Note Payable | | | | | — | | | | | | — |
Financing Costs, net of Accumulated Amortization | | ( | | | — | | | ( | | | — |
Total Long-Term Debt | $ | | | $ | | | $ | | | $ | |
Payments applicable to reduction of principal amounts as of June 30, 2025 will be required as follows (in thousands):
| | |
As of June 30, 2025 | Amount | |
Remainder of 2025 | $ | — |
2026 | | |
2027 | | |
2028 | | |
2029 | | |
2030 | | — |
2031 and Thereafter | | — |
Total Long-Term Debt - Face Value | $ | |
The carrying value of long-term debt as of June 30, 2025 consisted of the following (in thousands):
| | |
| Total | |
Current Face Amount | $ | |
Financing Costs, net of Accumulated Amortization | | ( |
Total Long-Term Debt | $ | |
In addition to the $
The following table reflects a summary of interest expense incurred and paid during the three and six months ended June 30, 2025 and 2024 (in thousands):
| | | | | | | | | | | |
| Three Months Ended | | Six Months Ended | ||||||||
| June 30, 2025 | | June 30, 2024 | | June 30, 2025 | | June 30, 2024 | ||||
Interest Expense | $ | | | $ | | | $ | | | $ | |
Amortization of Deferred Financing Costs | | | | | | | | | | | |
Amortization of Discount on Convertible Notes | | | | | | | | | | | |
Total Interest Expense | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | |
Total Interest Paid (1) | $ | | | $ | | | $ | | | $ | |
(1) | Net of capitalized interest of $ |
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The Company was in compliance with all of its debt covenants as of June 30, 2025 and December 31, 2024.
NOTE 16. INTEREST RATE SWAPS
The Company has entered into interest rate swap agreements to hedge against changes in future cash flows resulting from fluctuating interest rates related to the below noted borrowings. The interest rate agreements were
| | | | | | | | | | | | |
Hedged Item (1) | | Effective Date | | Maturity Date | | Rate | | Amount | | Fair Value as of June 30, 2025 | ||
2026 Term Loan | | 3/29/2024 | | 3/10/2026 | | | $ | | | $ | | |
2026 Term Loan | | 8/31/2021 | | 3/10/2026 | | | $ | | | $ | | |
2026 Term Loan (2) | | 3/10/2026 | | 3/10/2031 | | | $ | | | $ | ( | |
2027 Term Loan | | 3/29/2024 | | 1/31/2027 | | | $ | | | $ | | |
2027 Term Loan (2) | | 1/31/2027 | | 1/30/2032 | | | $ | | | $ | ( | |
2028 Term Loan | | 9/30/2022 | | 1/31/2028 | | | $ | | | $ | ( | |
2028 Term Loan | | 9/30/2022 | | 1/31/2028 | | | $ | | | $ | ( | |
2028 Term Loan (2) | | 1/31/2028 | | 1/31/2033 | | | $ | | | $ | ( | |
2029 Term Loan | | 1/31/2023 | | 1/31/2030 | | | $ | | | $ | | |
2029 Term Loan | | 1/31/2023 | | 1/31/2030 | | | $ | | | $ | | |
2029 Term Loan | | 1/31/2023 | | 1/31/2030 | | | $ | | | $ | | |
Credit Facility | | 2/1/2024 | | 1/31/2028 | | | $ | | | $ | ( | |
Credit Facility | | 4/30/2025 | | 4/30/2030 | | | $ | | | $ | ( | |
Credit Facility | | 4/30/2025 | | 4/30/2030 | | | $ | | | $ | | |
(1) | Effective September 30, 2022, the Company converted its existing interest rate swaps from 1-month LIBOR to SOFR. |
(2) | The Company entered into forward swaps to further fix interest rates through periods that the Company reasonably expects to extend its current term loans. |
The use of interest rate swap agreements carries risks, including the risk that the counterparties to these agreements are not able to perform. To mitigate this risk, the Company enters into interest rate swap agreements with counterparties with high credit ratings and with major financial institutions with which the Company and its affiliates may also have other financial relationships. The Company does not currently anticipate that any of the counterparties to the Company’s interest rate swap agreements will fail to meet their obligations. As of June 30, 2025, there were no events of default related to the Company’s interest rate swap agreements.
NOTE 17. ACCRUED AND OTHER LIABILITIES
Accrued and other liabilities consisted of the following (in thousands):
| | | | | | |
| | As of | ||||
|
| June 30, |
| December 31, | ||
Accrued Property Taxes | | $ | | | $ | |
Reserve for Tenant Improvements | | | | | | |
Tenant Security Deposits | | | | | | |
Accrued Construction Costs | | | | | | |
Accrued Interest | | | | | | |
Environmental Reserve | | | | | | |
Cash Flow Hedge - Interest Rate Swaps | | | | | | — |
Operating Leases - Liability | | | | | | |
Construction and Other Reserves from Commercial Loans and Investments | | | | | | |
Other | | | | | | |
Total Accrued and Other Liabilities | | $ | | | $ | |
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Reserve for Tenant Improvements. In connection with recent acquisitions, the Company received an aggregate of $
Construction and Other Reserves from Commercial Loans and Investments. In connection with certain of the Company’s commercial loan investments, the borrower has deposited real estate tax and/or construction reserves in accounts held by the Company. Those accounts balances are included in restricted cash on the Company’s consolidated balance sheets with the corresponding liability recorded in accrued and other liabilities as seen above.
NOTE 18. DEFERRED REVENUE
Deferred revenue consisted of the following (in thousands):
| | | | | | |
| | As of | ||||
|
| June 30, |
| December 31, | ||
Prepaid Rent | | $ | | | $ | |
Interest Reserve from Commercial Loans and Investments | | | | | | |
Tenant Contributions | | | | | | |
Total Deferred Revenue | | $ | | | $ | |
Interest Reserve from Commercial Loans and Investments. In connection with certain of the Company’s commercial loan investments, the borrower has deposited interest reserves in accounts held by the Company. Those accounts balances are included in restricted cash on the Company’s consolidated balance sheets with the corresponding liability recorded in deferred revenue as seen above. Pursuant to each respective agreement, interest reserves are either (i) utilized to fund the monthly interest due on the loan or (ii) maintained throughout the term of the loan.
NOTE 19. STOCK-BASED COMPENSATION
SUMMARY OF STOCK-BASED COMPENSATION
A summary of share activity for all equity classified stock compensation during the six months ended June 30, 2025 is presented below.
| | | | | | | | | | | | | | | | | | |
Type of Award |
| Shares Outstanding at 1/1/2025 |
| Granted Shares | | Vested / Exercised Shares | | Expired Shares | | Forfeited Shares |
| Shares Outstanding at 6/30/2025 | ||||||
Equity Classified - Performance Share Awards - Peer Group Market Condition Vesting | | | | | | | | | ( | | | — | | | — | | | |
Equity Classified - Three Year Vest Restricted Shares | | | | | | | | | ( | | | — | | | ( | | | |
Total Shares | | | | | | | | | ( | | | — | | | ( | | | |
Amounts recognized in the financial statements for stock-based compensation are as follows (in thousands):
| | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | ||||||
|
| | June 30, 2025 |
| | June 30, 2024 |
| | June 30, 2025 |
| | June 30, 2024 |
Total Cost of Share-Based Plans Charged Against Income | | $ | | | $ | | | $ | | | $ | |
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EQUITY-CLASSIFIED STOCK COMPENSATION
Performance Share Awards – Peer Group Market Condition Vesting
Performance shares have been granted to certain employees under the 2010 Plan. The performance share awards entitle the recipient to receive, upon the vesting thereof, shares of common stock of the Company equal to between
The Company used a Monte Carlo simulation pricing model to determine the fair value of its awards that are based on market conditions. The determination of the fair value of market condition-based awards is affected by the Company’s stock price as well as assumptions regarding a number of other variables. These variables include expected stock price volatility over the requisite performance term of the awards, the relative performance of the Company’s stock price and stockholder returns to companies in its peer group, annual dividends, and a risk-free interest rate assumption. Compensation cost is recognized regardless of the achievement of the market conditions, provided the requisite service period is met.
As of June 30, 2025, there was $
A summary of the activity for these awards during the six months ended June 30, 2025 is presented below:
| | | | | | |
Performance Shares With Market Conditions |
| Shares | | Wtd. Avg. Fair Value Per Share | ||
Non-Vested at January 1, 2025 | | | | | $ | |
Granted | | | | | $ | |
Vested | | | ( | | $ | |
Expired | | | — | | | — |
Forfeited | | | — | | | — |
Non-Vested at June 30, 2025 | | | | | $ | |
Restricted Shares
Restricted shares have been granted to certain employees under the 2010 Plan. Certain of the restricted shares vest on each of the first, second, and third anniversaries of January 28 of the applicable year provided the grantee is an employee of the Company on those dates. Certain other restricted share awards, granted on July 1, 2022, vested entirely on the third anniversary of the grant date, or July 1, 2025, provided the grantees were employees of the Company on that date. In addition, any unvested portion of the restricted shares will vest upon a change in control. The Company granted a total of
The Company’s determination of the fair value of the restricted stock awards was calculated by multiplying the number of shares issued by the Company’s stock price at the grant date. Compensation cost is recognized on a straight-line basis over the applicable vesting period.
