CTO Realty Growth Inc Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Gaurav Mehta - Alliance Global Partners - Analyst : Thank you. Good morning. I wanted to follow-up on your comments around convertible notes and just clarify, so that settlement, you guys are expecting that with cash and there's no expectation of share issuance with that conversion, right?

Question: Gaurav Mehta - Alliance Global Partners - Analyst : Okay. And so, the cash, the source would be the line of credit?

Question: Gaurav Mehta - Alliance Global Partners - Analyst : Okay. Second question on the guidance. I was hoping if you could provide some more color on your 2025 outlook between acquisitions and structured investments. What kind of mix you're expecting?

Question: Gaurav Mehta - Alliance Global Partners - Analyst : Okay. And then lastly, on the same property NOI guidance, can you provide some color on how you expect that to trend from quarter to quarter?

Question: Gaurav Mehta - Alliance Global Partners - Analyst : Okay thank you that's all I had.

Question: Rob Stevenson - Janney Montgomery Scott. - Analyst : Good morning, guys. That Slide 8 in the deck was very helpful. But a question for you, John. Did I understand you say that half of the re-leasing would impact '25 and that you'd get the full impact of the $4 million to $4.5 million of new rent in '26? Just trying to jive that with the $0.10 a share in the guidance.

Question: Rob Stevenson - Janney Montgomery Scott. - Analyst : Okay. That's helpful. And then, you have one of your structured investments, the Watters Creek maturing in April. What is that looking like in terms of recent conversations with that borrower? Is that a repay? Is that an extend? How is that likely to be resolved? And if you're getting the money back -- expected to get the money back, then how is that market these days to replace that? Are you going to wind up bringing the structured investment portfolio down a little bit in size?

Question: Rob Stevenson - Janney Montgomery Scott. - Analyst : And I guess, if that's staying -- if that's likely to stay in the portfolio and nothing else comes out in the interim, how aggressive should we expect you guys to be in expanding the $107 million portfolio today? Is that likely to end 2025 at $150 million, pushing $200 million? Is this the current sort of upper end? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 21, 2025 / 2:00PM, CTO.N - Q4 2024 CTO Realty Growth Inc Earnings Call

Question: Rob Stevenson - Janney Montgomery Scott. - Analyst : Okay. That's helpful. And then, last one for me. Can you talk about how your AMCs are performing these days? Is that you're starting to get back to some more robust releases with the Captain America movie and stuff like that? How are they performing versus where they were in the past? And how much of a concern are they for you at this point in the cycle?

Question: Rob Stevenson - Janney Montgomery Scott. - Analyst : Okay. Thanks, guys. Appreciate the time. Have a great weekend.

Question: Matthew Erdner - Jones Trading - Analyst : Hey, good morning, guys. Thanks for taking the question. John, I believe you mentioned something about those 10 additional acres next to Forsyth that are up in that area. Could you remind me again what the plan was with that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 21, 2025 / 2:00PM, CTO.N - Q4 2024 CTO Realty Growth Inc Earnings Call

Question: Matthew Erdner - Jones Trading - Analyst : Yeah, that's helpful. And then, I'm guessing that would kind of include the first right of refusal similar to others. And then, as a follow-up to that, it's probably a little ways away, but do you ever anticipate kind of closing on some of those right to refusals and taking those properties in?

Question: Matthew Erdner - Jones Trading - Analyst : Got it. That's helpful. Thank you.

Question: RJ Milligan - Raymond James - Analyst : Hey, good morning, guys. I appreciate the detail on Slide 8. It's helpful. But I'm curious, Phil, for the guidance, what is baked into additional potential bad debt sort of -- you obviously highlight the known or expected vacancies, but I'm curious what you're baking into guidance for unknown.

Question: RJ Milligan - Raymond James - Analyst : It does. And then, for the -- I know you guys mentioned four of those 10 boxes, you expect the rent to commence in 2026. Can you just give me an idea of the expected timing of that rent commencement in '26?

Question: RJ Milligan - Raymond James - Analyst : And that's helpful. That sort of leads into my last question, John, which is, who are the tenants that you're talking to that are interested in those spaces? And then, just curious how you think about the overall value creation as you get those new tenants into the space.

