CTO - Earnings call transcript Q2 2024 | CTO Realty Growth, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the CTO Realty Growth Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, John Albright, President and CEO. Please go ahead.

John Albright

thank Growth joining Results Second and the today Conference everyone, Realty CTO Quarter morning, you us for for Call. Good XXXX Operating Financial morning. to joining pleased have Mays, new I'm Phil me Chief this our Officer,

provide Before we it disclosures turn begin, today's Phil? the Phil call. over regarding customary to I'll to

Philip Mays

discussed remind from would future statements. these securities of law. to in company's that actual our the statements comments we John. I duty everyone forward-looking federal Thanks, today may under significantly differ results matters like to and no statements, many are considered forward-looking The undertake these update

Factors SEC cause time materially to risks filings. Form the results from from greater in to XX-K, detail in and differ that could time company's disclosed other expectations and are Form actual XX-Q

find and reports, the on can that, our presentation investor ctoreit.com. John. supplemental turn I website will recent to release, our over earnings most at call back With SEC You

John Albright

quarter I overview our another we of in are investment had areas We opportunities second our seeing. strong of provide Phil. will highlight leasing quarter results environment, strong Thanks, the all and morning, a This business. brief

the located As of portfolio in of XX% of see Texas and Southwest. a our owning over the in centers Florida, strong and and quarter growth of continue Southeast to come shopping from high-quality we rents end, Georgia, benefits markets

per at square the renewals XXXX. $XX.XX rent extensions second activity to In with leasing signed Starting and an quarter square feet square successful average XX,XXX of first new foot our half foot, at average operating $XX.XX business, quarter, per we the leases, our feet another leasing activity. rent we XXX,XXX for of of bringing had square of of an

and in portfolio, spread in was at Broad across Richmond. Village activity West heaviest Lane but leasing This our Ashford Atlanta

in half the Our comparable XX% XXXX. in quarter lease second of first were X% and the spreads

of fitness includes Creek year-end our occupancy operator call, impact in Raleigh XX% Regal half a X.X% Beaver a at As with of the growth Crossing open quarter an We in XXXX in first mid-XXXX. discussed on physical increase cinemas the significant leased XX.X%. ended XX.X%, scheduled of occupancy replacing and to the last of with from

The X% rents current and base occupancy our million leased in-place between nearly rents. cash in of $X point basis future of XXX cash represents spread physical almost

some XXXX from of leases half as possession. We will receive up these most ramp the of throughout tenants second new benefit benefit earnings in the but will the XXXX, take

the Forsyth We by The space the Collection formerly in and of of Plano, to Shops at former Texas. lease feet Legacy at square square also are WeWork leased Fare , approximately at at negotiations store XX,XXX feet Atlanta Earth XX,XXX in

$X.X Seminole future first for submarket in Turning Richmond. a relatively for to land included Center X.X the of investments. acres quiet After West purchasing Village development Sanford of an Marketplace acquiring vacant Orlando, at our within we Towne which quarter active had quarter, second the Broad and million property

year to we that have we for full of successful importantly, a the $XXX Accordingly, in XXXX we optimistic would which to acquisitions quarter. $XXX increased third close are in with for investments our of More markets, some we range million. outlook target our expect to will million the be

in dispositions million in the $XX Jordan sales nonrefundable contract were although have we scheduled completed our a Landing, On during August. the no quarter, front, property for with transactions Utah closings

into our open-air selling retail We attractive non-core format larger opportunities small prioritize centers. few redeployment to continue will remaining in investment assets for

call of increased our seeing, detail, will $X.XX Phil I portfolio more we results, market over the have we and $X.XX. of has a our the favorable are the our to and first along Given now XX% hand strong will XXXX him. core half to guidance of to guidance discuss midpoint the a with FFO earnings for XXXX, by transaction delivered range in

Philip Mays

Thanks, John.

the X.X in million of for long-term results to Southwest, remarkable comprising privilege all this property the The job portfolio a are The here me quarter's demographics the results Currently, of property feet consists transforming and markets, transformed are Board positive done have the company's and business-friendly of substantially company's is states a outsized portfolio. markets. CTO XX call. X on from these join specifically, in growth. today's management located discussed team properties, and located it this throughout at Southeast portfolio More management the Realty. First, properties strong evident XX team square supportive and in

demand Accordingly, they in evidenced tenant and growth. occupancy, benefit from spreads as strong NOI leasing same-property

and occupancy year. earnings quarter growth physical of spread increased X% that was the the a end, NOI cash-based to in between with the XX.X%, annualized period almost As in occupancy them contribute and representing million Same-property rents quarter XXXX. leased by second prior will at John for was NOI to same compared previously primarily XX.X% mentioned, $X

