CTO Realty Growth Inc - Ordinary Shares- New Aktie

Hello, and welcome to the Annual Meeting of Stockholders of CTO Realty Growth, Inc. Please note that today's meeting is being recorded.

It is now my pleasure to turn this morning's meeting over to Laura M. Franklin, Chairman of the Board of CTO Realty Growth. Ms. Franklin, the floor is yours.

Good morning, everyone. Pursuant to the company's third amended and restated bylaws, I will preside as Chair of this meeting. I would like to welcome all of you to the 2026 Annual Meeting of Stockholders of CTO Realty Growth.

We are conducting this meeting in virtual format only, which will enable stockholders to listen to the proceedings from any computer, tablet or handheld device that has Internet connectivity.

Participants in this meeting from the company include the senior management team and all of the independent directors as well as Computershare Trust Company, N.A., the Inspector of Elections, and a representative of Grant Thornton, our independent registered public accounting firm.

I understand we have approximately 11 others who are listening to the meeting via the virtual meeting portal. Mr. Daniel Smith, Secretary of the company, will act as Secretary of the meeting.

Now to proceed with the business of the meeting. Mr. Smith will confirm that the notice of this meeting was given to all stockholders as of the record date for the meeting. Dan?

I hereby certify that the stockholder meeting notice regarding the notice of Annual Meeting of Stockholders and availability of the 2026 proxy statement over the Internet was mailed to stockholders of record as of April 16, 2026, and that the mailing was commenced on May 5, 2026.

Additional copies of the proxy statement and a complete list of the stockholders of record as of the record date are available for your inspection and have been properly filed with the minutes of this meeting.

Thank you, Dan. I would now like to introduce Ms. Christine Abbey of Computershare Trust Company, N.A., who is participating in this meeting. Computershare has been appointed as Inspector of Elections for this meeting. Ms. Abbey's oath as Inspector of Elections will be filed with the minutes of the meeting. Ms. Abbey will confirm the presence of a quorum when she completes her tally of stockholders' proxies and ballots.

Now it is my pleasure to introduce your current Board of Directors: John Albright; George Brokaw; Chris Drew; myself, Laura Franklin; Blake Gable; and Chris Haga. A copy of the agenda for the meeting is available on the virtual meeting portal, along with a list of the rules of conduct for the meeting.

By following those rules and procedures, stockholders who logged in with their unique 15-digit control number will have an opportunity to participate in the meeting, and we will be able to handle the business of the meeting efficiently and fairly.

As stated in the rules of conduct, only those stockholders or their representatives who are logged into the virtual meeting with their control number will have the opportunity to vote their shares and submit questions during the meeting.

As stated in the rules of conduct, we ask that you restrict any questions to the items on the meeting agenda. Please note that any questions submitted during the meeting will be answered later in the meeting after the formal business portion has concluded. Thank you for your cooperation with these rules. It is now time to begin the formal part of the meeting.

As noted in the notice and proxy statement previously furnished to you, the record date for stockholders entitled to vote at the meeting was the close of business on April 16, 2026.

We believe that the total number of shares of the company, which are held by holders of record now present at the meeting, either in person or by proxy, is sufficient to declare that we have a quorum. Such determination is subject to verification by the Inspector of Election.

The next order of business to come before this meeting is a description of the matters properly brought before today's meeting. Proposals and director nominations from the company's stockholders in order to be properly brought before this meeting must have been submitted by January 19, 2026.

No stockholder proposals or nominations were properly submitted, which means that the only proposals and nominations properly before this meeting are those submitted by the Board. Voting on the proposals will commence after all proposals have been presented.

The first proposal before the stockholders of the company is the election of 6 directors for 1-year terms expiring upon the election and qualification of directors at the company's 2027 Annual Meeting of Stockholders. The Board of Directors of the company has recommended the election of John Albright; George Brokaw; Chris Drew; Laura Franklin; Blake Gable and Chris Haga to the Board. These 6 individuals are the only persons who have been nominated to stand for election to the 6 positions on our Board of Directors. No other nominations were made in compliance with the company's bylaws. Accordingly, all nominations are closed.

The second proposal before the stockholders of the company is the ratification of the appointment of our Audit Committee -- by our Audit Committee of Grant Thornton LLP as the company's independent registered public accounting firm for fiscal year 2026, which is described on Page 59 of the proxy statement.

The third proposal before the stockholders of the company is an advisory vote to approve executive compensation described on Page 61 of the proxy statement.

The fourth proposal before the stockholders of the company is the approval of the company's 6 amended and restated 2010 equity incentive plan as described beginning on Page 62 of the proxy statement.

The next order of business is a vote on the proposals. It is currently 11:06 a.m., and I declare the voting open. Stockholders who logged into the virtual meeting portal using the unique 15-digit control number may vote their shares during the meeting. In addition, prior to today's meeting, voting on the proposals was conducted by proxy via mail, phone and Internet.

[Voting]

It is approximately 11:07 a.m., and I hereby declare the voting closed. The inspector of elections will now count the votes. Will the Secretary please report the results of the voting?

We have been informed by the Inspector of Elections that the ballots have been counted and that the 6 nominees for election to the Board for a 1-year term have all been duly elected.

The appointment of Grant Thornton LLP has been ratified. The advisory vote regarding executive compensation has been in the affirmative and the stockholders have approved the company's sixth amended and restated 2010 equity incentive plan.

Consistent with the company's bylaws, no advanced notice has been given to the company regarding any other business to be conducted at this meeting. Therefore, no other business will be considered at this meeting. The official business portion of this meeting is now adjourned.

Before we disperse, however, as is customary, we would like to turn our remaining time over to the company's President and CEO, John Albright, who will now address any questions that have been submitted during the meeting.

If you have a question or comment, please follow the instructions on the virtual meeting portal, and please follow the rules and procedures for conduct of the meeting that were previously made available to you.

Laura, no questions have been submitted.

Thank you, Dan. That concludes the question-and-answer session. Thank you again for your attendance.

This concludes the meeting. You may now disconnect.

Good day, and thank you for standing by. Welcome to the CTO Realty Growth Q1 2026 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jenna McKinney, Director of Finance. Please go ahead.

Good morning, everyone, and thank you for joining us today for the CTO Realty Growth First Quarter 2026 Operating Results Conference Call. Participating on the call this morning are John Albright, President and Chief Executive Officer; Philip Mays, Chief Financial Officer; 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 discussed 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, and good morning, everyone. We are pleased to report a strong quarter to start the year, highlighted by a robust leasing and strong same-store NOI growth as well as the $81.6 million acquisition of a high-quality shopping center in Texas. Our strategic focus on shopping centers located along growth corridors primarily in the Southeast and Southwest markets of the United States, along with the proactive asset management and leasing continues to produce strong results. Starting with retail leasing.

During the quarter, we executed leases, renewals and extensions totaling 153,000 square feet, including 146,000 square feet of comparable leases at an average cash rent increase of 14%. Our leasing activity for the quarter was spread across our portfolio, but particularly positive at [indiscernible] Crossing in Orlando, where we signed a lease with Williams Sonoma to fill the former Mattress Firm space. And just after quarter end, we signed a lease with Pottery Barn Kids to fill a space that had been vacant since we acquired the property. Combined, this activity has increased [indiscernible] Crossing to 97% leased and improves the quality of the tenant roster and value of the asset. Further, our only shopping center with leased occupancy below 90% is now Carolina Pavilion at 83%, and we are in active negotiations with tenants for all the remaining vacancy.

We look forward to providing announcements of this leasing activity at this shopping center in the future. We are also making strong progress with the 6 outparcel opportunities we discussed on our last call. During the quarter, we signed a lease with Swig for a drive-through customized beverage store at Marketplace at Seminole Towne Center located in Orlando. And just after quarter end, we signed a lease with Cooper's Hawk at Ashley Park located in Atlanta market. In addition, we have executed LOIs or in active lease negotiations for the remaining 4 outparcels. We continue to expect these 6 outparcels to generate low double-digit unlevered yield on approximately $30 million of investment. We anticipate that this $30 million will primarily be deployed and begin contributing to earnings in 2027 with the full benefit expected to be recognized in 2028.