As of June 30, 2025, there was $
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A summary of the activity for these awards during the six months ended June 30, 2025 is presented below:
| | | | | | |
Non-Vested Restricted Shares |
| Shares |
| Wtd. Avg. Fair Value Per Share | ||
Non-Vested at January 1, 2025 | | | | | $ | |
Granted | | | | | $ | |
Vested | | | ( | | $ | |
Expired | | | — | | | — |
Forfeited | | | ( | | $ | |
Non-Vested at June 30, 2025 | | | | | $ | |
NON-EMPLOYEE DIRECTOR STOCK COMPENSATION
Each member of the Company’s Board of Directors has the option to receive his or her annual cash retainer and applicable committee retainers in shares of Company common stock rather than cash. The number of shares awarded to the directors making such election is calculated quarterly by dividing (i) the sum of (A) the amount of the quarterly retainer payment due to such director, by (ii) the trailing
Each non-employee director serving as of the beginning of each calendar year shall receive an annual award of the Company’s common stock. The value of such award totaled $
During the six months ended June 30, 2025 and 2024, the expense recognized for the value of the Company’s common stock received by non-employee directors totaled $
NOTE 20. INCOME TAXES
The Company elected to be taxed as a REIT for U.S. federal income tax purposes, commencing with its taxable year ended December 31, 2020. The Company believes that, commencing with such taxable year, it has been organized and has operated in such a manner as to qualify for taxation as a REIT under the U.S. federal income tax laws. The Company intends to continue to operate in such a manner. As a REIT, the Company will be subject to U.S. federal and state income taxation at corporate rates on its net taxable income; the Company, however, may claim a deduction for the amount of dividends paid to its stockholders. Amounts distributed as dividends by the Company will be subject to taxation at the stockholder level only. While the Company must distribute at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, to qualify as a REIT, the Company intends to distribute all of its net taxable income. The Company is allowed certain other non-cash deductions or adjustments, such as depreciation expense, when computing its REIT taxable income and distribution requirement. These deductions permit the Company to reduce its dividend payout requirement under U.S. federal income tax laws. Certain states may impose minimum franchise taxes. To comply with certain REIT requirements, the Company holds certain of its non-REIT assets and operations through TRSs and subsidiaries of TRSs, which are subject to applicable U.S. federal, state and local corporate income tax on their taxable income. As of January 1, 2024, the Company owns
As a result of the Company’s election to be taxed as a REIT, during the year ended December 31, 2020, an $
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certain, primarily single-tenant REIT assets after the REIT conversion within the 5-year period. All such sales were completed using 1031 Exchanges or other deferred tax structures to mitigate the built-in gain tax liability of conversion.
NOTE 21. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
From time to time, the Company may be a party to certain legal proceedings, incidental to the normal course of its business. While the outcome of the legal proceedings cannot be predicted with certainty, the Company does not expect that these proceedings will have a material effect upon our financial condition or results of operations.
Contractual Commitments – Expenditures
The Company has committed to fund the following capital improvements. The improvements, which are related to several properties, are estimated to be generally completed within twelve months. These commitments, as of June 30, 2025, are as follows (in thousands):
| | | |
| | As of June 30, 2025 | |
Total Commitment (1) | | $ | |
Less Amount Funded | | | ( |
Remaining Commitment | | $ | |
| (1) | Commitment includes tenant improvements, leasing commissions, rebranding, facility expansion and other capital improvements. |
The Company is committed to fund
NOTE 22. BUSINESS SEGMENT DATA
The Company operates in
Our income property operations consist of income-producing properties, and our business plan is focused on investing in additional income-producing properties. Our income property operations accounted for
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Information about the Company’s operations in different segments for the three months ended June 30, 2025 is as follows (in thousands):
| | | | | | | | | | | | |
| | | | | | | | | | | | |
|
| Income Properties |
| Management Services |
| Commercial Loans and Investments | | Total | ||||
Revenues: | | | | | | | | | | | | |
Income Properties | | $ | | | $ | — | | $ | — | | $ | |
Management Fee Income | | | — | | | | | | — | | | |
Interest Income From Commercial Loans and Investments | | | — | | | — | | | | | | |
Total Revenues for Reportable Segments | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
Operating Expenses: | | | | | | | | | | | | |
Income Properties | | $ | ( | | $ | — | | $ | — | | $ | ( |
Total Revenues Less Direct Costs of Revenues | | $ | | | $ | | | $ | | | $ | |
Provision for Impairment | | | — | | | — | | | — | | | — |
Depreciation and Amortization - Real Estate | | | ( | | | — | | | — | | | ( |
Total Revenues Less Operating Expenses for Reportable Segments | | $ | | | $ | | | $ | | | $ | |
Gain on Disposition of Assets | | | — | | | — | | | — | | | — |
Net Income From Operations for Reportable Segments | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
Reconciliation to Consolidated Net Income | | | | | | | | | | | | |
General and Administrative Expenses | | | | | | | | | | | | ( |
Investment and Other Loss | | | | | | | | | | | | ( |
Interest Expense | | | | | | | | | | | | ( |
Loss on Extinguishment of Debt | | | | | | | | | | | | ( |
Depreciation and Amortization - Other | | | | | | | | | | | | ( |
Net Loss Before Income Tax Expense | | | | | | | | | | | $ | ( |
Income Tax Expense | | | | | | | | | | | | ( |
Net Loss Attributable to the Company | | | | | | | | | | | $ | ( |
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Information about the Company’s operations in different segments for the three months ended June 30, 2024 is as follows (in thousands):
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
|
| Income Properties |
| Management Services |
| Commercial Loans and Investments | | Real Estate Operations | | Total | |||||
Revenues: | | | | | | | | | | | | | | | |
Income Properties | | $ | | | $ | — | | $ | — | | $ | — | | $ | |
Management Fee Income | | | — | | | | | | — | | | — | | | |
Interest Income From Commercial Loans and Investments | | | — | | | — | | | | | | — | | | |
Real Estate Operations | | | — | | | — | | | — | | | | | | |
Total Revenues for Reportable Segments | | $ | | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | | | | |
Operating Expenses: | | | | | | | | | | | | | | | |
Income Properties | | $ | ( | | $ | — | | $ | — | | $ | — | | $ | ( |
Real Estate Operations | | | — | | | — | | | — | | | ( | | | ( |
Total Revenues Less Direct Costs of Revenues | | $ | | | $ | | | $ | | | $ | | | $ | |
Provision for Impairment | | | — | | | — | | | ( | | | — | | | ( |
Depreciation and Amortization - Real Estate | | | ( | | | — | | | — | | | — | | | ( |
Total Revenues Less Operating Expenses for Reportable Segments | | $ | | | $ | | | $ | | | $ | | | $ | |
Gain on Disposition of Assets | | | — | | | — | | | — | | | — | | | — |
Net Income From Operations for Reportable Segments | | $ | | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | | | | |
Reconciliation to Consolidated Net Income | | | | | | | | | | | | | | | |
General and Administrative Expenses | | | | | | | | | | | | | | | ( |
Investment and Other Income | | | | | | | | | | | | | | | |
Interest Expense | | | | | | | | | | | | | | | ( |
Depreciation and Amortization - Other | | | | | | | | | | | | | | | ( |
Net Income Before Income Tax Expense | | | | | | | | | | | | | | $ | |
Income Tax Expense | | | | | | | | | | | | | | | ( |
Net Income Attributable to the Company | | | | | | | | | | | | | | $ | |
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Information about the Company’s operations in different segments for the six months ended June 30, 2025 is as follows (in thousands):
| | | | | | | | | | | | |
|
| Income Properties |
| Management Services |
| Commercial Loans and Investments | | Total | ||||
Revenues: | | | | | | | | | | | | |
Income Properties | | $ | | | $ | — | | $ | — | | $ | |
Management Fee Income | | | — | | | | | | — | | | |
Interest Income From Commercial Loans and Investments | | | — | | | — | | | | | | |
Total Revenues for Reportable Segments | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
Operating Expenses: | | | | | | | | | | | | |
Income Properties | | $ | ( | | $ | — | | $ | — | | $ | ( |
Total Revenues Less Direct Costs of Revenues | | $ | | | $ | | | $ | | | $ | |
Provision for Impairment | | | — | | | — | | | — | | | — |
Depreciation and Amortization - Real Estate | | | ( | | | — | | | — | | | ( |
Total Revenues Less Operating Expenses for Reportable Segments | | $ | | | $ | | | $ | | | $ | |
Gain on Disposition of Assets | | | — | | | — | | | — | | | — |
Net Income From Operations for Reportable Segments | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
Reconciliation to Consolidated Net Income | | | | | | | | | | | | |
General and Administrative Expenses | | | | | | | | | | | | ( |
Investment and Other Loss | | | | | | | | | | | | ( |
Interest Expense | | | | | | | | | | | | ( |
Loss on Extinguishment of Debt | | | | | | | | | | | | ( |
Depreciation and Amortization - Other | | | | | | | | | | | | ( |
Net Loss Before Income Tax Benefit | | | | | | | | | | | $ | ( |
Income Tax Expense | | | | | | | | | | | | ( |
Net Loss Attributable to the Company | | | | | | | | | | | $ | ( |
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Information about the Company’s operations in different segments for the six months ended June 30, 2024 is as follows (in thousands):