X The first growth months first X XXXX of to of percentage the from months certain first of after XXXX, annual higher was quarter by in and on year-end. received of months XXXX. an lease-up the was that the For basis tenants rent for additionally growth from percentage X% first XXXX the driven risk same-property benefited X NOI compared pay

Moving for same to the quarter, the $X.XX $X.XX prior consistent year. in was prior the the in AFFO period per share period year, quarter, earnings. per with for Core representing to growth share same X% when and was FFO the the compared

X per the months first respectively, of the per For XX%, growth months XX% to of first core representing share XXXX. FFO share, XXXX, AFFO and X compared and $X of $X.XX was was

write-off year. associated hall a growth FFO tenant Ashford at second Core for outpaced X quarter quarter $XXX,XXX our with of months due both and in Lane. first to rents last growth the the AFFO receivable non-cash straight-line former food of XXXX of

and impact fluctuations our in And that in that AFFO such release for items addition to present reason, press excludes short-term rents non-cash flows. straight-line As with filings, operating our disclosed other can cash no on in earnings FFO. we cause AFFO as

XXXX a of of announce ratio an distributed August, amount we X%. approximately XX% practice, past regular of May, the in share quarter quarterly cash second AFFO dividend a payout per in and annualized $X.XX third announced yield will attractive towards for we end dividend we with the quarter. of As QX our Consistent current resulting

to X.Xx, ended EBITDA total net turning quarter Now million and a to to XX% $XXX of balance the net maturity debt debt value enterprise with schedule. of our sheet. We debt of liquidity staggered and

shares of announced, in we for proceeds the early million. previously As stock second million issued X.X quarter, A net our preferred Series $XX.X of

XXX,XXX our with million. Additionally, These $XX.X one common million, we and of investments $XX quarter, end. along almost our for we of proceeds to down in revolving to outstanding used proceeds of during net quarter loan at received the facility of ATM total repayment under million approximately credit program connection $X.X with pay proceeds its shares issued of balance reduce our million the $XXX combined

cover disclosed additional earnings for our that ] interest swaps no as end. credit amount term rate $XXX [ thereby supplemental quarter exposure of Further, revolving loans and reporting release at facility, package, in SOFR our rate and million floating no into our have we entered all leaving previously of

share. of we Lastly, range update share year to guidance FFO AFFO core per with results increasing a outlook, half a to first guidance XXXX and and guidance to per to range $X.XX $X.XX are our of $X.XX $X full our strong current

unchanged, of guidance XX% increase XXXX increase represents the guidance At underlying remain for XX% the an except our FFO to guidance. this assumptions to core midpoint, investments. a Most and AFFO

of optimistic to second range million in we about initial of increased yield full we investments an cash million year X%. discussed, acquisitions John As the $XXX the are range of half our have and X.X% $XXX Accordingly, anticipated year. XXXX a to to

we As not inclusive are range a investment Currently, to of increasing $XX of are loans. million. disposition our reminder, our properties and $XX million assumptions both

However, possible as we will call opportunistically exceed we end assets. our that, line dispose would look disposition one more for non-core range the our of to our should range, few we high it back the to now With open questions. the turn land is I operator of or could the on remaining of that investment to

Operator

of [Operator Our question James. comes the Raymond Milligan Instructions] with line R.J. first from

R.J. Milligan

talk John, loans regular the in increase confidence a And could way in gives to was wondering guidance? to mix investments. if between terms Phil. of the what you comment you the expect should environment we I Welcome, the of today what and just terms as about maybe

John Albright

Yes. Thanks, Sure. R.J.

would we mentioned now in fairly good properties on have amount last lot of say acquisitions. shopping guidance the is we're We've of the we're confidence XX% missed a call, as are a mix, out right that We able actively far real XX% sizable the us seeing But estate this looking fair of in been seeing center, of question to its one primarily I investments. power core due quality more it's core pursuing acquisitions. then that line gives been locations. And that on one this I as as opportunities. of far buy. earlier was probably sights of to centers as your -- upward year our So then in diligence. on we're mix that what we've this based And structured

R.J. Milligan

helpful. That's

a In in increase guidance. of, the terms obviously, -- decent

give might that you sooner idea just timing, than funding to imply of expect and an you later. number that could expectations think rather modeling I some if so a us one, on perspective, transactions curious, sources. And close I'm these from then

John Albright

Yes.