We also look forward to providing additional announcements related to this initiative in the coming quarters. Reflecting our leasing progress at quarter end, our portfolio was 95.4% leased and our Signed-Not-Open pipeline totaled $6.2 million of annual cash base rent, representing approximately 5.5% of in-place annual cash base rent. We believe this pipeline of new lease revenue will provide a meaningful earnings tailwind beginning as we move through 2026 and into 2027. Further, leasing activity completed over the prior year for which tenants have commenced paying rent is already beginning to benefit NOI. For the quarter, same-property NOI for shopping centers increased 6.8% compared to the comparable prior year period. Excluding the benefit of certain nonrecurring items, same-property NOI for shopping centers grew at a healthy 4.2%.

Moving to investment activity. During the quarter, we announced an acquisition of Palms Crossing, a 399,000 square foot open-air center located in McAllen, Texas for $81.6 million. Palms Crossing is anchored by Best Buy, Hobby Lobby, Burlington Coat Factory, Barnes & Noble and Nike and is currently 98% leased and benefits from strong cross-border shopping. This property has also provides the opportunity to develop 2 additional outparcels beyond the 6 discussed earlier. With this acquisition, Texas is now our third largest state by ABR and combined contribution from Georgia, Florida, North Carolina and Texas increased to 85% of total ABR. On the property recycling front, Madison Yards located in Atlanta is under contract with a nonrefundable deposit, and we expect the sale to close in May.

Madison Yards is 99% leased and the anticipated sale would enable us to extract value from a stabilized asset while also reducing our AMC Theatres exposure to only 2 locations, which are both high performing. Further, the anticipated sale, along with Palms Crossing acquisition will complete the recycling proceeds at a positive cap rate spread contributing to future earnings growth.

As we move forward, we're evaluating additional property sales, focusing on recycling capital from stabilized properties into assets at positive initial yield spread with the potential for value-add opportunities and higher earnings growth in the future. Now turning to our structured investments. During the quarter, we received full repayment of our [indiscernible] $30 million preferred investment in Watters Creek Village. This repayment was expected and represents the only structured investment scheduled to mature in 2026. More notably, just after the quarter end, we completed a $75 million preferred equity investment in a Class A premier retail property located in the Southwest. This preferred investment yields 12% and has a term of 2 years. This activity increased our structured investment portfolio by $45 million to $158 million subsequent to quarter end with a weighted average yield of 11.6%. In summary, 2026 is off to a great start, and we are in a great position to sustain our growth in the quarters ahead.

Our portfolio continues to perform well and is supported by embedded growth drivers, including in-place below-market rents, our Signed-Not-Open pipeline, planned outparcel developments and disciplined capital recycling. Collectively, we believe that these initiatives can support meaningful earnings growth for several years to come and contribute to our increased guidance for core FFO and AFFO per diluted share to new ranges that imply approximately 12% growth at the midpoint.

And with that, I will now hand the call over to Phil.

Thanks, John. On this call, I will briefly highlight our earnings, provide an update on our balance sheet and discuss our raised 2026 outlook. Starting with operating results. For the first quarter, core FFO was $16.9 million, a $2.5 million increase compared to $14.4 million reported in the comparable quarter of the prior year. And on a diluted share basis was $0.52 per share versus $0.46 per share. AFFO was $18.2 million for the quarter, an increase of $2.7 million compared to $15.5 million reported in the comparable quarter of the prior year and on a diluted share basis was $0.56 per share versus $0.49 per share. The growth in both core FFO and AFFO was primarily driven by leases executed over the past year that have since commenced paying rent, although it did include approximately $0.01 related to nonrecurring recovery benefits from final 2025 CAM, real estate taxes and insurance billings that tenants recorded in this quarter.

With regards to property operations, as John mentioned, same-property NOI for shopping centers increased 6.8% in the first quarter compared to the comparable quarter of the prior year. Excluding the nonrecurring recovery benefits discussed earlier, same-property NOI for our shopping centers still increased a healthy 4.2%. Given the relatively small size of our same-property NOI, $200,000 impacts quarterly growth by approximately 100 basis points. Accordingly, unusual and nonrecurring items like this can occasionally skew our same-property NOI, so we want to highlight the impact of such items when appropriate. Notably, shopping center properties represented 97% of total same-property NOI for the quarter.

Total same-property NOI, including our few noncore properties, increased 3.4% for the quarter. This growth was impacted by one tenant as previously announced, vacating 98,000 square feet at our Albuquerque property at the beginning of December 2025, which more than offset the nonrecurring recovery benefits recorded. As a reminder, this vacancy has been fully leased to the state of New Mexico, which is expected to commence paying rent in late 2026. Moving to the balance sheet. At March 31, 2026, we had total debt of $651.8 million with a weighted average interest rate of 4.6%. Further, we ended the quarter with approximately $125 million of liquidity and leverage at 6.4x net debt to pro forma adjusted EBITDA, which is consistent with the end of 2025.

During the quarter, we opportunistically utilized our common ATM program to issue approximately 733,900 common shares at an average price of $19.59 per share for total net proceeds of $14.2 million. Notably, these proceeds, combined with the repayment of our $30 million Watters Creek preferred investment and higher NOI enabled us to maintain leverage at a consistent level even with the acquisition of Palms Crossing completed in this quarter. Now turning to guidance. For the full year 2026, we are increasing our core FFO outlook to a new range of $2.06 to $2.11 per diluted share and our AFFO outlook to a new range of $2.19 to $2.24 per diluted share. Key assumptions reflected in our guidance include increased investment volume, including structured investments of $175 million to $250 million, same-property NOI growth for shopping centers of 3.5% to 4.5% and general and administrative expenses of $19.7 million to $20.2 million.

And with that, operator, please open the line for questions.

[Operator Instructions]

Our first question comes from the line of Jay Kornreich with Cantor Fitzgerald & Company.

I guess I just want to start out with the new $75 million Southwest preferred equity investment at the 12% yield. I guess what attracted you to that investment? And how do you anticipate, I guess, the draw schedule occurring -- sorry, how do you anticipate the draw schedule occurring going forward? And in terms of funding sources for it, I guess you can use $30 million from the Watters investment, which was prepaid, but how do you think about funding the incremental $45 million?

Yes. We've already did the investment. So it was like it was one closing. And so as you mentioned, the Watters Creek was recycled into that. And we'll basically have, as we mentioned, an asset sale coming up and so forth, which will bring down leverage. But otherwise, we just use the balance sheet for the balance of it.

Okay. And then just going back to the original 10 vacant anchor spaces that we've talked about. I think there's still 3 remaining to be signed. Can you just give an update on how those conversations are progressing and when you think you could get a lease signed and ultimately rent payment beginning?

Yes. It's going really well as far as terms have been agreed upon moving to leases, but these things with these large national companies go really slow. So I would say, conservatively, I would say, 3 months and hoping to do it before then. But every time you think these things would take 30 days, it drags. So -- but we are -- the good thing is even though the lease may take that long, we're working right away on basically engineering drawings and what needs to be done to outfit the space for the tenants.

So that's not going to -- we're not going to wait for the lease to be signed to get that work done. So the lease commencement will kind of stay kind of probably take, call it, 9 months or so to kind of get the tenant in place, but that part won't move even though the lease may drag out.

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

I'm just curious what's going to lead you kind of towards the high range of the investment guidance versus the bottom end? Because I think if you lean towards the bottom end, it will probably be one more structured investment. And given the timing of Madison Yards, should we expect anything to kind of happen in the second half of the year from an investment perspective?

Phil, I'll let you kind of address that, but I'll start with some of the pipeline. We do have structured investments that we are working on. It's relatively small, but that's something that could happen here in the next 30 days. And as far as acquisition pipeline, we do have our eyes on a couple of things, but they're not going to happen until they're not even out in the market yet. They're being prepared for market. So we hope to be more active probably in the next kind of 4 months. And then we'll -- as mentioned in our prepared remarks, we'll have some recycling going on, which will kind of happen in the next probably 3 months.

Yes, Matt, it's Phil. And you're correct in your assumption. So the small structured investment John referred to would put us right around the low end of the range. And then if we complete some of the larger property acquisitions in the pipeline, it would push us up towards the higher end of the range.

Got it. And then kind of as a follow-up to that, are you guys assuming that outparcel at Forsyth, there's 10 extra acres there in the investment guidance for this year? Or would that be additional?

