CTO Realty Growth, Inc.

Good day, and welcome to CTO's fourth quarter and full year 2024 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Instructions will be given at that time. As a reminder, this call may be recorded. I would like to turn the call over to Phil Mays, CFO. Please go ahead.

Thank you. I would 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. Today's call will include certain non-GAAP financial measures. For reconciliation of these non-GAAP measures, you should also refer to our earnings release and SEC filings. You can find our SEC filings, earnings release, supplemental, and most recent investor presentation on our website at ctoread.com. With that, I will turn the call over to John.

Thanks, Bill. 2024 was a year of significant accomplishments towards execution of our strategic business plan. Our robust performance was driven by investment volume and leasing activity that both exceeded expectations, and with efficient capital raising, we reported core FFO of $1.88 per share for the year, a record high for CTO and growth of 6% from 2023. Beginning with investment activity, in 2024, we completed $331 million of investments at a weighted average yield of 9.3%, consisting of $227 million of retail property acquisitions located in our target markets of the southeast and southwest and $104 million of structured investments. These amounts include two investments closed in the fourth quarter. In November, we originated a $40 million first mortgage loan for the development of an 80,000-square-foot retail center anchored by Whole Foods Market located in Atlanta, The loan has an initial term of 30 months and initial fixed interest rate of 12.15%. Additionally, this development neighbors our shopping center known as the Collection at Foresight, and we have the right of first refusal to purchase it. In December, we acquired Granada Plaza for $17 million, expanding our presence in the Tampa market. Granada Plaza is a 74,000-square-foot shopping center anchored by high-performing publics. and is a densely populated and growing retail market in the Tampa metro area. Our investment activity over the full year of 2024 increased our portfolio by 1 million square feet, or 26%, to 4.7 million square feet. Significantly, we were able to complete our first investment in Charlotte, North Carolina market, while further expanding our presence in both Orlando and Tampa. With our growth in 2024, I want to note that our total enterprise value rose by 33% to approximately $1.3 billion, and we ended the year with significantly reduced leverage and over $200 million of liquidity. Now transitioning to leasing, during the fourth quarter, we signed 68,000 square feet of new leases, renewals, and extensions. bringing full-year leasing activity to more than 450,000 square feet and average rent of $24.07 per square foot. On a comparable lease basis, we signed 352,000 square feet for the full year 2024 at a positive cash lease spread of 23% and average rent of $23.36 per square foot. We believe that our strong comparable leasing spreads are a further indication of the strong tenant demand for our high quality properties within our strategic markets. Significantly, our signed not open leasing pipeline now stands at $5.2 million, representing almost 6% of in-place cash rents. The rent commencement associated with this pipeline will be weighted toward the second half of 2025, Accordingly, we expect to recognize just over 50% of it in 2025, and for 2026, we'll receive the full benefit of it. Moving to recently announced retailer bankruptcies, given that all of our impacted leases were for spaces with meaningfully below-market rents and embedded value, we have been proactive in working to quickly regain them. Late in the fourth quarter, we successfully worked through the court process and regained four spaces that were occupied by our two big lots, one cons, and an American freight. Furthermore, we're now working on agreements to get possession of our three-party city spaces and three Joanne spaces early in 2025. Notably, we already have LOIs or are negotiating leases with tenants for a majority of these spaces. We believe this is a testament to our favorable markets and locations which drive tenant demand. Based on current lease negotiations, we currently estimate that potential releasing spread for these spaces could be between 40% and 60%. While we are making rapid progress on leases with new tenants, it simply takes time for tenants to obtain permits, complete their build-out, and open. Accordingly, we expect rent from new tenants to commence during 2026. We are also in negotiation with several anchor tenants for our 10 acres of undeveloped land adjacent to our shopping center collection at Forsyth. We're targeting to have this property contribute to earnings by late 2026. The leasing opportunity for this property combined with the releasing opportunities related to the recent retailer bankruptcies and our signed not open pipeline should provide strong tailwinds for 2026 earnings growth. As we look ahead, our acquisition pipeline is robust, and we currently anticipate closing one or two acquisitions in the near term. We're excited about these opportunities and the ability to continue our portfolio growth with high-quality investments and attractive yields in 2025, and look forward to providing more information to you soon. And with that, I will now hand the call back over to Phil.