do of days. a on the something the acquisition. able we credit And on in, sizable be that we facilities us transaction hope to close line we our have fairly to XX So it, that capacity basically for have call we

-- and you been as pretty assets. about good so And have obviously we know, recycling

we're into X we assets So or that have, well. more property going under looking addition process the -- we less in sell to as have we contract, other or to closing

Operator

the with from Mehta comes line of Gaurav Partners. Alliance question next Our Global

Gaurav Mehta

from rate more the well. the seeing follow to guidance you cap previous lower I get I acquisitions on that if the the rate CapEx expectation what wanted wanted market? to raised [ the to I guidance. you're a at? as was that to is that in like seems X% specific some guidance well It as investment Or up And on cap for X.X% you're the wondering questions. to ] color looking

John Albright

and we making where the the structured what combination and feel offers and Combination. like of can acquire probably know some been acquisition we've investments. assets on What we're pursuing we

a with we our it's two. what But So we the see transactable that of comprised blend acquisitions. is far as definitely as think

Gaurav Mehta

repayment, on color that Any follow-up what seller early of early financing repayment loan. the a early sorry. on And refinancing -- I'm drove

Philip Mays

million. $XX

John Albright

ask you again? can Sorry, that

Gaurav Mehta

Yes.

had seller you a quarter, the of loan. early of in repayment financing million $XX.X think I

Just wanted color. more to get some

John Albright

Yes.

was little for one the I bit that That's second in the seller of the we that we building where allowed and in that office believe so sorry, -- announced I think was earlier close in quarter, call, Ford we a on discount. the to sold financing Tampa. on -- earnings a So Sabal last

Operator

of from Janney Scott. Stevenson line Rob Our comes the with Montgomery next question

Robert Stevenson

your in John, where the comments, or other XX,XXX about in current and Plano that it yet? is beyond Atlanta on the you XX,XXX that square vacancy signed of tenant at whether pockets future you're feet are in working the today, talked a larger

John Albright

Yes.

the some WeWork space, basically -- the So the the But the I foot those of ones of amount for on mentioned sure. of the are the WeWork big mean roughly of square balance space, it. XX,XXX -- of that's X/X as

still that market, which on balance we wood is have good The to increased chop news there is the the great. So in we're some seeing of space. activity

to love see so that. And

everything And square the the fairly feet portfolio. rest scattered. we And throughout XXX,XXX as of then else as far vacancy have is, where space of the roughly is

then -- on those sure, and which addressed. getting the like what been looks for would we've Earth hard working pretty that we big There's X that's have Fare spaces. on the be not and ones space, WeWork the signed smaller lease So up are

Robert Stevenson

still the mixed-use Okay. aggressively these deal retail the assets Is only if really mixed-use acquisition mixed-use and focus guys do to it days? sort you are falls track, how pursuing That's a in are lap? a assets Or forward? you great pursuing And then is going helpful. back asset, and it's your it -- you of aggressively

John Albright

Yes. mixed-use in the air there's primarily open now, core Right pipeline, our no centers. assets retail it's

Robert Stevenson

rest of -- some the drove And slugs outlook helpful. increased That's the any of better that leasing? guidance then, the Phil, Anything for year? main Okay. beyond just up big the contributors the to

Philip Mays

Yes.

falls X into I think buckets. it

and second, the And touched The activity, first the of timing both John also, right? one I dispositions. loans on, we're them think properties. lead seeing being investment as acquisitions

we've falls a maybe And then with in especially being in conservatism kind half And it. year the the buckets, drives them. initially early results. us just the also that with very, you spread of strong first of increase behind the little in it year. in year, then very got CFO guidance guidance early prudent X across the of kind And of out those can So

Operator

of line Matthew comes Trading. the Jones Our Erdner from next with question

Matthew Erdner

investment the yield. on and to of like I'd up opportunities. follow kind the higher

capital So facilities ones lower that centers kind targeting or that in shopping some some of increased guess, open-air occupancy to with guys need maybe some some rate? cap I you of these get are kind of improvement

John Albright

properties good mean we're component a definitely not capital some I refresh to -- lot incredible are we a it's certainly Yes, upfront the Not side it's that of a not question. capital, of more the vacancy, fair acquisition on but amount amount seeing need capital, a but There's some big less seeing not vacancy. it. or of of properties.