Yes. So they won't contribute to earnings in this year. It's one of the pads that we've identified. So part of the -- where we've discussed $30 million of capital earning low double-digit yield unlevered. It's in that group. But any earnings from that will not be in this year, Matt.

Our next question comes from the line of Craig Kucera with Lucid Capital Markets.

With the preferred equity investment you made here in the second quarter, I think -- and it sounds like you've got another potential small one. I think that brings CTO's exposure to structured investments to around 11%, maybe closer to 15% when fully funded relative to undepreciated assets. Are you thinking about a cap or target on that as a percentage of the balance sheet similar to PINE?

Yes. Thanks for the question. So I would say that most likely, the cap will be -- it will definitely be below 20% and maybe more in line with the 15%. And so as you've seen at PINE, sometimes it will go a little higher as we anticipate some payoffs happening. But roughly 15% feels like a good place for us.

Okay. Great. And thinking about investment guidance, you've done $156 million year-to-date. I think you started out the year guiding to sort of 8% to 8.5%. The preferred equity down here this quarter is 12%. Has that sort of yield range changed at all because of that?

Yes. So the cap rates, I can kind of go into kind of what we're seeing on cap rates. And then as we see more visibility on what we'll be buying and kind of the structured finance kind of give you a better mix outcome. But in general, the acquisitions that we're seeing are kind of in the 7.5% to 8% range. And then with regards to structured finance, something in the kind of 10% to 13% range. And so you kind of have that little blend.

Okay. Great. That's very helpful. Just a couple more for me. Looking at your space that's expiring this year, it looks like it's significantly above the average in the portfolio, particularly on the anchor space, are mostly on the anchor space. You had, I think, a 24% cash increase in rent spreads last year. Do you -- I think you had [ 14% ] this quarter. Are you thinking something in the double-digit range is possible this year? Or is that going to be a little tougher?

Yes. I mean I think the spreads, you would see them kind of continue in the range they've been, Craig. Are you referring to '26 when you say this year, right?

Yes, in '26.

Yes, yes. So the expiring rents are a little higher, right? I think they're closer to [ '25 ] where we've been signing a lot of leases. But we're not only working on '26, we're also working on '27. I mean they start early. So I think while the spreads could come down a little just because the average rent and the leases expiring in '26 could bring it down a little. But generally, it still should be close to where we've historically been recently. Obviously, any one quarter can bounce around a lot just because it's not a lot of [ GLA ] in one quarter, but for the full year, should be pretty good.

Okay. That's helpful. Just one more for me.

What's driving that? -- there's fewer anchors in there, Craig. So that's what's left is small shop. So a little higher ABR.

And just one more for me. I think last quarter, the implied ABR recognition in the Signed-Not-Open pipeline was about [ 2.9 ] million for 2026. I think now we're looking at [ 1.8 ] million in the updated deck. Can you give us a sense of how you're anticipating the timing of that [ 1.8 ] million in '26 and sort of how we should think about modeling '27 from a Signed-Not-Open pipeline recognition perspective?

Yes. So about [ 1.5 ] million rolled off the pipeline from last time and got -- and commenced. And then with new leases, we kind of filled that back up, signing about [ 1.5 ] million. So the total the Signed-Not-Open pipeline did not move much. What did go in went in relatively closer to the beginning of the quarter. So it was in there for most of the quarter and it's reflected in the quarter's run rate. With what's left in the Signed-Not-Open pipeline, I think it will be a little more Q3, Q4 weighted. And then generally, almost all of it is in place, albeit maybe later in the year, prior to '27. So you should get pretty much the full impact of the Signed-Not-Open pipeline in '27. I think there's one tenant that pushes to early '28, but almost everything should be recognized in '27.

I'm sorry, are you saying recognized as of sort of that early '27 or throughout '27?

Early '27. So it should -- just other than one tenant, I think they're all -- you should get the full benefit of the Signed-Not-Open pipeline for '27. There's one tenant you won't get the full benefit of until '28 because they'll open during '27. But what's left for '26 will be later in the year, and then you'll get the full benefit in '27.

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

Maybe thinking about the Madison disposition. I know we can kind of back into the numbers a little bit on our own given your disclosure. But is it right to think that that's at about a 6% cap rate? I know it kind of depends a little bit on the NOI margin at that specific asset, but does that sound roughly correct?

It's a little higher than that because of the AMC Theatres.

Okay. All right. And then maybe kind of more big picture as you're thinking about your leasing pipeline and some of the vacancy that's left. And I know a lot of that's been addressed because a lot of it is in Carolina Pavilion. But is there any kind of hesitancy you've seen in retailers and frankly, in recent weeks around signing deals just given some of the macro uncertainty out there, some of the uncertainty about how some of the headline stuff maybe impacts the consumer. Just curious how the kind of leasing trajectory has been on a super recent basis.

There's been no hesitancy with pushing forward on leases. We have not seen any pullback whatsoever on any category.

Okay. And then the in-place portfolio, any new tenants or any kind of notable increase to the watch list? I was just curious if there's any kind of pushes and pulls there. Anything coming out of the watch list even too?

No. I mean really, as I've said in prior calls, it's really some of the smaller type tenants and maybe restaurant oriented, but there's been no notable change one way or the other on the watch list.

Okay. And then last one. There's been a decent amount of M&A in the space in kind of recent years, including a notable comp to you all recently. How does that impact kind of your disposition and acquisition outlook? Is there stuff that maybe comes out of those transactions or a competitor maybe not being in the space that increases the likelihood of you closing certain deals? Does it indicate something you can do on the capital recycling side that is interesting? Just kind of curious if the events outside of your control kind of changed the dynamics around how you're operating the business?

Yes. I would just say that there's just a lot more capital out there and that price point of that transaction was fairly aggressive. So it's helpful on our recycling side for sure, but not helpful on our acquisition side. So we pride ourselves on being fast to kind of address an acquisition. We can move fast. And the groups that are out there on the acquisition hunt are much larger kind of institutional and they take a lot longer. So just being a little bit nimble is an advantage for us.

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

I wanted to ask you on the acquisition that you made, Palms Crossing this quarter. On the value-add upside, can you maybe talk about where the rents are on that property versus where the market rents are?

Yes. I mean the market rents are below market, but there's not really any sort of play where we're going to get a tenant out and we're going to have a huge mark-to-market on lease-up. I would just say that we do have a little bit of vacancy, and we have an outparcel that we didn't pay any money for that we're working on. So that's where the growth is going to come over and beyond what we bought. But they are below market, but not something that you can kind of get to anytime soon.

Okay. Second question on the guidance, just a clarification. On the Madison Yards, I didn't see that listed in the guidance assumption. Is that included in your guidance, the disposition?

No, we didn't put a disposition volume out there. Currently, that's the only near-term and planned disposition.

So I'm showing no further questions at this time. This concludes the question-and-answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Ladies and gentlemen, thank you for standing by. Welcome to the CTO Realty Growth Fourth Quarter and Year-End 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would like now to turn the conference over to Jenna McKinney, Director of Finance. Please go ahead.

Good morning, everyone, and thank you for joining us today for the CTO Realty Growth Fourth Quarter 2025 Operating Results Conference Call. Participating on the call this morning are John Albright, President and Chief Executive Officer; Philip Mays, Chief Financial Officer; 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 discussed 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, and good morning, everyone. We are pleased to report a robust fourth quarter, highlighted by record high leased occupancy of 95.9% same-property NOI growth for our shopping centers of 4.3% and the previously announced acquisition of a shopping center in South Florida. Our strategic focus on shopping centers located in the higher-growth Southeast and Southwest markets of the U.S., along with the proactive asset management and leasing is producing strong results across all areas of our business. Nowhere is this better illustrated than in our retail leasing results.

During the fourth quarter, we signed leases for 189,000 square feet including 167,000 square feet of comparable leases and a cash rent increase of 31%. For the full year, we signed leases for a record 671,000 square feet including 592,000 square feet of comparable leases at a cash rent increase of 24%. Further, we continue to make meaningful progress backfilling our 10 anchor spaces.