Question: RJ Milligan - Raymond James - Analyst : That's helpful. Thank you, guys.

Question: John Massocca - B. Riley Securities - Analyst : Good morning. Maybe kind of going back to Slide 8, the $9 million to $12 million of CapEx, I mean, how does that kind of impact the CapEx outlook for 2025 versus, say, what's kind of more run rate or what you were doing in -- sorry, 2025 versus what you were doing in 2024?

Question: John Massocca - B. Riley Securities - Analyst : Okay. And kind of with that in mind, I mean, what lease durations are you kind of talking about today with potential replacement tenants, just given there is a decent amount of CapEx going into these boxes?

Question: John Massocca - B. Riley Securities - Analyst : Okay. Appreciate that. And then, on the kind of the re-leasing side of things, is the timing you're seeing typical of what you would see for vacancies, maybe kind of smaller vacancies you've seen in the portfolio historically? I know you talked there's a bit of a variance on IG versus maybe some smaller tenants can come in faster. But I mean, is it just indicative of anything in the kind of macro environment or specific to these assets, or is that timing just kind of typical if you were to see other vacancies going forward?

Question: John Massocca - B. Riley Securities - Analyst : Okay. And then, last one for me, maybe broad strokes if you don't have the exact number in front of you, but what would kind of same-store NOI growth expectations have been for 2025 if you weren't dealing with these vacancies?

Question: John Massocca - B. Riley Securities - Analyst : Perfect. That's very helpful. And that's it for me.

Question: Craig Kucera - Lucid Capital Markets - Analyst : Yeah. Hey, good morning, guys. You've got a lot of activity planned in '25 without any dispositions. And I know you're comfortable running the company at higher leverage, but is the plan to be leverage neutral or did you maybe frontload some equity in '24 and you're willing to lever up?

Question: Craig Kucera - Lucid Capital Markets - Analyst : Okay, great. Changing gears, at the time of the Carolina Pavilion acquisition, I think it was 93% occupied. I guess, as part of your underwriting process, were you aware you would lose a number of tenants in the fourth quarter or want to kick them out, and was that mark to market opportunity part of the attractiveness of the purchase? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 21, 2025 / 2:00PM, CTO.N - Q4 2024 CTO Realty Growth Inc Earnings Call

Question: Craig Kucera - Lucid Capital Markets - Analyst : Right. And just one more for me. Given the changes in the current administration and some job losses in DC, have the folks at Rivana communicated any changes to you regarding their development schedule or any of that thing of that sort?

Question: Craig Kucera - Lucid Capital Markets - Analyst : Okay. That's it for me. Thanks, guys.

Question: Michael Gorman - BTIG - Analyst : Yeah, thanks. John, maybe just sticking with some of the discussions around acquisitions and some of your underwriting, I'm curious if -- maybe not yet, but if you think there'll be some additional opportunities in the acquisition market shaken loose by some of these recent retailer bankruptcies, or maybe smaller landlords don't want to have to go through a re-tenanting or don't want to have to go through another CapEx cycle? Are you seeing or starting to see any opportunities because of these new vacancies in the marketplace for acquisitions? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 21, 2025 / 2:00PM, CTO.N - Q4 2024 CTO Realty Growth Inc Earnings Call

Question: Michael Gorman - BTIG - Analyst : Got it. Great. And then, I think, I could probably tell just based on the CapEx expectations, but for any of the LOIs you're discussing, would any of that add a grocer to an existing center or are these all non-grocer tenants?

Question: Michael Gorman - BTIG - Analyst : Perfect thanks so much.

Question: John Massocca - B. Riley Securities - Analyst : Hi. Just a quick one for me given some of the conversations on mark-to-market with rents. What's the outlook for the 2025 lease expirations, I mean, just kind of noting it's above your average cash rent per square foot, but everything's kind of a scope in a portfolio like this? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 21, 2025 / 2:00PM, CTO.N - Q4 2024 CTO Realty Growth Inc Earnings Call

Question: John Massocca - B. Riley Securities - Analyst : Okay. Any -- like, any kind of broad stroke ranges you're kind of looking at for just this year's lease expirations?

Question: John Massocca - B. Riley Securities - Analyst : Okay. Very helpful. That's it for me.