| | | | | | | | | | | | | | | |
|
| Income Properties |
| Management Services |
| Commercial Loans and Investments | | Real Estate Operations | | Total | |||||
Revenues: | | | | | | | | | | | | | | | |
Income Properties | | $ | | | $ | — | | $ | — | | $ | — | | $ | |
Management Fee Income | | | — | | | | | | — | | | — | | | |
Interest Income From Commercial Loans and Investments | | | — | | | — | | | | | | — | | | |
Real Estate Operations | | | — | | | — | | | — | | | | | | |
Total Revenues for Reportable Segments | | $ | | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | | | | |
Operating Expenses: | | | | | | | | | | | | | | | |
Income Properties | | $ | ( | | $ | — | | $ | — | | $ | — | | $ | ( |
Real Estate Operations | | | — | | | — | | | — | | | ( | | | ( |
Total Revenues Less Direct Costs of Revenues | | $ | | | $ | | | $ | | | $ | | | $ | |
Provision for Impairment | | | — | | | — | | | ( | | | — | | | ( |
Depreciation and Amortization - Real Estate | | | ( | | | — | | | — | | | — | | | ( |
Total Revenues Less Operating Expenses for Reportable Segments | | $ | | | $ | | | $ | | | $ | | | $ | |
Gain on Disposition of Assets | | | | | | — | | | — | | | | | | |
Net Income From Operations for Reportable Segments | | $ | | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | | | | |
Reconciliation to Consolidated Net Income | | | | | | | | | | | | | | | |
General and Administrative Expenses | | | | | | | | | | | | | | | ( |
Investment and Other Loss | | | | | | | | | | | | | | | ( |
Interest Expense | | | | | | | | | | | | | | | ( |
Depreciation and Amortization - Other | | | | | | | | | | | | | | | ( |
Net Income Before Income Tax Benefit | | | | | | | | | | | | | | $ | |
Income Tax Benefit | | | | | | | | | | | | | | | |
Net Income Attributable to the Company | | | | | | | | | | | | | | $ | |
Capital expenditures of each segment for the three and six months ended June 30, 2025 and 2024 are as follows (in thousands):
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | June 30, 2025 | | June 30, 2024 | | June 30, 2025 | | June 30, 2024 | ||||
Capital Expenditures: | | | | | | | | | | | | |
Income Properties | | $ | | | $ | | | $ | | | $ | |
Commercial Loans and Investments | | | | | | | | | | | | |
Corporate and Other | | | | | | | | | | | | |
Total Capital Expenditures | | $ | | | $ | | | $ | | | $ | |
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Identifiable assets of each segment as of June 30, 2025 and December 31, 2024 are as follows (in thousands):
| | | | | | |
| | As of | ||||
|
| June 30, 2025 |
| December 31, 2024 | ||
Identifiable Assets: | | | | | | |
Income Properties | | $ | | | $ | |
Management Services | | | | | | |
Commercial Loans and Investments | | | | | | |
Real Estate Operations | | | | | | |
Corporate and Other | | | | | | |
Total Assets | | $ | | | $ | |
| | | | | | | | | | | | |
Identifiable assets by segment are those assets that are used in the Company’s operations in each segment. Real Estate Operations includes the identifiable assets of certain real estate operations receivables. Corporate and other assets consist primarily of cash and restricted cash, property, plant, and equipment related to the other operations, as well as the general and corporate operations.
The Management Services and Real Estate Operations segments had
NOTE 23. SUBSEQUENT EVENTS
Subsequent events and transactions were evaluated through July 29, 2025, the date the consolidated financial statements were issued. There were no reportable subsequent events or transactions.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
When we refer to “we,” “us,” “our,” or “the Company,” we mean CTO Realty Growth, Inc. and its consolidated subsidiaries. References to “Notes to Financial Statements” refer to the Notes to the Consolidated Financial Statements of CTO Realty Growth, Inc. included in this Quarterly Report on Form 10-Q. Some of the comments we make in this section are forward-looking statements within the meaning of the federal securities laws. For a discussion of forward-looking statements, see the section below entitled “Special Note Regarding Forward-Looking Statements.” Certain factors that could cause actual results or events to differ materially from those the Company anticipates or projects are described in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Special Note Regarding Forward-Looking Statements
Statements contained in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Also, when the Company uses any of the words “anticipate,” “assume,” “believe,” “estimate,” “expect,” “intend,” or similar expressions, the Company is making forward-looking statements. Management believes the expectations reflected in such forward-looking statements are based upon present expectations and reasonable assumptions. However, the Company’s actual results could differ materially from those set forth in the forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise such forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law. The risks and uncertainties that could cause our actual results to differ materially from those presented in our forward-looking statements, include, but are not limited to, the following:
• | we are subject to risks related to the ownership of commercial real estate that could affect the performance and value of our properties; |
• | our business is dependent upon our tenants successfully operating their businesses, and their failure to do so could materially and adversely affect us; |
• | competition that traditional retail tenants face from e-commerce retail sales, or the integration of brick and mortar stores with e-commerce retail operators, could adversely affect our business; |
• | we operate in a highly competitive market for the acquisition of income properties and more established entities or other investors may be able to compete more effectively for acquisition opportunities than we can; |
•we may be unable to successfully execute on asset acquisitions or dispositions;
• | the loss of revenues from our income property portfolio or certain tenants would adversely impact our results of operations and cash flows; |
• | our revenues include receipt of management fees and potentially incentive fees derived from our provision of management services to Alpine Income Property Trust, Inc. (“PINE”) and the loss or failure, or decline in the business or assets, of PINE could substantially reduce our revenues; |
• | there are various potential conflicts of interest in our relationship with PINE, including our executive officers and/or directors who are also officers and/or directors of PINE, which could result in decisions that are not in the best interest of our stockholders; |
• | a prolonged downturn in economic conditions could adversely impact our business, particularly with regard to our ability to maintain revenues from our income-producing assets; |
• | a part of our investment strategy is focused on investing in commercial loans and investments which may involve credit risk or the risk that our borrowers will fail to pay scheduled contractual payments to us when due; |
• | we may suffer losses when a borrower defaults on a loan and the value of the underlying collateral is less than the amount due; |
•the Company’s real estate investments are generally illiquid;
• | if we are not successful in utilizing the Section 1031 like-kind exchange structure in deploying the proceeds from dispositions of income properties, or our Section 1031 like-kind exchange transactions are disqualified, we could incur significant taxes and our results of operations and cash flows could be adversely impacted; |
• | the Company may be unable to obtain debt or equity capital on favorable terms, if at all, or additional borrowings may impact our liquidity or ability to monetize any assets securing such borrowings; |
• | servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to service or pay our debt; |
• | our operations and properties could be adversely affected in the event of natural disasters, pandemics, or other significant disruptions; |
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• | we may encounter environmental problems which require remediation or the incurrence of significant costs to resolve, which could adversely impact our financial condition, results of operations, and cash flows; |
• | failure to remain qualified as real estate investment trust (“REIT”) for U.S. federal income tax purposes would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distribution to stockholders; |
•the risk that the REIT requirements could limit our financial flexibility;
•our limited experience operating as a REIT;
• | our ability to pay dividends consistent with the REIT requirements, and expectations as to timing and amounts of such dividends; |
•the ability of our board of directors (the “Board”) to revoke our REIT status without stockholder approval;
•our exposure to changes in U.S. federal and state income tax laws, including changes to the REIT requirements;
• | general business and economic conditions, including unstable macroeconomic conditions due to, among other things, political unrest and economic uncertainty due to terrorism or war, inflation, higher interest rates, tariffs and international trade policies and distress in the banking sector; and |
• | an epidemic or pandemic, and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, may precipitate or materially exacerbate one or more of the above-mentioned and/or other risks and may significantly disrupt or prevent us from operating our business in the ordinary course for an extended period. |
The Company describes the risks and uncertainties that could cause actual results and events to differ materially in “Risk Factors” (Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024), “Quantitative and Qualitative Disclosures about Market Risk” (Part I, Item 3 of this Quarterly Report on Form 10-Q), and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (Part I, Item 2 of this Quarterly Report on Form 10-Q).
