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CTO Realty (CTO) Sells Mixed-Use Asset to Boost Core Properties
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In a significant move toward portfolio optimization, CTO Realty Growth, Inc. (CTO - Free Report) has successfully closed the sale of a 136,000-square-foot mixed-use property in Santa Fe, New Mexico. The transaction, valued at $20.0 million, resulted in a gain on sale of around $4.6 million.
The disposition of the mixed-use property is part of a broader strategy to optimize the portfolio and enhance financial flexibility. CTO Realty Growth intends to utilize the sales proceeds as part of a Section 1031 like-kind exchange, with the ultimate goal of repaying a portion of the outstanding balance under its revolving unsecured credit facility or financing future acquisitions. The company currently holds proceeds of approximately $30.7 million in 1031 restricted cash accounts following the mixed-use property transaction.
John P. Albright, the president and chief executive officer of CTO Realty Growth, noted that in recent months, the company has sold a number of its smaller non-core properties and almost all of its legacy office exposure.
Particularly, during the fourth quarter of 2023, CTO Realty Growth sold six properties for a total disposition volume of $64.2 million at a weighted average exit cap rate of 7.8%, generating total gains on sales of $3.1 million. During 2023, CTO sold nine income properties for a total disposition volume of $87.1 million at a weighted average exit cap rate of 7.5%.
Albright also commented, “We anticipate using the proceeds from this sale to fund the acquisition of a core power center in the Orlando MSA, which we expect to close in the first quarter of 2024.”
CTO Realty Growth recently disclosed its leasing accomplishments for the year-to-date period, signifying healthy growth and promising prospects in the retail real estate sector.
CTO unveiled its leasing achievements from the beginning of the year through Mar 11, which include the signing of 16 leases totaling an impressive 112,480 square feet at an average cash base rent of $27.49 per square foot. Particularly noteworthy is the company's substantial comparable growth, evidenced by the signing of 12 leases totaling 103,065 square feet at an average cash base rent of $26.58 per square foot. This represents a staggering 89% increase compared to the previous average cash base rent, highlighting CTO's adeptness in enhancing value across its portfolio.
Of notable significance is the execution of a sizable 45,000-square-foot lease with a regional fitness tenant, marking a strategic move to replace Regal Cinemas at Beaver Creek Crossing in Apex, NC. Additionally, CTO has secured significant leases, renewals or extensions with prominent brands such as Altar’d State, Bath & Body Works, Occidental Petroleum, Total Wine & More and Sunglass Hut, underscoring the strength of its tenant roster and the attractiveness of its properties.
Moreover, the company's expansion endeavors have been evident in its recent openings, including Politan Row and Culinary Dropout at Ashford Lane in Atlanta, GA, Ainsworth at Shops of Legacy in Plano, TX, and Fogo de Chão at West Broad Village in Richmond, VA. These strategic moves align with CTO's commitment to curating vibrant retail destinations in high-growth markets across the United States.
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 risen 1.3% in the past month and outperformed the real estate market.
Image: Bigstock
CTO Realty (CTO) Sells Mixed-Use Asset to Boost Core Properties
In a significant move toward portfolio optimization, CTO Realty Growth, Inc. (CTO - Free Report) has successfully closed the sale of a 136,000-square-foot mixed-use property in Santa Fe, New Mexico. The transaction, valued at $20.0 million, resulted in a gain on sale of around $4.6 million.
The disposition of the mixed-use property is part of a broader strategy to optimize the portfolio and enhance financial flexibility. CTO Realty Growth intends to utilize the sales proceeds as part of a Section 1031 like-kind exchange, with the ultimate goal of repaying a portion of the outstanding balance under its revolving unsecured credit facility or financing future acquisitions. The company currently holds proceeds of approximately $30.7 million in 1031 restricted cash accounts following the mixed-use property transaction.
John P. Albright, the president and chief executive officer of CTO Realty Growth, noted that in recent months, the company has sold a number of its smaller non-core properties and almost all of its legacy office exposure.
Particularly, during the fourth quarter of 2023, CTO Realty Growth sold six properties for a total disposition volume of $64.2 million at a weighted average exit cap rate of 7.8%, generating total gains on sales of $3.1 million. During 2023, CTO sold nine income properties for a total disposition volume of $87.1 million at a weighted average exit cap rate of 7.5%.
Albright also commented, “We anticipate using the proceeds from this sale to fund the acquisition of a core power center in the Orlando MSA, which we expect to close in the first quarter of 2024.”
CTO Realty Growth recently disclosed its leasing accomplishments for the year-to-date period, signifying healthy growth and promising prospects in the retail real estate sector.
CTO unveiled its leasing achievements from the beginning of the year through Mar 11, which include the signing of 16 leases totaling an impressive 112,480 square feet at an average cash base rent of $27.49 per square foot. Particularly noteworthy is the company's substantial comparable growth, evidenced by the signing of 12 leases totaling 103,065 square feet at an average cash base rent of $26.58 per square foot. This represents a staggering 89% increase compared to the previous average cash base rent, highlighting CTO's adeptness in enhancing value across its portfolio.
Of notable significance is the execution of a sizable 45,000-square-foot lease with a regional fitness tenant, marking a strategic move to replace Regal Cinemas at Beaver Creek Crossing in Apex, NC. Additionally, CTO has secured significant leases, renewals or extensions with prominent brands such as Altar’d State, Bath & Body Works, Occidental Petroleum, Total Wine & More and Sunglass Hut, underscoring the strength of its tenant roster and the attractiveness of its properties.
Moreover, the company's expansion endeavors have been evident in its recent openings, including Politan Row and Culinary Dropout at Ashford Lane in Atlanta, GA, Ainsworth at Shops of Legacy in Plano, TX, and Fogo de Chão at West Broad Village in Richmond, VA. These strategic moves align with CTO's commitment to curating vibrant retail destinations in high-growth markets across the United States.
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 risen 1.3% in the past month and outperformed the real estate market.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are Host Hotels & Resorts (HST - Free Report) and Lamar Advertising (LAMR - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for HST’s 2024 funds from operation (FFO) per share has moved 2.6% northward over the past week to $1.97.
The Zacks Consensus Estimate for LAMR’s current-year FFO per share has been raised marginally over the past month to $7.74.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.