CTO Realty Growth, Inc.

Good day, and thank you for standing by. Welcome to this CTO Q1 2024 earnings conference call. At this time, all participants are in a listening mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Lisa Varricone. Please go ahead.

Good morning, everyone, and thank you for joining us today for the CTO Realty Growth First Quarter 2024 Operating Results Conference Call. With me today is our CEO and President, John Albright. Before we begin, I'd like to remind everyone that many of our comments today are considered forward-looking statements under federal securities law. The company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we undertake no duty to update these statements. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's Form 10-K, Form 10-Q, and other SEC filings. You can find our SEC report, earnings release, supplemental, and most recent investor presentation on our website at ctoreet.com. And now I'll turn it over to John for his prepared remarks.

Thanks, Lisa. Good morning, everyone, and thank you for joining us. I'd like to start off by thanking our former CFO, Matt Partridge, for his many contributions to our company. We wish him well with his new opportunity. We've engaged the National Search Forum to assist us in identifying our new CFO and and have started interviewing candidates. Today, we'll provide a brief overview of our first quarter results, discuss the continued strength we're seeing in the leasing front, and highlight our recent transactions. Starting with our operating business, we had yet another successful quarter of leasing activity in the first quarter. We signed over 100,000 square feet of new leases, renewals, options, and extensions, and an average rent of 2712 per square foot. That's over 200,000 square feet of leasing activity in the past six months. The leasing activity was relatively widespread and included the signing of a replacement of Regal Cinemas at Beaver Creek Crossing at Apex, North Carolina. The new 45,000 square foot lease is with a well-known, successful regional fitness operator. The rent is meaningfully higher than the rent under the existing Regal lease, given the reduced rent in place associated with the bankruptcy of Regal. The fitness operator tenant is tentatively scheduled to open for business in mid-2025. Comparable growth in new cash-based rents versus expiring rents stood at an impressive 68%, which includes a significant impact of the Regal replacement tenant. We anticipate this activity will help push same-story NOI in 2024 and even more so in late 2025 when we get the full benefit of our rent commencement under some of the larger leases signed on required vacancy. Given our recent leasing activity, our signed but not open pipeline now represents 3.5% of prospective occupancy pickup and over 5% of our existing quarter-end cash flow-based rents. We ended the quarter with a strong increase in occupancy, finishing at 92.6% increase of 2.3% from year end 2023. Additionally, our lease occupancy increased by 1% from year end 2023 to 94.3%. Turning to our investments for the quarter, we acquired the final property within the Sprouts Grocery Anchored Exchange at Gwinnett in Beaufort, Georgia for 2.3 million. Additionally, as announced in March, we purchased Marketplace, a Seminole town center, in the Sanford sub-market of Orlando, Florida, for $68.7 million. The multi-tenanted retail power center is over 315,000 square feet, located on 41 acres along I-4, just over 20 miles northeast of downtown Orlando. The property is 98% leased and is anchored by Burlington Marshalls World Market Petco, Ross Dress for Less, Old Navy, Ulta, Beauty, and Five Below. With this acquisition, the Orlando Metroplex, which has seen tremendous growth over the past few years, is now in our top five markets, representing over 8% of our in-place cash-based rent. And Florida has moved into our top three states with over 17% of our annual cash-based rent. Additionally, we originated $10 million first mortgage loan on a retail development in West Palm Beach, Florida, at a fixed interest rate of 11%, of which $6.7 million was funded during the first quarter. On the disposition front, we are pleased to complete the sale of our mixed-use property in Santa Fe, New Mexico for $20 million and exit cap rate of 8.2% and a gain of $4.6 million. From a capital recycling perspective, we will continue to prioritize selling smaller non-core assets for redeployment into attractive investment opportunities. After quarter end, the company issued just over 1.7 million shares of our 6.38% preferred stock for net proceeds of 33 million. With the net proceeds from this issuance and the $15 million early prepayment of the Sable Pavilion seller financing loan, we were able to pay down all of our floating rate debt under our credit facility subsequent to the quarter end. This gives us ample liquidity to pursue larger format retail center acquisitions in what we believe is a very favorable environment with limited buyer competition. With that, I'd like to hand the call back over to Lisa.