As previously announced in the fourth quarter, we signed a lease with a national investment-grade retailer at Market Place at Seminole Town Center for 48,000 square feet. This single lease consolidated the 34,000 square feet formerly occupied by Big Lots, 9,000 square feet of small shop space and 5,000 square feet of new expansion space. Further, this lease brought us to 7 resolved anchor spaces in 2025, totaling 177,000 square feet.

Additionally, we are in active negotiations for the three anchor spaces in the Value City at Carolina Pavilion which we expect to get back in early 2026. Notably, all combined, we expect to achieve a positive cash rent spread of approximately 60%, the high end of the targeted range previously disclosed. So while getting these boxes back did result in temporary downtime, it ultimately accelerated our ability to achieve higher rents and stronger tenant credits along with driving higher customer traffic to the respective center.

More broadly, as of year-end, our signed-not-open pipeline stands at $6.1 million, representing approximately 5.8% of annual cash base rents. We believe this pipeline position us for meaningful earnings growth as reflected in our outlook, with almost half of the signed-not-open pipeline anticipated to be recognized in 2026 and 100% in 2027.

Moving to investment activity. In December, we acquired Pompano Citi Center, an open-air retail center located on 35 acres in Pompano Beach submarket of Fort Lauderdale, Florida, for $65.2 million. The property consists of 509,000 square feet of operating space that is currently 92% occupied, plus 62,000 square feet of unfinished shelf space, primarily on the second level presenting future leasing opportunity. Pompano Citi Center is anchored by Burlington, T.J. Maxx, Nordstrom Rack, Ross Dress For Less and JCPenney. Further, the property enjoys a prime location at a high-traffic intersection offering great visibility and access. This acquisition provides another attractive opportunity to create long-term value through both strategic mark-to-market rent opportunities and incremental leasing.

Including the acquisition of Ashley Park, an open-air lifestyle center acquired early in 2025 and $21 million of structured investments originated during 2025, we closed $166 million of investments during 2025 at a weighted average initial cash yield of 9%.

Moving to dispositions. Last quarter, I provided an update about the significant leasing we completed at The Shops at Legacy North located in Dallas, Texas. During this quarter, we capitalized on those leasing efforts and sold The Shops at Legacy North for $78 million and a cash exit cap of low 5%. While the lease-up of this shopping center took longer than anticipated, we are pleased with the ultimate outcome and the ability to accretively recycle the proceeds into higher-yielding acquisitions. This transaction demonstrates our team's ability to execute value-add strategies at properties, retenanting, increasing occupancy and bringing rents up to market.

As we look ahead, I do want to note a near-term anticipated acquisition. We are under contract to acquire a 384,000 square foot shopping center located in Texas for approximately $83 million. We look forward to announcing the closing of this acquisition in the first quarter of 2026 and providing more details at that time. Additionally, while we have plenty of liquidity under our revolving credit facility to acquire this property, we may elect to fund this acquisition by selling a stabilized property, thus accretively recycling the proceeds to further drive earnings.

Finally, while both leasing and capital recycling will add to earnings growth in 2026 and 2027, we never rest here at CTO. We have identified 6 outparcels for development in our various stages of negotiations with tenants ranging from preliminary to detailed lease negotiations. Three of the 6 outparcels are for larger boxes and uses. We expect to drive significant foot traffic to their respective centers. While each specific opportunity is unique, in general, they average about $5 million of investment capital and low double-digit yield. If completed, we expect the capital to be invested over 2026 and 2027 with leases beginning to contribute to earnings in the second half of 2027.

In summary, while we are pleased with our 2025 performance, we are even more excited about the future of CTO. We are beginning to reap the benefits of our strategic business plan, focusing on the right assets in the right markets, along with the proactive leasing and asset management. I'm immensely proud of the team here at CTO and what they have accomplished along with the performance and results they are driving for our shareholders.

And with that, I will now hand the call over to Phil.

Thanks, John. On this call, I will highlight our earnings, provide an update on our balance sheet and discuss our initial 2026 outlook. Starting with operating results. For the fourth quarter, core FFO was $15.8 million, a $1.6 million increase compared to the reported in the comparable quarter of the prior year. On a per share basis, core FFO was $0.49 per diluted share compared to $0.46 per diluted share in the comparable quarter of the prior year. For the full year, core FFO was $60.5 million, a $12.6 million increase compared to $47.9 million reported in the comparable prior year. On a per share basis, core FFO was $1.87 per diluted share compared to $1.88 per diluted share in the comparable prior year. The change in core FFO per share for the full year reflects the reduction in leverage that took place late in 2024 when we reduced net debt to EBITDA by approximately a full turn.

With regards to same-property NOI, total same-property NOI, including our 4 noncore properties, increased 1.1% for the fourth quarter. Same-property NOI for our noncore properties was impacted by Fidelity, vacating almost half of our 212,000 square foot office property located in Albuquerque, New Mexico and lower percentage rent from our beachfront restaurants in Daytona Beach, Florida. As previously disclosed, we have already released the portion of the building vacated by Fidelity to the state of New Mexico for an initial lease term of 10 years, making the property now 100% leased to two investment-grade tenants. Further, we currently expect the state of New Mexico to begin paying cash rent in the latter half of 2026.

Notably, same property NOI for our shopping centers increased 4.3% in the fourth quarter. This growth was driven by leasing activity across our portfolio and a reduction in maintenance costs related to a property enhancement project completed in the fourth quarter of 2024. For context, shopping center properties represent 93% of total same-property NOI for the fourth quarter. However, given the relatively small nominal size of our same-property NOI, just $200,000 impacts quarterly growth by approximately 100 basis points and one tenant vacating together with the seasonal impact of percentage rent at a noncore property can obscure the same-property NOI trend at our shopping centers. Accordingly, we have updated our supplemental financial information this quarter to more clearly highlight the metrics related to our shopping center properties.

Moving to the balance sheet. We started the fourth quarter in a strong financial position after completing the previously announced $150 million term loan financing at the end of the third quarter. The proceeds from these new term loans were used to retire a $65 million term loan scheduled to mature in March of 2026 and reduce the balance on our revolving credit facility to provide enhanced liquidity. Notably, we now only have $17.8 million of debt maturing in 2026.

Also, as previously disclosed, early in the fourth quarter, we repurchased $5 million of common stock at a weighted average purchase price of $16.26 per share increasing our repurchases for the full year of 2025 to a total of $9.3 million at a weighted average purchase price of $16.27 per share.

Regarding liquidity, we ended the year with $167 million of liquidity, consisting of $149 million available under our revolving credit facility and $18 million in cash available for use. This provides more than adequate capacity to initially fund the $83 million anticipated acquisition of a shopping center located in Texas that John discussed earlier.

From a leverage perspective, we ended the fourth quarter with net debt to EBITDA of 6.4x, an improvement from 6.7x at the end of the third quarter. The anticipated acquisition in Texas will temporarily elevate our leverage to a level similar to that at the start of the quarter. However, we anticipate deleveraging from the sale of select assets as well as rent commencing from our signed-not-open pipeline.

Now turning to our 2026 outlook. Our initial earnings guidance for the full year of 2026 is $1.98 to $2.03 for core FFO per diluted share and $2.11 to $2.16 for AFFO per diluted share. Key assumptions reflected in our initial guidance include: investment volume, including structured investments of $100 million to $200 million at a weighted average initial yield between 8% and 8.5%. The same-property NOI growth for shopping centers of 3.5% to 4.5% and general and administrative expenses of $19.5 million to $20 million. One last note, the cadence of our same-property NOI growth will improve over the year as tenants included in our signed-not-open pipeline take possession of their space and commence paying rent.

And with that, operator, please open the line for questions.

[Operator Instructions] The first question comes from Jay Kornreich with Cantor Fitzgerald.

First, I wanted to ask about backfilling the 10 vacant anchor centers. Could you just give us another color as to the timing of how rent from those already signed leases starts to get paid in 2026? And then for the three leases that have yet to be signed, any thoughts as to timing for that? And if that can also, I guess, hit the upper end of that 40% to 60% increase in leasing spreads you forecasted?

Yes, thanks. I'll kind of answer sort of the ones that we're still working on. We have -- we're in a fortunate situation with regards to the vacancies that are left where we have multiple tenants buying for the space, and we're trying to obviously optimize sort of the higher paying credit, what it does for the center, that sort of thing. So we're trying to move around the chess pieces. So -- and that's more talking about Carolina Pavilion and there's two boxes there. And so I would suspect that that's going to get resolved here in the next 6 months for sure. And then as we talked about before, these things tend to take a year at least to kind of get into operation.

