CTO Realty Growth, Inc.

Good day, and thank you for standing by. Welcome to CTO second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To answer your question, please press star 11 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, Jenna McKinley. Please go ahead.

Good morning, everyone, and thank you for joining us today for the CTO Realty Growth Second Quarter 2025 Operating Results Conference Call. Participating on the call this morning are John Albright, President and CEO, Philip Mays, CFO, and other members of the executive team that will be available to answer questions during the call. I would like to remind everyone that many of our comments today are considered forward-looking statements under federal securities laws. 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 reports, earnings release, supplemental, and most recent investor presentation on our website at ctoreit.com. With that, I will turn the call over to John.

Thanks, Jenna. Once again, we delivered another quarter of strong operating results driven by continued leasing momentum. During this quarter, we signed approximately 227,000 square feet of new leases, renewals, and extensions, an average cash-based rent of $25.43 per square foot, including 190,000 square feet of comparable leases at a 22% cash rent spread. Year-to-date, we have now completed 339,000 square feet of leasing, including 299,000 square feet of comparable leasing at a 27% cash rent spread. Given the robust leasing fundamentals at our shopping centers located in faster-growing, business-friendly MSAs within the Southeast and Southwest, we're making considerable progress regarding the unique mark-to-market opportunity on the 10 anchor spaces we have been discussing. With Party City and Joann's having wound down their operations and vacating in the second quarter, we now have full control of all 10 of these spaces. Furthermore, because of our proactive leasing efforts, six of the 10 anchor spaces are resolved with new leases executed for five of them, and one of the leases assigned The new anchors include Burlington, Two Boot Barns, Bassett Furniture, Slick City Action Park, and Bob's Discount Furniture, all concepts that will drive more foot traffic compared to the former tenants that we're replacing. Additionally, we are in active lease negotiations for the remaining four anchor spaces and look forward to announcing additional leases upon execution. Overall, we remain on target to achieve a positive cash leasing spread of 40% to 60% in total for these 10 anchor spaces. Notably, with our leasing activity this quarter, our signed not open pipeline now stands at $4.6 million, representing a 4.6% of in-place cash rents. This pipeline of completed leasing along with anticipated leasing for the remaining four anchor spaces will provide the company with earnings tailwinds going into 2026. We're continuing to see strong leasing momentum from high-quality retailers and are excited about ongoing lease negotiations. One last leasing note. Our property portfolio consisting of 5.3 million square feet was 93.9% leased and 90.2% occupied at the end of the quarter. On the investment fraud, we remain disciplined in our underwriting of both property acquisitions and structured investments and currently have a healthy pipeline of potential acquisitions. Specifically, we have one shopping center on our sites. This asset is located in one of our core target markets and has the value-add attributes that align with our leasing and operating strengths, providing the opportunity to acquire the asset at an attractive yield and create additional long-term value. We are optimistic about getting this asset under contract and will provide an update next quarter. Additionally, as previously mentioned, We are considering recycling some of our stabilized assets, which could be a part of the funding for future acquisitions. Now I'd like to briefly discuss the exciting progress taking place at three of our properties. Starting with Carolina Pavilion, a 694,000 square foot regional power center located in Charlotte, North Carolina that we acquired in August 2024. Since acquisition, Ulta, Sierra Trading, and Academy Sports have all opened at this center. significantly increasing its vibrancy. Additionally, this property includes four of the 10 anchor spaces I discussed earlier. All four of these were identified in underwriting as value-add opportunities, having significantly below market rent. Of these four spaces, two have already been leased, and we are in active lease negotiations for the other two spaces. After capturing the upside on these four anchor spaces, We expect to achieve an unlevered double-digit yield on this property. Moving to the plaza at Rockwall, a 446,000 square foot center located in the desirable suburb of Dallas, Texas. Late last year, Staples lease at the center expired with no remaining contractual options. Staples wanted to stay at the center, but we received strong tenant interest and ultimately signed a lease with Barnes & Noble. Barnes & Noble is on schedule to open their new format here in the fall. Additionally, the center includes a former space leased to Joann's before they vacated in the second quarter. Our proactive leasing efforts also enabled us to execute a timely lease with Boot Barn, which is working hard to get open prior to year end. Similar to Carolina Pavilion, these spaces were identified as having significantly below market rent and upside in our underwriting. In combined, we are achieving 86% cash rent spread on them. Now to our last significant non-core asset, a 210,000-square-foot office property located in Albuquerque, New Mexico. This asset is currently fully leased and occupied by Fidelity. However, we are finalizing a lease amendment to reduce Fidelity's space to approximately half the building around the end of November. Their lease on the remaining space has an initial maturity of 2028 with two five-year extensions. This amendment provides us with the opportunity to sign a new 10-year lease with the state of New Mexico, which will backfill a majority of the space vacated by Fidelity. Accordingly, this property will soon have two credit tenants and a longer-awaited lease term, increasing both its value and marketability. Again, we are pleased with our leasing activity and progress as we begin to realize the embedded upside in our assets. And with that, I will now hand the call over to Phil.