OVERVIEW
We are a publicly traded, self-managed equity REIT that focuses on the ownership, management, and repositioning of high-quality retail and mixed-use properties located primarily in what we believe to be faster growing, business-friendly markets exhibiting accommodative business tax policies, outsized relative job and population growth, and where retail demand exceeds supply. We have pursued our investment strategy by investing primarily through fee simple ownership of our properties, commercial loans and preferred equity.
As of June 30, 2025, we own and manage, sometimes utilizing third-party property management companies, 24 commercial real estate properties in seven states in the United States, comprising 5.3 million square feet of gross leasable space. In addition to our income property portfolio, as of June 30, 2025, our business included the following:
Management Services: A fee-based management business that is engaged in managing PINE as well as: (i) a portfolio of assets pursuant to the Portfolio Management Agreement (hereinafter defined) and (ii) Subsurface Interests (hereinafter defined) pursuant to the Subsurface Management Agreement (hereinafter defined), as further described in Note 5, “Management Services Business” in the Notes to Financial Statements.
Commercial Loans and Investments: A portfolio of four commercial loan investments and two preferred equity investments which are classified as commercial loan investments.
Real Estate Operations: During the year ended December 31, 2024, the Company sold its portfolio of subsurface mineral interests associated with approximately 352,000 surface acres in 19 counties in the State of Florida (“Subsurface Interests”), as further described in Note 6, “Real Estate Operations” in the Notes to Financial Statements. As part of the Subsurface Interests sale, the Company entered into a management agreement with the buyer to provide ongoing management services (the “Subsurface Management Agreement”).
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Investment in PINE: Our business also includes our investment in PINE. As of June 30, 2025, the fair value of our investment totaled $34.8 million, or 15.4% of PINE’s outstanding equity, including the units of limited partnership interest (“OP Units”) we hold in Alpine Income Property OP, LP (the “PINE Operating Partnership”), which are redeemable for cash, based upon the value of an equivalent number of shares of PINE common stock at the time of the redemption, or shares of PINE common stock on a one-for-one basis, at PINE’s election. Our investment in PINE generates investment income through the dividends distributed by PINE. In addition to the dividends we receive from PINE, our investment in PINE may benefit from any appreciation in PINE’s stock price, although no assurances can be provided that such appreciation will occur, the amount by which our investment will increase in value, or the timing thereof. Any dividends received from PINE are included in investment and other income (loss) on the accompanying consolidated statements of operations.
Our strategy for investing in income-producing properties is focused on factors including, but not limited to, long-term real estate fundamentals and target markets, including markets we believe to be faster growing, business-friendly markets exhibiting accommodative business tax policies, outsized relative job and population growth. We employ a methodology for evaluating targeted investments in income-producing properties which includes an evaluation of: (i) the attributes of the real estate (e.g. location, market demographics, comparable properties in the market, etc.); (ii) an evaluation of the existing tenant(s) (e.g. creditworthiness, property level sales, tenant rent levels compared to the market, etc.); (iii) other market-specific conditions (e.g. tenant industry, job and population growth in the market, local economy, etc.); and (iv) considerations relating to the Company’s business and strategy (e.g. strategic fit of the asset type, property management needs, ability to use a Section 1031 like-kind exchange structure, etc.).
We believe investment in income-producing assets provides attractive opportunities for generally stable cash flows and increased returns over the long run through potential capital appreciation. Our focus on acquiring income-producing investments includes a continual review of our existing income property portfolio to identify opportunities to recycle our capital through the sale of income properties based on, among other possible factors, the current or expected performance of the property and favorable market conditions. No properties were sold during the six months ended June 30, 2025. As a result of entering into the Exclusivity and Right of First Offer Agreement with PINE (the “ROFO Agreement”) which generally prevents us from investing in single-tenant net lease income properties, our income property investment strategy is focused on multi-tenant, primarily retail-oriented, properties. We may pursue this strategy by monetizing certain of our single-tenant properties, and should we do so, we would seek to utilize the 1031 like-kind exchange structure to preserve the tax-deferred gain on the original transaction(s) that pertains to the replacement asset.
Our current portfolio of 18 multi-tenant properties generates $98.8 million of revenue from annualized straight-line base lease payments and had a weighted average remaining lease term of 5.0 years as of June 30, 2025. Our current portfolio of 6 single-tenant income properties generates $5.4 million of revenues from annualized straight-line base lease payments and had a weighted average remaining lease term of 3.6 years as of June 30, 2025.
COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2025 AND 2024
Revenue
Total revenue for the three months ended June 30, 2025 is presented in the following summary and indicates the changes as compared to the three months ended June 30, 2024 (in thousands):
| | | | | | | | | | | |
| | Three Months Ended | | | | | |||||
Operating Segment |
| June 30, 2025 | | June 30, 2024 | | $ Variance | | % Variance | |||
Income Properties | | $ | 33,375 | | $ | 25,878 | | $ | 7,497 | | 29.0% |
Management Services | | | 1,247 | | | 1,131 | | | 116 | | 10.3% |
Commercial Loans and Investments | | | 3,016 | | | 1,441 | | | 1,575 | | 109.3% |
Real Estate Operations | | | — | | | 395 | | | (395) | | (100.0)% |
Total Revenue | | $ | 37,638 | | $ | 28,845 | | $ | 8,793 | | 30.5% |
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Total revenue for the three months ended June 30, 2025 increased to $37.6 million, compared to $28.8 million during the three months ended June 30, 2024. The $8.8 million increase in total revenue is primarily attributable to increased income produced by the Company’s recent income property acquisitions versus that of properties disposed of by the Company during the comparative period, as well as more same store revenue from our properties owned during each period. Additionally, revenues from our commercial loans and investments increased, which was partially offset by reduced revenues from our real estate operations.
Income Properties
Revenue and operating income from our income property operations totaled $33.4 million and $23.2 million, respectively, during the three months ended June 30, 2025, compared to total revenue and operating income of $25.9 million and $17.8 million, respectively, for the three months ended June 30, 2024. The direct costs of revenues for our income property operations totaled $10.2 million and $8.1 million for the three months ended June 30, 2025 and 2024, respectively. The increase in revenues of $7.5 million, or 29.0%, during the three months ended June 30, 2025 is primarily related to the overall growth and lease up of the Company’s income property portfolio, as well as the timing of acquisitions versus dispositions. The increase in operating income of $5.4 million from our income property operations reflects increased rent revenues related to our net investments as well as leasing activity.
Management Services
Revenue from our management services from PINE totaled $1.1 million and $1.0 million during the three months ended June 30, 2025 and 2024, respectively. Management services during the three months ended June 30, 2025 and 2024 also included $0.1 million from the asset management agreement with a third party to manage a portfolio of multi-tenant and single-tenant assets (the “Portfolio Management Agreement”) and less than $0.1 million from the Subsurface Management Agreement.
Commercial Loans and Investments
Interest income from our commercial loans and investments totaled $3.0 million and $1.4 million during the three months ended June 30, 2025 and 2024, respectively. The increase of $1.6 million is primarily due to increased income as a result of the overall growth in the loan portfolio as well as the timing of the investments made related to new loan originations and structured investments.
Real Estate Operations
During the three months ended June 30, 2024, revenue and operating income from real estate operations was $0.4 million and $0.1 million, respectively, which was attributable to mitigation credits sold during the period. There was no revenue or operating income from real estate operations during the three months ended June 30, 2025, because the Company sold its portfolio of Subsurface Interests and all remaining mitigation credits during the year ended December 31, 2024.
General and Administrative Expenses
Total general and administrative expenses for the three months ended June 30, 2025 is presented in the following summary and indicates the changes as compared to the three months ended June 30, 2024 (in thousands):
| | | | | | | | | | | |
| | Three Months Ended | | | | | |||||
General and Administrative Expenses |
| June 30, 2025 | | June 30, 2024 | | $ Variance | | % Variance | |||
Recurring General and Administrative Expenses | | $ | 3,445 | | $ | 2,709 | | $ | 736 | | 27.2% |
Non-Cash Stock Compensation | | | 1,003 | | | 750 | | | 253 | | 33.7% |
Total General and Administrative Expenses | | $ | 4,448 | | $ | 3,459 | | $ | 989 | | 28.6% |
The primary reason for the increase in total general and administrative expenses is the overall higher employee count, as a result of the increased operating activity from the increase in managed income property assets, as well as increases in compensation effective on January 1, 2025.
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Depreciation and Amortization
Depreciation and amortization totaled $15.3 million and $11.6 million during the three months ended June 30, 2025 and 2024, respectively. The increase of $3.7 million is due to the overall growth in the Company’s income property portfolio, as well as $0.6 million in the acceleration of amortization for lease intangibles related to certain leases terminated during the three months ended June 30, 2025.