But I'll let Phil talk about the others that we've signed up.

Yes, Jay, on the ones that have already been completed, as far as contributing to the fourth quarter, it's really just the two Boot Barns, one at Rockwall and one at [ price ] that got opened really quick. We did get Slick City moved into Carolina, but it was very, very late in the year, it didn't contribute much this year. And then just going forward, it will ramp up about half in '26 and then they'll all be online in '27.

Okay. I appreciate that. And then just one follow-up. I guess looking at the office property in New Mexico, which now has this new lease worked out between the two tenants, I guess, how do you think about the value and opportunity to dispose of that asset now? And whenever that does happen, should it happen? What would your ideal use of the proceeds be?

Yes. So we're definitely in a fortunate position that now that we have the state of New Mexico, taking half the building and Fidelity another other half, we certainly have a marketable asset right now. So we are in early discussions with groups that have an interest in buying it. But as we get closer to the state of New Mexico's rent commencement, it's kind of really we're going to have higher values to us. So we're being patient with it, knowing that we have that opportunity and alternatively, to your question, we would look to reinvest those proceeds into an open air center, a larger open air center. And if we find a great candidate acquisition opportunity, we may speed up the process of selling that building in New Mexico.

Our next question is going to come from Craig Kucera with Lucid.

I want to talk about Pompano Citi Center. There is a mention of some potential mark-to-market lease-up opportunity there. Can you give us some color on what you think that might be?

Well, it's really -- I mean, look, JCPenney is the largest tenant and they literally pay nothing. And so if that company wherever to really go under or get back space or most likely is something where we buy out their space, that's a huge opportunity at that property. But really, the real opportunities, Craig, the lease-up, there's a fair amount of vacancy, and we're very active right now in -- with LOIs going out to prospective tenants. It's really turning this around, creating the excitement of the activity, and we're doing that. So we're really very optimistic about Pompano. So -- but there's -- it's more about lease-up than taking an old tenant and bringing in a new tenant at higher rent. But certainly, the largest one by far, JCPenney is that opportunity down the road.

Right. That could be pretty significant if they're paying nothing. Changing gears, it was a very strong leasing quarter. Obviously, a lot going on at Seminole Town Center. But outside of that, were there just kind of a flavor of the market, are you seeing any particular categories that are really creating or are you finding demand in your shopping centers for?

It's really the strong national brands that are still very interested in spaces if you have them. You have the T.J. Maxx' of the world, the Ross and so forth. So I mean, you're actually seeing more development occur in different markets because those tenants are doing very well in this economy as we read the national headlines and so they're looking for store expansion. So if you have a big box in a good market and a good center, you really are in the driver's seat.

Great. I saw you extended and increased the Revana loan and extended founders. Have you gotten any indication from Watters that they'll extend? Or you expect that to be repaid in the second quarter?

Yes. Unfortunately, we expect that to be repaid. We are hoping that it wouldn't, but it looks like it will. So we'll be on the hunt to replace that.

Got it. And I saw that Revana paid down a portion of their balance but you would anticipate them drawing down the remaining $25 million or so available on that loan in 2026?

Yes. They have some basically users for some of the site and they need to do site work and put in the roads and all that kind of stuff, utilities. And so it's really master development work. And so yes, we expect that to be used to improve that site.

Okay. Great. And just one more for me. Phil, this is on the ABR recognition timing on the signed-not-open. Can you give us any more granularity certainly relative to 2026? Is this like we -- should we assume something ratable? And as far as 2027, is that also throughout 2027, I would imagine? Or any additional granularity would be helpful for modeling purposes.

Yes. Ratable is pretty close. It may ramp up a little more towards the latter half of the year in '26. But if you're doing it ratable or a little bit stacked towards the latter part of the year, you're going to be pretty close. And same for '27, from what we can see now.

You would say the same for '27 as well?

Yes, from what we can see now, yes.

Our next question is going to come from John Massocca with B. Riley.

So maybe thinking about the Texas acquisition that's in the pipeline, how does that property, you think, look compared to the portfolio today? And I guess, is there more kind of a value-add opportunity in that acquisition as you see it today? Or is that going to be something that's more stabilized or you're just getting it at a really solid yield and maybe there's some rent mark-to-market in the future that's attractive?

How about if I say all of the above? We're lucky that it's a stabilized asset with upside opportunity. There's actually a land parcel that comes along with it that there's definitely possibilities for and there is a little bit of lease-up and there is some below-market leases, but nothing near term so that you can get a hold out. So it hits all the boxes. So we're pretty excited about it.

Okay. And then maybe thinking about acquisitions in the pipeline or in the guidance beyond that transaction and with the likely repayment of the one structured investment in mind, how much of that is maybe structured investments as you see it today? And how much of that would be additional shopping center purchases?

We're definitely on the hunt for the larger shopping center purchases. And we -- in the last week, I went to go see two larger ones that were definitely interested in. I would say that the market, there's not a lot on the market right now. There is a lot of talk about brokers doing a lot of valuations for sellers. And so we'll see whether that comes to fruition. But we're definitely looking to find some chunkier shopping centers this year.

As we mentioned before, we still have some recycle opportunities in our portfolio where we've leased up properties and they're slower growth now. And if we can move them into, for instance, the Texas acquisition, where there's a ramp of cash flow increases and lease-up opportunity. That's kind of where we like to position ourselves.

And as you think about -- I mean, I know if you bespoke based on whatever asset you decided to sell, but what's kind of the day one spread in yields between kind of dispositions and acquisitions? I mean you gave acquisition cap rates and guidance, but just kind of curious what the disposition side would be.

I mean at least 100 basis points, if not more, most likely more.

To the positives?

Yes.

Okay. And then last one for me. CapEx kind of came up a little bit in 4Q, is that kind of a better run rate level as we look at the portfolio today? Because I know you sold legacy, which is a little bit more of a CapEx-intensive asset. Just kind of curious how we should think about that going forward.

Yes, the fourth quarter was elevated. It did include the large anchor lease at Market Place at Seminole. That's the one John talked about where the anchor took the 34,000 square foot box and then also is absorbing 9,000 a small shop plus 5,000 square feet of expansion. And there was also a restaurant in there and the restaurants always carry a little heavier TI. So I would say the fourth quarter is probably a little higher than the run rate going forward. Those run rates are, for a portfolio our size, are better to look at an annual basis because it's just one lease like an anchor in any one quarter can skew it up significantly. And I would say just generally, the fourth quarter is a little higher than a good run rate.

The next question is going to come from Gaurav Mehta with Alliance Global Partners.

I wanted to follow up on the SNO timing of 47% in 2026. It seems like it's different than 76% you had in last quarter. So is it like the new leases that came in? Or was there any changes in the timing?

Yes. When you look at it from quarter-to-quarter, there's a lot of moving parts. So there was a tenant that moved off of it and into this year, right? And then you also -- you had where we sold legacy, so then that dropped off. And I think that's probably the biggest mover in your kind of reconciliation of the 76% that was previously there to 50% now. There was a lot of lease-up at legacy, as John discussed that we completed, and then with selling that, that drops out of the pipeline. And the amount did not decrease because we signed a lot of new leases, right? So the signed-not-open pipeline is still significantly large even with legacy falling off, but that's the change, the biggest driver of that change for '26.

Okay. Understood. Second question I have is on your market allocation as you look to acquire new properties. I see that Atlanta seems to be much higher at 36% than rest of the market. And I'm just wondering if you could just maybe comment on how you think about allocating in any given market as far as exposure to cash ABR?

Yes. I mean, look, we're not looking to add to Atlanta. So you'll probably see Atlanta move down over time for sure. And so given that our portfolio is 85%, North Carolina, Florida, Texas, Georgia, we certainly have one of the strongest portfolios relative to the growth of markets where tenants want to be. And so you'll just see more of our investments in other markets kind of in that Southeast, Southwest, but less so in Atlanta.

The next question will come from Jason Weaver with JonesTrading.

Just first of all, when it comes to allocation, can you talk about the relative merits between grocery, anchor, lifestyle and power centers and of those, what you're most likely looking to target?

