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CTO Realty (CTO) Sells Assets, Ups Financial Strength, Stock Up
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In a significant move to fortify its financial position, CTO Realty Growth, Inc. (CTO - Free Report) recently closed the sale of three single-tenant outparcels in Chandler, AZ, for a combined price of $9.2 million. Reflecting positive sentiments, CTO Realty shares increased 1.9% in the past two days.
This move marks a notable achievement for the company. The outparcels, occupied by Olive Garden, Old Chicago Pizza + Taproom and Mattress Firm, were part of the Crossroads Towne Center property. The weighted average exit cap rate of 5.9% and aggregate gains of approximately $3 million underscore the attractiveness of these dispositions.
Year to date, CTO Realty has demonstrated a strategic focus on optimizing its portfolio. The company has successfully sold eight properties, totaling $65.1 million in disposition volume. The weighted average exit cap rate stands at 6.4%, generating gains of $7.1 million. This aligns with the company's ongoing effort to divest smaller format properties, channeling the proceeds toward debt reduction and seeking higher growth opportunities in larger formats.
John P. Albright, the president and CEO of CTO Realty Growth, emphasized the positive impact of these dispositions on the company's financial health. He stated, "Our year-to-date dispositions cap rate of 6.4% is accretive to the $64 million of debt we recently repaid, which had an in-place floating rate of 7.1%." This strategic move not only reduces debt but also positions CTO favorably against its recent acquisition in Dallas, TX, showcasing management's adept navigation of market dynamics.
The sales proceeds were utilized as part of a Section 1031 like-kind exchange. It allowed the company to repay $64 million of its outstanding debt under the unsecured revolving credit facility. Post-repayment, CTO Realty maintains $148 million in undrawn commitments under its credit facility, providing ample liquidity for future strategic moves.
In November, the company closed the sale of Eastern Commons Shopping Center in Henderson, NV, for $18.2 million, reflecting an exit cap rate of 7.4%. This move aligns with CTO Realty's initiative to optimize its portfolio. Similarly, in October, the sale of Westcliff Shopping Center in Fort Worth, TX, and Reston Metro Center II in Reston, VA, demonstrated the company's commitment to refining its asset mix.
The strategic divestiture of Westcliff Shopping Center, a 134,750-square-foot community shopping center, occurred at $14.8 million with an exit cap rate of 5.2%. Reston Metro Center II, a 64,319-square-foot single-tenant office property leased to General Dynamics, was sold for $18.5 million, reflecting an exit cap rate of 7.2%.
These transactions align with the company's strategy to recycle non-core assets into core retail shopping center properties in business-friendly growth markets.
In conclusion, CTO Realty's strategic dispositions reflect a proactive approach to portfolio optimization, debt reduction and tax-efficient capital deployment. The company's commitment to refining its portfolio while strategically positioning itself for future opportunities bodes well for its financial resilience and long-term growth potential. Investors should closely monitor CTO Realty Growth as it continues to navigate the dynamic real estate landscape with a focus on value creation.
Shares of this Zacks Rank #3 (Hold) company have rallied 6.2% in the past month but underperformed the real estate market’s growth of 11%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are Tanger Factory Outlet Centers (SKT - Free Report) and Acadia Realty Trust (AKR - Free Report) . While Tanger Factory Outlet Centers sports a Zacks Rank #1 (Strong Buy), Acadia Realty Trust carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Tanger Factory Outlet Centers’ current-year FFO per share has moved marginally northward over the past month to $1.94.
The Zacks Consensus Estimate for Acadia Realty Trust’s current-year FFO per share has moved marginally northward over the past month to $1.31.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.
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CTO Realty (CTO) Sells Assets, Ups Financial Strength, Stock Up
In a significant move to fortify its financial position, CTO Realty Growth, Inc. (CTO - Free Report) recently closed the sale of three single-tenant outparcels in Chandler, AZ, for a combined price of $9.2 million. Reflecting positive sentiments, CTO Realty shares increased 1.9% in the past two days.
This move marks a notable achievement for the company. The outparcels, occupied by Olive Garden, Old Chicago Pizza + Taproom and Mattress Firm, were part of the Crossroads Towne Center property. The weighted average exit cap rate of 5.9% and aggregate gains of approximately $3 million underscore the attractiveness of these dispositions.
Year to date, CTO Realty has demonstrated a strategic focus on optimizing its portfolio. The company has successfully sold eight properties, totaling $65.1 million in disposition volume. The weighted average exit cap rate stands at 6.4%, generating gains of $7.1 million. This aligns with the company's ongoing effort to divest smaller format properties, channeling the proceeds toward debt reduction and seeking higher growth opportunities in larger formats.
John P. Albright, the president and CEO of CTO Realty Growth, emphasized the positive impact of these dispositions on the company's financial health. He stated, "Our year-to-date dispositions cap rate of 6.4% is accretive to the $64 million of debt we recently repaid, which had an in-place floating rate of 7.1%." This strategic move not only reduces debt but also positions CTO favorably against its recent acquisition in Dallas, TX, showcasing management's adept navigation of market dynamics.
The sales proceeds were utilized as part of a Section 1031 like-kind exchange. It allowed the company to repay $64 million of its outstanding debt under the unsecured revolving credit facility. Post-repayment, CTO Realty maintains $148 million in undrawn commitments under its credit facility, providing ample liquidity for future strategic moves.
In November, the company closed the sale of Eastern Commons Shopping Center in Henderson, NV, for $18.2 million, reflecting an exit cap rate of 7.4%. This move aligns with CTO Realty's initiative to optimize its portfolio. Similarly, in October, the sale of Westcliff Shopping Center in Fort Worth, TX, and Reston Metro Center II in Reston, VA, demonstrated the company's commitment to refining its asset mix.
The strategic divestiture of Westcliff Shopping Center, a 134,750-square-foot community shopping center, occurred at $14.8 million with an exit cap rate of 5.2%. Reston Metro Center II, a 64,319-square-foot single-tenant office property leased to General Dynamics, was sold for $18.5 million, reflecting an exit cap rate of 7.2%.
These transactions align with the company's strategy to recycle non-core assets into core retail shopping center properties in business-friendly growth markets.
In conclusion, CTO Realty's strategic dispositions reflect a proactive approach to portfolio optimization, debt reduction and tax-efficient capital deployment. The company's commitment to refining its portfolio while strategically positioning itself for future opportunities bodes well for its financial resilience and long-term growth potential. Investors should closely monitor CTO Realty Growth as it continues to navigate the dynamic real estate landscape with a focus on value creation.
Shares of this Zacks Rank #3 (Hold) company have rallied 6.2% in the past month but underperformed the real estate market’s growth of 11%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are Tanger Factory Outlet Centers (SKT - Free Report) and Acadia Realty Trust (AKR - Free Report) . While Tanger Factory Outlet Centers sports a Zacks Rank #1 (Strong Buy), Acadia Realty Trust carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Tanger Factory Outlet Centers’ current-year FFO per share has moved marginally northward over the past month to $1.94.
The Zacks Consensus Estimate for Acadia Realty Trust’s current-year FFO per share has moved marginally northward over the past month to $1.31.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.