Gain on Disposition of Assets and Provision for Impairment
2025 Dispositions. There were no income property dispositions during the three months ended June 30, 2025.
2024 Dispositions. There were no income property dispositions during the three months ended June 30, 2024.
Provision for Impairment. There were no impairment charges on the Company’s income property portfolio during the three months ended June 30, 2025 and 2024. During the three months ended June 30, 2024, the Company recorded an impairment charge of $0.1 million related to its commercial loans and investments. There were no such impairment charges related to the Company’s CECL allowance during the three months ended June 30, 2025.
Investment and Other Income (Loss)
During the three months ended June 30, 2025, the closing stock price of PINE decreased by $2.01 per share, with a closing price of $14.71 on June 30, 2025. During the three months ended June 30, 2024, the closing stock price of PINE increased by $0.28 per share, with a closing price of $15.56 on June 30, 2024. The change in stock price resulted in unrealized non-cash gain (loss) on the Company’s investment in PINE in the amount of $(4.7) million and $0.7 million which is included in investment and other income (loss) in the consolidated statements of operations for the three months ended June 30, 2025 and 2024, respectively.
The Company earned dividend income from the investment in PINE of $0.7 million and $0.6 million during the three months ended June 30, 2025 and 2024, respectively.
Interest Expense
Interest expense totaled $6.9 million and $5.6 million for the three months ended June 30, 2025 and 2024, respectively. The increase of $1.3 million is primarily due to the $1.1 million increase in interest from the Company’s 2029 Term Loan effective on September 30, 2024 and $0.7 million increase in interest on the Credit Facility due to a higher average outstanding balance, partially offset by a $0.5 million reduction in interest on the 2025 Notes due to their settlement in early April 2025 and at maturity on April 15, 2025.
Loss on Extinguishment of Debt
During the three months ended June 30, 2025, the Company settled the aggregate $51.0 million of principal outstanding on the 2025 Notes in a combination of cash and the issuance of shares of the Company’s common stock resulting in a loss on extinguishment of debt of $20.4 million.
Net Income (Loss) Attributable to the Company
Net income (loss) attributable to the Company totaled $(23.4) million and $1.2 million during the three months ended June 30, 2025 and 2024, respectively. The $24.6 million decrease in net income is attributable to the factors described above, most notably the $20.4 million loss on extinguishment of debt incurred during the three months ended June 30, 2025.
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COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2025 AND 2024
Revenue
Total revenue for the six months ended June 30, 2025 is presented in the following summary and indicates the changes as compared to the six months ended June 30, 2024 (in thousands):
| | | | | | | | | | | |
| | Six Months Ended | | | | | |||||
Operating Segment |
| June 30, 2025 | | June 30, 2024 | | $ Variance | | % Variance | |||
Income Properties | | $ | 65,047 | | $ | 50,501 | | $ | 14,546 | | 28.8% |
Management Services | | | 2,425 | | | 2,236 | | | 189 | | 8.5% |
Commercial Loans and Investments | | | 5,977 | | | 2,792 | | | 3,185 | | 114.1% |
Real Estate Operations | | | — | | | 1,443 | | | (1,443) | | (100.0)% |
Total Revenue | | $ | 73,449 | | $ | 56,972 | | $ | 16,477 | | 28.9% |
Total revenue for the six months ended June 30, 2025 increased to $73.4 million, compared to $57.0 million during the six months ended June 30, 2024. The $16.4 million increase in total revenue is primarily attributable to increased income produced by the Company’s recent income property acquisitions versus that of properties disposed of by the Company during the comparative period, as well as more same store revenue from our properties owned during each period. Additionally, revenues from our commercial loans and investments increased, which was partially offset by reduced revenues from our real estate operations.
Income Properties
Revenue and operating income from our income property operations totaled $65.0 million and $45.9 million, respectively, during the six months ended June 30, 2025, compared to total revenue and operating income of $50.5 million and $35.7 million, respectively, for the six months ended June 30, 2024. The direct costs of revenues for our income property operations totaled $19.1 million and $14.8 million for the six months ended June 30, 2025 and 2024, respectively. The increase in revenues of $14.5 million, or 28.8%, during the six months ended June 30, 2025 is primarily related to the overall growth and lease up of the Company’s income property portfolio, as well as the timing of acquisitions versus dispositions. The increase in operating income of $10.2 million from our income property operations reflects increased rent revenues related to net investments as well as leasing activity.
Management Services
Revenue from our management services from PINE totaled $2.2 million and $2.1 million during the six months ended June 30, 2025 and 2024, respectively. Management services during the six months ended June 30, 2025 and 2024 also included $0.2 million and $0.1 million, respectively, from the asset management agreement with a third party to manage a portfolio of multi-tenant and single-tenant assets (the “Portfolio Management Agreement”) and less than $0.1 million from the Subsurface Management Agreement during each of the six months ended June 30, 2025 and 2024.
Commercial Loans and Investments
Interest income from our commercial loans and investments totaled $6.0 million and $2.8 million during the six months ended June 30, 2025 and 2024, respectively. The increase is primarily due to increased income as a result of the overall growth in the loan portfolio as well as the timing of the investments made related to new loan originations and structured investments.
Real Estate Operations
During the six months ended June 30, 2024, revenue and operating income from real estate operations was $1.4 million and $0.4 million, respectively, which was attributable to mitigation credits sold during the period. There was no revenue or operating income from real estate operations during the six months ended June 30, 2025, because the Company sold its portfolio of Subsurface Interests and all remaining mitigation credits during the year ended December 31, 2024.
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General and Administrative Expenses
Total general and administrative expenses for the six months ended June 30, 2025 is presented in the following summary and indicates the changes as compared to the six months ended June 30, 2024 (in thousands):
| | | | | | | | | | | |
| | Six Months Ended | | | | | |||||
General and Administrative Expenses |
| June 30, 2025 | | June 30, 2024 | | $ Variance | | % Variance | |||
Recurring General and Administrative Expenses | | $ | 6,845 | | $ | 5,538 | | $ | 1,307 | | 23.6% |
Non-Cash Stock Compensation | | | 2,286 | | | 2,137 | | | 149 | | 7.0% |
Total General and Administrative Expenses | | $ | 9,131 | | $ | 7,675 | | $ | 1,456 | | 19.0% |
The primary reason for the increase in total general and administrative expenses is the overall higher employee count, as a result of the increased operating activity from the increase in managed income property assets, as well as increases in compensation effective on January 1, 2025.
Depreciation and Amortization
Depreciation and amortization totaled $29.7 million and $22.5 million during the six months ended June 30, 2025 and 2024, respectively. The increase of $7.2 million is due to the overall growth in the Company’s income property portfolio, as well as $1.3 million in the acceleration of amortization for lease intangibles related to certain leases terminated during the six months ended June 30, 2025.
Gain on Disposition of Assets and Provision for Impairment
2025 Dispositions. There were no income property dispositions during the six months ended June 30, 2025.
2024 Dispositions. During the six months ended June 30, 2024, the Company sold one mixed use income property in downtown Santa Fe, NM for $20.0 million, resulting in a gain of $4.6 million. Additionally, during the six months ended June 30, 2024, the Company sold its portfolio of Subsurface Interests for $5.0 million, resulting in a gain of $4.5 million.
Provision for Impairment. There were no impairment charges on the Company’s income property portfolio during the six months ended June 30, 2025 and 2024. During the six months ended June 30, 2024, the Company recorded an impairment charge of $0.1 million related to its commercial loans and investments. There were no such impairment charges related to the Company’s CECL allowance during the six months ended June 30, 2025.
Investment and Other Income (Loss)
During the six months ended June 30, 2025, the closing stock price of PINE decreased by $2.08 per share, with a closing price of $14.71 on June 30, 2025. During the six months ended June 30, 2024, the closing stock price of PINE decreased by $1.35 per share, with a closing price of $15.56 on June 30, 2024. The change in stock price resulted in unrealized non-cash losses on the Company’s investment in PINE in the amount of $4.9 million and $3.1 million which is included in investment and other income (loss) in the consolidated statements of operations for the six months ended June 30, 2025 and 2024, respectively.
The Company earned dividend income from the investment in PINE of $1.3 million during each of the six months ended June 30, 2025 and 2024, respectively.
Interest Expense
Interest expense totaled $13.0 million and $11.1 million for the six months ended June 30, 2025 and 2024, respectively. The increase of $1.9 million is primarily due to the $2.3 million increase in interest from the Company’s 2029 Term Loan effective on September 30, 2024 which was partially offset by a $0.5 million reduction in interest on the 2025 Notes due to their settlement in early April 2025 and at maturity on April 15, 2025.
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Loss on Extinguishment of Debt
During the six months ended June 30, 2025, the Company settled the aggregate $51.0 million of principal outstanding on the 2025 Notes in a combination of cash and the issuance of shares of the Company’s common stock resulting in a loss on extinguishment of debt of $20.4 million.