Yes. I mean, look, grocer is terrific, but it's a lower-yielding kind of product and a little bit slower growth sort of product. And so -- and then lifestyle is fantastic. We've had some great success, but they're a little bit more expensive to operate. You need more of that security element and everything because you have restaurants and entertainment and so forth, but they work really well in the right locations. And then power is just more stable but higher growth opportunities with lease-up and less sort of CapEx exposure, tenants that are going in those don't need really high TI sort of finish outs like the lifestyle centers do, but that's sort of an easy sort of way to think about them.

Yes. And how are you thinking about the relative availability in the market for what you can deploy to today?

Yes. We're not right now on the grocer side. We're not chasing those just because of the yields are so low. However, we do -- we're looking at lifestyle and power, for sure. And a lot of the opportunities we're looking at are kind of have that grocer opportunity in the future where grocers would come into those centers. We're seeing that in our portfolio now where we may have a large power center, but a grocer is looking at one of the boxes, and we've had that happen before where, unfortunately, we couldn't get one of the tenants out, that would have been a very national grocer that is very beloved in the nation. But unfortunately, we're couldn't get a book store out to accommodate them if you can imagine.

So we won't be chasing grocers just because the yield is way too low. We don't see a compelling return opportunity there. We do see it in areas where in the lifestyle and power where the yields are definitely higher, and there's not as much capital chasing them.

Great. That's helpful. And then maybe it's a little bit early here, but with 20% of your base rent, 2028 lease is coming off, have you started any discussions on what types and sort of opportunity that might present for FFO growth in the [ out year ]?

Yes. I mean, look, that's the great thing about this company set up right now is we've done so much work on the lease-up and kind of the ramp that -- and a lot of these tenants that -- or these properties that we bought, their leases are below market. And these tenants are doing well. And so most likely, they're going to exercise renewal options. But if not, there's definitely some mark-to-market opportunities. So we don't really have to do much here to grow our earnings, it's just really letting the portfolio play out. And so the setup is really great. We don't have to do anything special to have some really interesting growth here.

Thank you. And this does conclude today's Q&A session and conference call. I want to thank you for participating, and you may now disconnect.

Ladies and gentlemen, thank you for standing by. Welcome to CTO Realty Growth Third Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would like now to turn the conference over to Jenna McKinney, Director of Finance. Please go ahead.

Good morning, everyone, and thank you for joining us today for the CTO Realty Growth Third Quarter 2025 Operating Results Conference Call. Participating on the call this morning are John Albright, President and Chief Executive Officer; Philip Mays, Chief Financial Officer; 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 discussed 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. We delivered another quarter of strong operating performance driven by the strength of our leasing activity. Year-to-date through September 30, we have completed 482,000 square feet of overall leasing activity, including 424,000 square feet of comparable leasing at a weighted average base rent spread of 21.7%.

Contributing to this leasing performance was our third quarter in which we executed 143,000 square feet of new retail leases, renewals and extensions at an average base rent of $23 per square foot. This includes 125,000 square feet of comparable leases, a 10.3% base rent spread. Notably, just after the quarter, we signed a significant lease at the Shops at Legacy, a 243,000 square foot mixed-use lifestyle center located in Dallas, Texas. I will share more details on this lease and the Shops at Legacy shortly.

We also continue to make progress on backfilling our 10 anchor spaces. Six of the 10 vacant anchor spaces have been leased, and we remain in active negotiations for the remaining 4. To date, we are encouraged by the rental upside and value creation these 6 leases represent and expect the new tenants to increase foot traffic relative to the former tenants.

Furthermore, we remain on target to achieve our goal of positive cash leasing spread of 40% to 60% across these 10 anchor spaces, and we look forward to providing additional updates on our progress.

More broadly, as of today, our signed-not-open, or SNO, pipeline stands at $5.5 million, representing approximately 5.3% of annual cash base rents in place as of quarter end. We believe that this pipeline positions us for meaningful earnings growth with approximately 76% of our ABR from the SNO pipeline anticipated to be recognized in 2026 and 100% in 2027.

Now I would like to share some exciting updates related to the Shops at Legacy. Just after the quarter end, we signed a 30,000 square foot lease with a co-working operator expected to open by year-end 2026. This lease, along with the 20,000 square foot private members-only social club that we signed in the third quarter of 2024, substantially fills the space formerly leased to WeWork, marking a meaningful inflection point in our re-leasing efforts.

In addition to these large leases, over the last 2 years, we have signed smaller shop leases for an aggregate of nearly 60,000 square feet for various restaurants, fitness and retail concepts that we believe will further increase the vibrancy of the center. Today, reflecting all this leasing activity, the lease percentage of Shops at Legacy stands at approximately 85%.

Now moving to a recent agreement that we signed to acquire a shopping center in South Florida. This is a property that I mentioned on our last call that we were targeting. We believe this shopping center offers value-add potential that aligns well with our leasing and operating strength and presents an opportunity to both acquire the asset at an attractive initial yield and drive long-term value creation through lease-up of acquired vacancy. We expect to close this transaction before year-end and look forward to providing more details when we close.

From a financing perspective, as Phil will discuss in more detail, we recently termed out some debt and refreshed our revolving credit facility, providing enhanced liquidity. This will give us the ability to initially acquire the South Florida property using our line of credit. Ultimately, though, we anticipate funding this acquisition by recycling an asset around year-end. Overall, we are pleased with our leasing progress and the value creation underway as we continue to execute our strategic priorities.

And with that, I will hand the call over to Phil.

Thanks, John. On this call, I will discuss our balance sheet, earnings results and updated full year 2025 guidance.

Starting with the balance sheet. Just before quarter end, we closed $150 million in term loan financings, including a new 5-year $125 million term loan maturing in September of 2030 and a $25 million upsizing of our existing term loan maturing in September of 2029. Both term loans bear interest at SOFR plus a spread based on our leverage ratio. At closing, we utilized existing SOFR swap agreements, resulting in an initial fixed interest rate of approximately 4.2% for both loans.

In March of 2026, when certain of these applied SOFR swap agreements expire and are replaced by other existing forward swap agreements, the interest rate for both loans will adjust to approximately 4.7% based on the company's current leverage ratio. The proceeds from these new term loan financings were used to retire a $65 million term loan scheduled to mature in March of 2026 and to reduce the balance on our revolving credit facility, providing enhanced liquidity.

Reflecting this financing, we ended the quarter with approximately $170 million of liquidity, consisting of $161 million available under our revolving credit facility and $9 million in cash available for use.

Additionally, we have recently repurchased $9.3 million of common stock at a weighted average purchase price of $16.27 per share. These repurchases consisted of $4.3 million towards the end of the third quarter to close out our previous $5 million repurchase program and $5 million in October under our recently announced $10 million common stock repurchase program.

Reflecting this quarter's balance sheet activity, we ended the quarter with net debt to EBITDA of 6.7x, a slight improvement from 6.9x at the end of the second quarter. Further, we anticipate additional deleveraging as we successfully re-lease our vacant anchor boxes and tenants in our signed-not-open pipeline commence paying rent. And notably, with our recent completed term loan financing, we now only have $17.8 million of debt maturing in 2026.

Moving to operating results. Core FFO was $15.6 million for the quarter, a $3 million increase compared to $12.6 million in the comparable quarter of the prior year. On a per share basis, core FFO was $0.48 per share compared to $0.50 per share in the comparable quarter of the prior year. The change in core FFO per share reflects a reduction in leverage that took place from late third quarter of 2024 through the end of 2024 when we reduced net debt to EBITDA by approximately a full turn.

With regard to same-property NOI, our same-property NOI increased 2.3% during the quarter. This growth was driven by leasing activity across our portfolio, in particular, at Beaver Creek with Onelife Fitness replacing the former theater, along with strong small shop leasing at West Broad Village, Plaza at Rockwall and Ashford Lane.

Turning to guidance. We are raising both our core FFO and AFFO outlook for the full year of 2025. Our new core FFO range has increased to $1.84 to $1.87 per diluted share from the previous $1.80 to $1.86 per share. And our new AFFO range has increased to $1.96 to $1.99 per diluted share from the previous $1.93 to $1.98 per diluted share.

And with that, operator, please open the line for questions.