Matthew Erdner

Got you. That's payoffs? the a to And onetime of then Or loans, any kind thing? expect early we was turning helpful. this should other

John Albright

front in going that's nothing of us off soon. now to Yes, paying anytime right be

Operator

the line question Securities. next Massocca B. Riley from John Our comes of with

John Massocca

of set have the and was of the air up last therefore, today. a look pipeline any you beyond the close investment deals ago. in are pipeline seen like of interest the or pressure of moves a you've pretty given lot in what's But you today you some seeing this on rates couple as in kind the sounds rates, Are maybe the that even more little that some while pricing along pipeline is weeks? that So kind point, on of far over it of in cap the at

John Albright

Yes. on in to the the avoid the of institutional basically of larger assets kind real of sort pressure almost say, would be chasing mean cap -- the seem the really are that capital I trying that more to wouldn't pursuing the $XXX rates in type the assets core million major would we're asset of pressure I MSAs, more I these. were of that get pricing say

buy trying And so to around edges. the

expect compression yet, So we're not seeing it. rate cap as there we much

So we're that's trying busy why kind to front. on get acquisition of the

John Massocca

banking are probably loosening And of getting But more most a disposition extends you market to of of in the seeing terms kind active, of if financing any things. transactions? then the it will, little side of you

John Albright

seems market been transaction debt. secured for been for the are has for It helpful Yes. that acquirers folks like very look market the for the selling assets CMBS helping that sure. That's really

the better competition like it in that's leverage helping transaction don't to brings the market out because that see there, on asset are folks and sure. using is but we been that from So so leverage basis. more there for

John Massocca

particularly debt are own on kind of in side, financing debt the Okay. terms And seeing of then of investment in terms your pipeline, cost what the you of capital?

Philip Mays

borrower. largely unsecured We're an

under in terms in X% line terming fixed right just the do to spread or in. of loan, X-year probably and is X-year so right just our of So loan, something or swaps maybe an have the full could out now now. about get They're bps, we doing another term X all-in term come XXX neighborhood

John Massocca

loan going looks Would on there term if market it Okay. interest any the depending do? pursuing be investment is mortgages the much you what like? pretty all in be Or in to

John Albright

because just we for see if lot a we keeps sell, to Yes. flexibility it the want We makes the don't -- transaction better do it folks something debt on us. to It secured assets. like if

Operator

line with BTIG. Our next comes Gorman from of the question Michael

Michael Gorman

between spread you open John, Just the coming how up following how about of the there. think over kind a that How be much there's almost about online kind space quick that signed question much of not mentioned on the a be occupied of $X line, course leased that but net versus much XXXX. million always add should of durable incremental will of we -- will and that

gap, like about XXX think normalize business? we if that for basis a that XXX what as to the about So basis think would point you

John Albright

kind to about that, the the in has the of that now sure, missing couple we've that for like is signed leasing what feel bear been these of doing while tenants think get quarters this take us market been with open pipeline and been lot talking I of and finally seeing we're we've a fruit. not I we last really something open that's mean, a look,

lease obviously have in-place portfolio. But to that, regards of is big So yes, rates. our million a do with that one is thing beyond low a $X lot tenants with number we pretty

our about These think market. the XX average vintage they are leases below ago. like you being, call years were built it, If of assets

One we so morning some is gave Raleigh, have the spaces. of over we a opened these in And in quite hope back space example now bit line rent. at Bear Creek get Tuesday to the a I where total double

that's it's a mainly see the little as we so with can we is numbers, to it's buying new we And of rents, do -- as uplift, replacement love far can up a wherever we replacement vacancy but where do but properties less we opportunity, with move leasing. there but bit

Michael Gorman

And then a financing all quarter. the see. Maybe on front. around is color to I helpful. the That's obviously, equity think an you in here, as about off Okay. third side. question nice start additional the good debt just the maybe appreciate the which to

we've strategically, pre-loading to that volatility opportunity capital for start the markets, the opportunistically and set the Given sheet markets think how think as you balance equity in about tapping do seen XXXX? just the about you

John Albright

obviously, Yes. small since to especially but We've period. for we've recent we that without follow-on love given -- been time I the we XXXX, public the strength, as in cap live see we've the capital to only offering sector. certainly and markets, done learned that know, you mean, one

obviously, given back into us. the and think strength I a backdrop but the great our of coming for we'll trying capital to be so sure, we're looking these be rely size And makes can but for given that if finicky earnings we the retail, that's . the to on company, for companies, backdrop. markets it sense, of grow the people love And lot not very a

Operator

This conference showing Thank I'm call. participating. currently conclude all you for this today's no at And further time. does questions

disconnect. You now may

CTO Realty Growth (CTO) 26 Jul 242024 Q2 Earnings call transcript