Net Income (Loss) Attributable to the Company
Net income (loss) attributable to the Company totaled $(21.2) million and $7.0 million during the six months ended June 30, 2025 and 2024, respectively. The $28.2 million decrease in net income is attributable to the factors described above, most notably the $20.4 million loss on extinguishment of debt incurred during the three months ended June 30, 2025 and the aggregate $9.2 million of gains on disposition of assets included in the six months ended June 30, 2024.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $8.6 million at June 30, 2025, while restricted cash totaled $10.3 million, see Note 2, “Summary of Significant Accounting Policies” in the Notes to Financial Statements under the heading Restricted Cash for the Company’s disclosure related to its restricted cash balance at June 30, 2025.
Our cash flows provided by operating activities totaled $32.2 million during the six months ended June 30, 2025, as compared to $24.6 million during the six months ended June 30, 2024, an increase of $7.6 million. The primary reason for the increase in cash flows is due to the increase in cash flows provided by income properties, which is the result of the overall growth and lease up of the Company’s income property portfolio, as well as increased cash flows from our commercial loans and investments, partially offset by increases in interest expense and general and administrative expenses.
Our cash flows used in investing activities totaled $88.4 million during the six months ended June 30, 2025, as compared to $40.7 million during the six months ended June 30, 2024, for an increase in cash outflows of $47.7 million. The increase in net cash used in investing activities is primarily the result of a decrease in disposition activity, as $24.5 million of proceeds were received during the six months ended June 30, 2024 for the sales of an income property and Subsurface Interests for which there were no such proceeds during the six months ended June 30, 2025. Additionally, the Company received $12.9 million more in cash from principal payments on commercial loans and investments during the six months ended June 30, 2024 compared to the six months ended June 30, 2025.
Our cash flows provided by financing activities totaled $57.7 million during the six months ended June 30, 2025, compared to $4.4 million for the six months ended June 30, 2024, an increase in cash inflows of $53.3 million. The increase is primarily due to a $113.7 million increase in cash flows provided by net debt activity during the six months ended June 30, 2025, as compared to the same period in 2024, partially offset by $14.1 million of the premium related to the settlement of the 2025 Notes, as well as $7.8 million more in cash outflows to pay the Company’s common and preferred dividends during the six months ended June 30, 2025, as compared to the same period in 2024. Also, during the six months ended June 30, 2024, the Company received total proceeds of $39.3 million from the issuance of common and preferred stock, with no such proceeds during the six months ended June 30, 2025.
Long-Term Debt. At June 30, 2025, the current commitment level under the Credit Facility was $300.0 million. The undrawn commitment under the Credit Facility totaled $76.0 million. As of June 30, 2025, the Credit Facility had a $224.0 million balance outstanding. See Note 15, “Long-Term Debt” in the Notes to Financial Statements for the Company’s disclosure related to its long-term debt balance at June 30, 2025.
Acquisitions and Investments. During the six months ended June 30, 2025, the Company acquired one multi-tenant income property for a purchase price of $79.5 million, or a total acquisition cost of $80.0 million, including capitalized acquisition costs. During the six months ended June 30, 2024, the Company acquired one multi-tenant income property, one vacant land parcel within an existing multi-tenant income property, and one building within an existing multi-tenant income property for an aggregate purchase price of $72.5 million, or a total acquisition cost of $72.6 million. During the six months ended June 30, 2025, no new commercial loans or investments were originated, however $6.5 million of funding was provided for existing construction loans. During the six months ended June 30, 2024, the Company also originated one structured investment, to provide $10.0 million of funding towards the construction of improvements on seven outparcel locations located in Lake Worth, Florida, of which $7.1 million was funded as of June 30, 2024.
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The Company’s guidance for 2025 investments in income-producing properties, including structured investments, ranges from $100.0 million to $200.0 million. We expect to fund future acquisitions utilizing cash on hand, cash from operations, proceeds from the dispositions of income properties through 1031 like-kind exchanges, borrowings on our Credit Facility, if available, and additional financing sources. We expect dispositions of income properties will qualify under the like-kind exchange deferred-tax structure.
Dispositions. No properties were sold during the three months ended June 30, 2025. During the three months ended June 30, 2024, the Company sold one mixed use income property in downtown Santa Fe, NM for $20.0 million resulting in a gain of $4.6 million.
ATM Program. The Company was not active under the 2024 ATM Program during the three months ended June 30, 2025. As of June 30, 2025, $216.5 million of availability remained under the 2024 ATM Program.
Contractual Commitments – Expenditures. The Company has committed to fund the following capital improvements. The improvements, which are related to several properties, are estimated to be generally completed within twelve months. These commitments, as of June 30, 2025, are as follows (in thousands):
| | | |
| | As of June 30, 2025 | |
Total Commitment (1) | | $ | 24,362 |
Less Amount Funded | | | (6,784) |
Remaining Commitment | | $ | 17,578 |
(1) Commitment includes tenant improvements, leasing commissions, rebranding, facility expansion and other capital improvements.
The Company is committed to fund one construction loan, for the Whole Foods Market anchored development in Forsyth County, Georgia, as described in Note 4, “Commercial Loans and Investments.” The unfunded portion of the construction loan totaled $29.6 million as of June 30, 2025.
Off-Balance Sheet Arrangements. None.
Other Matters. We believe we will have sufficient liquidity to fund our operations, capital requirements, maintenance, and debt service requirements over the next twelve months and into the foreseeable future, with cash on hand, cash flow from our operations, $216.5 million of availability remaining under the 2024 ATM Program, and $76.0 million undrawn commitment under the existing $300.0 million Credit Facility as of June 30, 2025.
Our Board and management consistently review the allocation of capital with the goal of providing the best long-term return for our stockholders. These reviews consider various alternatives, including increasing or decreasing regular dividends, repurchasing the Company’s securities, and retaining funds for reinvestment. Annually, the Board reviews our business plan and corporate strategies, and makes adjustments as circumstances warrant. Management’s focus is to continue our strategy to diversify our portfolio by redeploying proceeds from like-kind exchange transactions and utilizing our Credit Facility to increase our portfolio of income-producing properties, providing stabilized cash flows with strong risk-adjusted returns primarily in larger metropolitan areas and growth markets.
We believe that we currently have a reasonable level of leverage. Our strategy is to utilize leverage, when appropriate and necessary, and proceeds from sales of income properties and the disposition or payoffs on our commercial loans and investments to acquire income properties. We may also acquire or originate commercial loans and investments, invest in securities of real estate companies, or make other shorter-term investments. Our targeted investment classes may include the following:
| ● | Multi-tenant, primarily retail-oriented, properties in major metropolitan areas and growth markets, typically stabilized; |
| ● | Single-tenant retail or other commercial, double or triple net leased, properties in major metropolitan areas and growth markets that are compliant with our commitments under the ROFO Agreement; |
| ● | Ground leases, whether purchased or originated by the Company, that are compliant with our commitments under the ROFO Agreement; |
| ● | Self-developed retail or other commercial properties; |
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| ● | Commercial loans and investments, whether purchased or originated by the Company, with loan terms of 1-10 years with strong risk-adjusted yields secured by property types to include hotel, retail, residential, land and industrial; |
| ● | Select regional area investments using Company market knowledge and expertise to earn strong risk-adjusted yields; and |
| ● | Real estate-related investment securities, including commercial mortgage-backed securities, preferred or common stock, and corporate bonds. |
Our investments in income-producing properties are typically subject to long-term leases. For multi-tenant properties, each tenant typically pays its proportionate share of the aforementioned operating expenses of the property, although for such properties we typically incur additional costs for property management services. Single-tenant leases are typically in the form of triple or double net leases and ground leases. Triple-net leases generally require the tenant to pay property operating expenses such as real estate taxes, insurance, assessments and other governmental fees, utilities, repairs and maintenance, and capital expenditures.
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Non-U.S. GAAP Financial Measures
Our reported results are presented in accordance with U.S. GAAP. We also disclose Funds From Operations (“FFO”), Core Funds From Operations (“Core FFO”), and Adjusted Funds From Operations (“AFFO”), each of which are non-U.S. GAAP financial measures. We believe these non-U.S. GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs.
FFO, Core FFO, and AFFO do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operating activities as reported on our statement of cash flows as a liquidity measure and should be considered in addition to, and not in lieu of, U.S. GAAP financial measures.
We compute FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT.