[Operator Instructions] The first question comes from Rob Stevenson with Janney Montgomery.

Phil, What's the pro forma debt-to-EBITDA look like once you complete the Florida acquisition and sell the existing asset and the near-term signed but not commenced leases start to drive revenue?

Yes. So as John discussed on the call, the Florida asset will be temporarily parked on the line, and we have plenty of liquidity there and capacity to do so, but will ultimately be funded with recycling and should not significantly change debt to EBITDA. The signed-not-open pipeline as it stands today, just coming online, would take off about half a turn as it comes online.

Okay. And what is the timing of the bulk of that revenue? Is that -- are you going to see any material amount in the fourth quarter? Is that a first or second quarter '26 event? How should we be thinking of that when we play around with our models in terms of when the bulk of that $5-plus million starts hitting revenue?

It's going to start beginning of next year. The pipeline is $5.5 million of base rent. I think we said 75% of that is going to be recognized next year, so about $4 million. And the way I would ramp that up is about $0.5 million in the first quarter, $1 million in the second and $1 million in the third and then about $1.5 million in the fourth, so kind of growing throughout the year to a total of about $4 million as the pipeline stands today or about 75% of the pipeline with all of it being recognized in '27, everybody should be as currently projected operating in space, paying cash rent by the end of '26. So you get the full $5.5 million in '27.

Okay. That's helpful. And then, John, where is your most significant vacancy today that's not either under contract, letter of intent or pretty far down the road where you still have some work to do? Where is the opportunity for you guys, right now?

Yes. We have a 40,000 square foot vacancy at Carolina Pavilion. We've gone through a couple tenants -- prospective tenants where they were going to take so long that we decided to switch tack. And so we're kind of going down a route of either splitting the box or talking to a couple of different groups about taking the whole box again. So we've had some false starts with some groups that are just going to be really torturous as far as how long they're going to take to get through the process. And then that's really the largest vacancy and then we have a little bit left to go at Legacy, but not too much. So that's where our focus is.

All right. And then last one for me. You've got about $45 million of structured investments that are -- have maturity dates in the first part of '26. When you take a look at those today, are those likely to be redeemed around that point in time? Or are those likely to be extended? How are you guys thinking about that as the preferred -- I think it's Watters Creek and Founders Square.

Yes. Founders Creek will pay off. Watters -- I'm sorry, Founders Square will pay off and Watters Creek may extend, but may just pay off as well. So we're seeing where that plays out, just depending on their -- how they look at capitalizing that property going forward.

And the next question will come from Matthew Erdner with JonesTrading.

You guys touched on what I was going to ask a little bit with the Florida acquisition, but I'm just trying to think about how you guys are going about capital allocation moving forward kind of between buybacks and structured investments. Given where the stock is trading, are you guys going to continue to buy back shares down at this level?

Yes. So I mean, clearly, we're going to do as much as we can, given our credit facility sort of restrictions. So absolutely, given the stock price kind of where we're trading below a 9 multiple and 5-year lows and almost a 10% dividend yield, it's fairly ridiculous. So clearly, the best acquisition investments is our own stock.

Got it. And then as a follow-up to that, do you guys have any restrictions on investing more into PINE? And if not, is that something that you guys are considering doing just given that, that stock price is trading at similar multiples?

Yes. So we do have a little bit more room there without hitting our restrictions on what we can own of PINE. And of course, we're opportunistic. So just depending on what happens with the stock price there. But clearly, right now, feel like CTO is the double discount.

And the next question will come from Craig Kucera with Lucid.

You've been pretty active on the structured finance side at PINE. Are you seeing any pickup in potential loans that work for CTO? Or are property investments really more compelling right now?

Yes, not so much at CTO. As you mentioned, we're seeing it more at PINE. Given that the CMBS market has come back very strong for the shopping centers, seeing less need for structured finance there, but we're certainly keeping our eye out there. So yes, that's kind of where the market is right now.

Got it. Changing gears, you have a decent amount of leases expiring here in the fourth quarter, I think about 3% of ABR, one is an anchor. Can you talk about your expectations there?

Yes. We're not really seeing any risk as far as nonrenewal. As you know, a lot of these acquisitions had tenants way below market rent and some that we'd like to get back and replace with higher rents. But yes, there's no risk that we're kind of seeing out there on the renewal side.

Okay. Got it. Congrats on the Shops at Legacy leasing. I think that's been -- there's been some vacancy there for a while. Can you give a sense of how additive that is to the signed-not-open pipeline?

Yes, I'll let Phil touch on that. But yes, it has been a long time, longer than we would like, of course. And one thing that, that's going to bring to the property that people kind of miss out on a little bit is a lot of vibrancy, a lot of bodies coming in. And it's going to -- even though the restaurants have done really, really well on the leasing without that, just having that component for that property is really going to be an enhancement. But I'll let Phil talk about that.

Yes. Out of the entire signed-not-open pipeline of $5.5 million, Legacy is close to $1 million of that, Craig. In particular, the private members club and then the co-working lease that we just signed in October, those 2 in particular.

Okay. And just one more for me. Any change to the credit watch negative list? I know we've talked about maybe home goods or some of those things, but any change there?

Not this quarter. No, same sort of tenants. And if anything, kind of credits have gotten a little better, I think.

And our next question is going to come from Gaurav Mehta with Alliance Global.

I wanted to ask you on the nonrecurring items. I think you reported $0.5 million of nonrecurring this quarter and also raised your G&A guidance a little bit. Just want to get some color on what those items were.

Yes. So on the nonrecurring, those kind of tend to run -- fluctuate between $100,000 and $300,000 a quarter, generally averaged around $250,000. You're correct, it was closer to about $0.5 million, I believe, this quarter. So it was slightly elevated. And we tend to get a quarter like that every 3 or 4 quarters, it kind of tends to pop up to that number. But generally, for like a good run rate, it's typically closer to $250 million. G&A, I think, for the fourth quarter will be similar to this quarter, if you're just looking to model that.

Okay. Second question I have is on tenant improvement allowances. It seems like it was higher this quarter than last few quarters. How should we think about that line item as you sign new leases?

Yes. So it was very light in the first half of the year. That volume and that size kind of tends to fluctuate as anchors get moved in and complete their construction and get open. So this quarter, you had Onelife at Beaver Creek, and they have to support -- provide invoices and stuff. So they can get in and get open. But by the time we reimburse them, it can lag a little. But you had Onelife at Beaver Creek. You had Boot Barn and Barnes at Rockwell. So it was elevated this quarter. Currently, I would expect the fourth quarter to also be elevated and be similar to the third quarter. But again, that's just going to depend on timing on individual anchors and when they get open and when they get their paperwork submitted for their TI reimbursements. But we do have a lot of anchors lined up, and I would expect the fourth quarter to be pretty elevated again.

Okay. And then lastly, on the asset recycling that you talked about to fund the acquisition. Is that expected to happen this year or that's expected to happen next year?

We think that something will happen this year, but you just never know as far as some things kind of come up and need extensions and so forth, but we're probably at the end of the year.

And the next question comes from John Massocca with B. Riley Securities.

As you think about the anchor box re-leasing in the $4 million to $4.5 million of potential new base rent there, how much of that is already set with the 6 leases you've closed? And how much is still contingent on the 4 leases that you're negotiating or trying to close here in the next couple of months?

Yes. So out of the anchors, the 6 that are done, about -- they represent about $2.5 million currently. So with the ones that are left, that would be a remaining $2 million.

Okay. And then maybe switching gears a little bit on the investment front. Anything else in the pipeline you're seeing that might close in 2025 beyond the kind of Florida shopping center transaction you talked about earlier?

Given that we're getting kind of tight on time, I wouldn't expect it, but we're not also kind of -- if one of the things that we're looking at, we are bidding on quite a bit of assets that we like, but not sure how competitive we'll be, but we're certainly saying that we can close by year-end if it's important for a seller. So hopeful, but I wouldn't expect an additional one.

Okay. And then in terms of 2026, what's the acquisition environment look like today? And I guess maybe to the extent you would do new investments, how do you think about funding it? And is there additional assets within the portfolio that you think are targets for capital recycling beyond the assets you're going to use to fund the Florida acquisition?