NAREIT defines FFO as U.S. GAAP net income or loss adjusted to exclude real estate related depreciation and amortization, as well as extraordinary items (as defined by U.S. GAAP) such as net gain or loss from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets and impairments associated with the implementation of CECL on commercial loans and investments at the time of origination, including the pro rata share of such adjustments of unconsolidated subsidiaries. The Company also excludes the gains or losses from sales of assets incidental to the primary business of the REIT which specifically include the sales of mitigation credits, subsurface sales, investment securities, and land sales, in addition to the mark-to-market of the Company’s investment securities and interest related to the 2025 Notes, if the effect is dilutive. To derive Core FFO, we modify the NAREIT computation of FFO to include other adjustments to U.S. GAAP net income related to gains and losses recognized on the extinguishment of debt, amortization of above- and below-market lease related intangibles, and other unforecastable market- or transaction-driven non-cash items, as well as adding back the interest related to the 2025 Convertible Senior Notes, if the effect is dilutive. To derive AFFO, we further modify the NAREIT computation of FFO and Core FFO to include other adjustments to U.S. GAAP net income related to non-cash revenues and expenses such as straight-line rental revenue, non-cash compensation, and other non-cash amortization. Such items may cause short-term fluctuations in net income but have no impact on operating cash flows or long-term operating performance. We use AFFO as one measure of our performance when we formulate corporate goals.
FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers primarily because it excludes the effect of real estate depreciation and amortization and net gains or losses on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. We believe that Core FFO and AFFO are additional useful supplemental measures for investors to consider because they will help them to better assess our operating performance without the distortions created by other non-cash revenues or expenses. FFO, Core FFO, and AFFO may not be comparable to similarly titled measures employed by other companies.
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Reconciliation of Non-U.S. GAAP Measures (in thousands, except share and dividend data):
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | June 30, 2025 | | June 30, 2024 | | June 30, 2025 | | June 30, 2024 | ||||
Net Income (Loss) Attributable to the Company | | $ | (23,418) | | $ | 1,183 | | $ | (21,157) | | $ | 7,025 |
Add Back: Effect of Dilutive Interest Related to 2025 Notes (1) | | | — | | | — | | | — | | | — |
Net Income (Loss) Attributable to the Company, If-Converted | | $ | (23,418) | | $ | 1,183 | | $ | (21,157) | | $ | 7,025 |
Depreciation and Amortization of Real Estate | | | 15,277 | | | 11,532 | | | 29,623 | | | 22,447 |
Gain on Disposition of Assets | | | — | | | — | | | — | | | (9,163) |
Gain on Disposition of Other Assets | | | — | | | (139) | | | — | | | (370) |
Provision for Impairment | | | — | | | 67 | | | — | | | 115 |
Realized and Unrealized Loss (Gain) on Investment Securities | | | 4,549 | | | (663) | | | 4,714 | | | 3,376 |
Funds from Operations | | $ | (3,592) | | $ | 11,980 | | $ | 13,180 | | $ | 23,430 |
Distributions to Preferred Stockholders | | | (1,878) | | | (1,871) | | | (3,756) | | | (3,058) |
Funds From Operations Attributable to Common Stockholders | | $ | (5,470) | | $ | 10,109 | | $ | 9,424 | | $ | 20,372 |
Loss on Extinguishment of Debt | | | 20,396 | | | — | | | 20,396 | | | — |
Amortization of Intangibles to Lease Income | | | (267) | | | 244 | | | (716) | | | 718 |
Less: Effect of Dilutive Interest Related to 2025 Notes (1) | | | — | | | — | | | — | | | — |
Core Funds From Operations Attributable to Common Stockholders | | $ | 14,659 | | $ | 10,353 | | $ | 29,104 | | $ | 21,090 |
Adjustments: | | | | | | | | | | | | |
Straight-Line Rent Adjustment | | | (712) | | | (346) | | | (1,285) | | | (1,039) |
Other Depreciation and Amortization | | | (1) | | | (3) | | | (2) | | | (7) |
Amortization of Loan Costs, Discount on Convertible Debt, and Capitalized Interest | | | 318 | | | 297 | | | 685 | | | 518 |
Non-Cash Compensation | | | 1,003 | | | 750 | | | 2,286 | | | 2,137 |
Adjusted Funds From Operations Attributable to Common Stockholders | | $ | 15,267 | | $ | 11,051 | | $ | 30,788 | | $ | 22,699 |
| | | | | | | | | | | | |
Weighted Average Number of Common Shares: | | | | | | | | | | | | |
Basic | | | 32,678,771 | | | 22,787,252 | | | 32,118,982 | | | 22,669,246 |
Diluted (2) | | | 32,727,831 | | | 22,828,148 | | | 32,174,574 | | | 22,674,796 |
| | | | | | | | | | | | |
Dividends Declared and Paid - Preferred Stock | | $ | 0.40 | | $ | 0.40 | | $ | 0.80 | | $ | 0.80 |
Dividends Declared and Paid - Common Stock | | $ | 0.38 | | $ | 0.38 | | $ | 0.76 | | $ | 0.76 |
| (1) | The 2025 Notes were settled during the three and six months ended June 30, 2025. As applicable, includes interest expense, amortization of discount, amortization of fees, and other changes in net income or loss that would result from the assumed conversion of the 2025 Notes to derive FFO (as defined herein) effective January 1, 2022 due to the implementation of ASU 2020-06 which requires presentation on an if-converted basis. For the three and six months ended June 30, 2025, a total of $0.1 million and $0.6 million of interest was not included, respectively, as the impact of the 2025 Notes, if-converted, would be antidilutive to net loss attributable to common stockholders for the respective periods. For the three and six months ended June 30, 2024, a total of $0.5 million and $1.1 million of interest was not included, respectively, as the impact of the 2025 Notes, if-converted, would be antidilutive to net income attributable to common stockholders for the respective periods. |
| (2) | The 2025 Notes were settled during the three and six months ended June 30, 2025. During the three and six months ended June 30, 2025, the Company issued 1,089,555 shares of the Company’s common stock in connection with the settlement of the 2025 Notes and such shares were included in the basic weighted average share count for the applicable periods. A total of 0.2 million shares and 2.0 million shares, representing the dilutive impact of the 2025 Notes, upon adoption of ASU 2020-06 effective January 1, 2022, were not included in the computation of diluted net income per share attributable to common stockholders for the three and six months ended June 30, 2025, respectively, because they were antidilutive to the net loss attributable to common stockholders for the respective periods. A total of 3.6 million shares and 3.5 million shares, representing the dilutive impact of the 2025 Notes, upon adoption of ASU 2020-06 effective January 1, 2022, were not included in the computation of diluted net income (loss) per share attributable to common stockholders for the three and six months ended June 30, 2024, respectively, because they were antidilutive to net income (loss) attributable to common stockholders for the respective periods. |
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Other Data (in thousands, except per share data):
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | June 30, 2025 | | June 30, 2024 | | June 30, 2025 | | June 30, 2024 | ||||
FFO Attributable to Common Stockholders | | $ | (5,470) | | $ | 10,109 | | $ | 9,424 | | $ | 20,372 |
FFO Attributable to Common Stockholders per Common Share - Diluted (1) | | $ | (0.17) | | $ | 0.44 | | $ | 0.29 | | $ | 0.90 |
| | | | | | | | | | | | |
Core FFO Attributable to Common Stockholders | | $ | 14,659 | | $ | 10,353 | | $ | 29,104 | | $ | 21,090 |
Core FFO Attributable to Common Stockholders per Common Share - Diluted (1) | | $ | 0.45 | | $ | 0.45 | | $ | 0.90 | | $ | 0.93 |
| | | | | | | | | | | | |
AFFO Attributable to Common Stockholders | | $ | 15,267 | | $ | 11,051 | | $ | 30,788 | | $ | 22,699 |
AFFO Attributable to Common Stockholders per Common Share - Diluted (1) | | $ | 0.47 | | $ | 0.48 | | $ | 0.96 | | $ | 1.00 |
| (1) | The 2025 Notes were settled during the three and six months ended June 30, 2025. During the three and six months ended June 30, 2025, the Company issued 1,089,555 shares of the Company’s common stock in connection with the settlement of the 2025 Notes and such shares were included in the basic and diluted weighted average share count for the applicable periods. The weighted average shares used to compute per share amounts for FFO Attributable to Common Stockholders per Common Share – Diluted, Core FFO Attributable to Common Stockholders per Common Share - Diluted, and AFFO Attributable to Common Stockholders per Common Share - Diluted do not reflect any assumed dilution related to the ultimate settlement of the 2025 Convertible Senior Notes other than the 1,089,555 shares of the Company’s common stock actually issued. |
CRITICAL ACCOUNTING ESTIMATES
Critical accounting estimates include those estimates made in accordance with U.S. GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the Company’s financial condition or results of operations. Our most significant estimate is as follows:
Purchase Accounting for Acquisitions of Real Estate Subject to a Lease. As required by U.S. GAAP, the fair value of the real estate acquired with in-place leases is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, the value of in-place leases, and the value of leasing costs, based in each case on their relative fair values. In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded as other assets or liabilities based on the present value. The assumptions underlying the allocation of relative fair values are based on market information including, but not limited to: (i) the estimate of replacement cost of improvements under the cost approach, (ii) the estimate of land values based on comparable sales under the sales comparison approach, and (iii) the estimate of future benefits determined by either a reasonable rate of return over a single year’s net cash flow, or a forecast of net cash flows projected over a reasonable investment horizon under the income capitalization approach. The underlying assumptions are subject to uncertainty and thus any changes to the allocation of fair value to each of the various line items within the Company’s consolidated balance sheets could have an impact on the Company’s financial condition as well as results of operations due to resulting changes in depreciation and amortization as a result of the fair value allocation. The acquisitions of real estate subject to this estimate totaled one multi-tenant income property for an aggregate purchase price of $79.5 million, or a total acquisition cost of $80.0 million, for the six months ended June 30, 2025, and one building within an existing multi-tenant income property, one vacant land parcel within an existing multi-tenant property, and one multi-tenant property for an aggregate purchase price $72.5 million, or a total acquisition cost of $72.6 million, for the six months ended June 30, 2024.
See Note 2, “Summary of Significant Accounting Policies” in the Notes to Financial Statements, for further discussion of the Company’s accounting estimates and policies.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The principal market risk (i.e. the risk of loss arising from adverse changes in market rates and prices), to which we are exposed is interest rate risk relating to our debt. We may utilize overnight sweep accounts and short-term investments as a means to minimize the interest rate risk. We do not believe that interest rate risk related to cash equivalents and short-term investments, if any, is material due to the nature of the investments.
We are primarily exposed to interest rate risk relating to our own debt in connection with our Credit Facility, as this facility carries a variable rate of interest. Our borrowings on our $300.0 million Credit Facility bear interest at a rate ranging from SOFR plus 0.10% plus 125 basis points to SOFR plus 0.10% plus 220 basis points based on our level of borrowing as a percentage of our total asset value. As of June 30, 2025, the outstanding balance on our Credit Facility totaled $224.0 million of which $74.0 million was not fixed by virtue of an interest rate swap agreement. As of June 30, 2024, the outstanding balance on our Credit Facility totaled $150.0 million and was fixed. A hypothetical change in the interest rate of 100 basis points (i.e., 1%) would affect our financial position, results of operations, and cash flows by $0.7 million as of June 30, 2025. The Company entered into interest rate swap agreements to hedge against changes in future cash flows resulting from fluctuating interest rates related to certain of its debt borrowings, see Note 16, “Interest Rate Swaps” in the Notes to Financial Statements. By virtue of fixing the variable rate on certain debt borrowings, our exposure to changes in interest rates is minimal but for the impact on other comprehensive income and loss. Management’s objective is to limit the impact of interest rate changes on earnings and cash flows and to manage our overall borrowing costs.
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, an evaluation, as required by Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934 (the “Exchange Act”) was carried out under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act). Based on that evaluation, the CEO and CFO have concluded that the design and operation of the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and to provide reasonable assurance that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the three months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company may be a party to certain legal proceedings, incidental to the normal course of its business. While the outcome of the legal proceedings cannot be predicted with certainty, the Company does not expect that these proceedings will have a material effect upon our financial condition or results of operations.
ITEM 1A. RISK FACTORS
For a discussion of the Company’s potential risks and uncertainties, see the information set forth under the heading Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “Form 10-K”). The risks described in the Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company. As of June 30, 2025, there have been no material changes in our risk factors from those set forth within the Form 10-K.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On April 3, 2025, the Company completed separate, privately-negotiated transactions with holders of $35,208,000 in aggregate principal amount of the Company’s 2025 Notes in which the holders exchanged their 2025 Notes with the Company for an aggregate of 1,089,555 shares of the Company’s common stock and aggregate cash payments of $29,032,088.77, including $632,888.25 representing accrued interest. The transactions with holders of the 2025 Notes were effected solely with “accredited investors” as defined in Rule 501(a) under the Securities Act. The 2025 Notes received by the Company were retired. The exchanges of shares of common stock for the 2025 Notes were made pursuant to the exemption from registration provided in Section 4(a)(2) of the Securities Act.
Issuer Purchases of Equity Securities
The following repurchases of shares of the Company’s common stock were made during the three months ended June 30, 2025:
| | | | | | | | | | |
|
| Total Number |
| Average Price |
| Total Number of |
| Maximum Number (or | ||
4/1/2025 - 4/30/2025 | | 2,251 | | $ | 16.34 | | 2,251 | | $ | 4,300 |
5/1/2025 - 5/31/2025 | | — | | | — | | — | | | — |
6/1/2025 - 6/30/2025 | | — | | | — | | — | | | — |
Total | | 2,251 | | $ | 16.34 | | 2,251 | | | |
| (1) | On December 12, 2023, the Board approved a $5.0 million common stock repurchase program, of which $4.3 million remained available as of June 30, 2025. |
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
Recent Tax Law Changes
On July 4, 2025, President Trump signed into law the legislation known as the One Big Beautiful Bill Act (the “OBBBA”). The OBBBA made significant changes to the U.S. federal income tax law that impact REITs and their investors. Specifically, the OBBBA increases the REIT asset test limitation on the value of taxable REIT subsidiary (“TRS”) securities a REIT may hold from 20% to 25% for taxable years beginning after December 31, 2025. As a result, for taxable years beginning after December 31, 2025, the aggregate value of all securities of TRSs held by a REIT may not exceed 25% of the value of its total assets. The OBBBA also makes permanent the 20% deduction for “qualified REIT dividends” (i.e., REIT dividends other than capital gain dividends and portions of REIT dividends designated as qualified dividend income) for individuals, trusts, and estates that was set to sunset for taxable years beginning after December 31, 2025. In addition, for taxable years beginning after December 31, 2024, the OBBBA restored the exclusion of deductions for depreciation, depletion and amortization in the calculation of a taxpayer’s “adjusted taxable income” for purposes of calculating the limitation on the taxpayer’s net interest expense deduction, which was previously in effect for taxable years beginning before January 1, 2022. This change will generally have the effect of increasing the available deduction.
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ITEM 6. EXHIBITS
(a) Exhibits:
| ||
(3.1) |
| Articles of Amendment and Restatement of CTO Realty Growth, Inc., as amended by the Articles of Amendment (Name Change), filed as Exhibit 3.1 to the registrant’s current report on Form 8-K12B filed February 1, 2021, and incorporated herein by reference. |
| | |
(3.2) | | Articles Supplementary, designating CTO Realty Growth, Inc.’s 6.375% Series A Cumulative Redeemable Preferred Stock, filed as Exhibit 3.2 to the registrant's Registration Statement on Form 8-A filed July 1, 2021 (File No. 001-11350), and incorporated herein by reference. |
| | |
(3.3) | | Articles Supplementary, designating 3,000,000 additional shares of CTO Realty Growth, Inc.’s 6.375% Series A Cumulative Redeemable Preferred Stock, filed as Exhibit 3.1 to the registrant’s current report on Form 8-K filed April 3, 2024, and incorporated herein by reference. |
| | |
(3.4) | | Third Amended and Restated Bylaws of CTO Realty Growth, Inc., effective as of February 16, 2023, filed as Exhibit 3.1 to the registrant’s current report on Form 8-K filed February 17, 2023, and incorporated herein by reference. |
| | |
(4.1) | | Specimen Common Stock Certificate of CTO Realty Growth, Inc., filed as Exhibit 4.2 to the registrant’s current report on Form 8-K12B filed February 1, 2021, and incorporated herein by reference. |
| | |
Exhibit 31.1 | | Certification filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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Exhibit 31.2 | | Certification filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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**Exhibit 32.1 | | Certification furnished pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | |
**Exhibit 32.2 | | Certification furnished pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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Exhibit 101.INS | | Inline XBRL Instance Document |
| | |
Exhibit 101.SCH | | Inline XBRL Taxonomy Extension Schema Document |
| | |
Exhibit 101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| | |
Exhibit 101.DEF | | Inline XBRL Taxonomy Definition Linkbase Document |
| | |
Exhibit 101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document |
| | |
Exhibit 101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| | |
Exhibit 104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| |
** | In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. |
** In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. | | | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | |
|
| CTO REALTY GROWTH, INC. | ||
|
| (Registrant) | ||
| | | | |
July 29, 2025 |
| By: | | /s/ John P. Albright |
|
| | | John P. Albright President and Chief Executive Officer (Principal Executive Officer) |
| | | | |
July 29, 2025 | By: | | /s/ Philip R. Mays | |
| | | Philip R. Mays, Senior Vice President, | |
| | | Chief Financial Officer and Treasurer | |
| | | (Principal Financial Officer) | |
| | | | |
July 29, 2025 |
| By: | | /s/ Lisa M. Vorakoun |
|
| | | Lisa M. Vorakoun, Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) |
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FAQ
How much revenue did CTO (NYSE:CTO) report for Q2 2025?
What caused CTO’s Q2 2025 net loss?
How has CTO’s debt position changed in 2025?
Did CTO cover its dividend with cash flow?
What is CTO’s share count after the note settlement?
How did interest-rate swaps impact results?