Yes. I mean that's the easy part. If we find a good acquisition candidate, we do have some stabilized assets given how much leasing we've done over the last couple of years. And so taking advantage of that lower cap rate sale, maybe slower growth asset and recycling into kind of value-add, higher growth asset, higher yielding. So we definitely have a nice pipeline of potential sale opportunities. I just want to match that up with something we feel really good about.

You think the Fidelity property or the New Mexico property is a potential candidate for that capital recycling, either for the acquisition we talked about earlier on the call or 2026 investment activity?

For sure. We just need to get the lease settled up with the state and then it will be in condition to sell. So that's probably early '26. I think maybe previously this year, I mentioned late this year, but it takes a while to settle the lease expansion and so forth. So we're probably looking at early '26 on selling that asset. But yes, that's definitely a candidate.

Okay. And then lastly, the Shops at Legacy, the kind of remaining square footage to be leased once you bring in the co-working tenant, what kind of is that? Just big picture, is it all kind of small shop space? Is there any kind of anchor space still left in that property? Just kind of curious what that looks like.

Yes. It's more small shop space that we've gone through literally 3 different tenants that we just didn't get there, whether we didn't like their financials or too much TI. So we're being a little picky on it. And then we have a little bit of WeWork space left, but we feel like the -- when the private club opens, they express some interest that, that might be an expansion opportunity for them. So everything is very manageable. We're just trying to kind of be picky about who we put in.

This concludes today's Q&A session and today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to CTO Second Quarter 2025 Earnings Conference Call. [Operator Instructions] 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 McKinney. 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 at an average cash base 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 are 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, 6 of the 10 anchor spaces are resolved with new leases executed for 5 of them and one of the leases is signed. The new anchors include Burlington, 2 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 4 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 4 anchor spaces will provide the company with earnings tailwinds going into 2026. Further, we are 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 front, 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 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 we'll 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 would like to briefly discuss the exciting progress taking place at 3 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 4 of the 10 anchor spaces I discussed earlier. All 4 of these were identified in underwriting as value-add opportunities having significantly below market rent. Of these 4 spaces, 2 have already been leased, and we are in active lease negotiations for the other 2 spaces. After capturing the upside on these 4 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 a 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 the Carolina Pavilion, these spaces were identified as having significantly below market rent and upside in our underwriting. And combined, we are achieving 86% cash rent spread on them.

Now to our last significant noncore 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 the 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 5-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 2 credit tenants and a longer weighted 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.

Thanks, John. On this call, I will discuss our balance sheet, earnings results and full year 2025 guidance. Starting with the balance sheet. This quarter, as previously disclosed, we fully settled our 3.875% convertible notes, which had an outstanding balance of approximately $51 million and a stated maturity of April 15, 2025. These notes were partially settled slightly prior to maturity with a series of privately negotiated transactions with certain note holders for a combination of cash and newly issued common shares and the remaining principal balance was settled with cash on the maturity date. Ultimately, the convertible notes were retired in full for approximately $71.1 million, consisting of $50.1 million of cash and $21 million of common equity. This repayment did result in an extinguishment of debt charge of approximately $20.4 million and consistent with past practice and our definition of non-GAAP measures, it was excluded from our computation of both core FFO and AFFO. After settlement of our convertible notes, we ended the quarter with $606.8 million of debt, of which just $74 million or 12% is subject to floating interest rates based on SOFR.

As you may recall from our prior earnings call, when interest rates temporarily dropped in April in connection with the initial tariff announcements, we executed SOFR swaps, fixing SOFR for $100 million of principal at a weighted average rate of 3.32% for 5 years effective April 30. These swaps were applied to borrowings outstanding on our revolving credit facility, reducing our floating rate exposure and the applicable interest rate on $100 million by nearly 100 basis points to just under 5% based on our current leverage and pricing tier. We ended the quarter with almost $85 million of liquidity, consisting of $76 million available under our revolving credit facility and approximately $9 million in cash available for use. Similar to last year, we will look to close a new term loan towards the end of the third quarter or early in the fourth quarter and use the proceeds to reduce the outstanding balance on our revolving credit facility and increase liquidity.

One last balance sheet note. We ended the quarter with net debt to EBITDA of 6.9x, an improvement from 7.5x from a year ago, but up a bit from 6.3x at the beginning of the year. The change from the beginning of the year was due to 2 items: First, the approximately $80 million acquisition of Ashley Park in the first quarter; and second, the earnings associated with the 10 anchors that vacated between last year and the second quarter that John discussed. Accordingly, as these anchors and other tenants in our signed not open pipeline open and commence paying rent, it will assist in deleveraging.

Moving on to operating results. Core FFO was $14.7 million for the quarter, a $4.3 million increase compared to $10.3 million in the comparable quarter of the prior year. On a per share basis, core FFO was $0.45 for the quarter, consistent with the comparable quarter of the prior year. The consistency of core FFO on a per share basis despite the $4.3 million growth in core FFO is primarily due to our reduction in leverage from a year ago.

Now to guidance. We are reaffirming our full year 2025 per share outlook for core FFO of $1.80 to $1.86 and AFFO of $1.93 to $1.98. The assumptions underlying this outlook remain consistent with those previously provided. While we have completed a significant amount of leasing and built a $4.6 million signed not open pipeline, it does take some time for tenants, particularly anchors to get open and commence paying rent. Accordingly, the related earnings from this pipeline will become more noticeable as we move through the fourth quarter of the year.

And with that, operator, please open the line for questions.

[Operator Instructions] And our first question will be coming from the line of Gaurav Mehta of Alliance Global Partners.

I wanted to ask you around your comments around Fidelity Office property where you mentioned they are vacating half of that and you have State of Mexico coming in. Can you provide some more color on what happened with that property as far as Fidelity exiting half of that? And do you expect any CapEx associated with State of Mexico?

Sure. So the building -- when Forest City built the building for Fidelity, it was built in 2 separate sort of building structures. So Fidelity could have the flexibility to downsize and bring in another tenant. And that's actually kind of what's happening. Fidelity is going to pay us a payment for that downsizing. And then at the same time, we did get lucky that state of New Mexico had a very big demand for more modern space to bring some agencies out of some older facilities. And so they are extremely happy about locating here and have moved very fast in this process. And I wouldn't be surprised if they take additional space in the future. So that's going to allow us to monetize this asset probably late this year or early next year after we get everything settled down. But yes, it's going to be a good situation for us.

Okay. Second question I have is around acquisitions. I think you mentioned that you are looking at one shopping center for a potential acquisition. And if you were to acquire that property, should we expect leverage to go up in the near term to fund that acquisition?

Maybe in the near term. But as I mentioned, I think last earnings, we are looking to recycle some assets. So we would not see the kind of leverage after recycling tick up at all.

Okay. And then lastly, can you remind if you have any dispositions in your guidance?

Yes, there's no dispositions in the current guidance.

And our next question will be coming from the line of Rob Stevenson of Janney Montgomery.

Are the Fidelity and the state of New Mexico leases, are those second quarter leases or are those third quarter leases?

The Fidelity is -- so we have an agreement with them to downsize. We're still working through the exact square footage there. So it's going to be approximately half, but just have to work through kind of the common areas and stuff like that, the lobby and all to make sure that it works for both tenants. So it's not 100% finalized, but it's substantially done, and we do have an agreement in place. It's just fine-tuning the layout and the exact square footage. And then the state of New Mexico was signed and it was this quarter.

Okay. So that was in the 226,000 and changes of leasing that you reported for the second quarter?

It is not. If you look at our leasing spreads and all, that is just retail leases. We sporadically have some office leases here and there that aren't just representative of the majority of our portfolio. And so as we disclosed on that schedule, it does exclude those. So that was not in there.

Okay. And then at this point, given that we're a month into the third quarter, any significant leasing that you guys have signed thus far? And where does the signed not open pipeline sort of sit today versus the $4.6 million at June 30?

I mean, we're working on a fair amount of leases. Again, actually, if you take all of our vacancy that's remaining, we're negotiating either LOIs or leases on majority of the remaining vacancy. So we're just not there yet. I would say probably the next 60 days is kind of where things will be getting signed.

Okay. And then you talked about potentially doing some dispositions. Basically, I think that the next or the first of the structured investments doesn't come due until -- I think there's one in March and one in April. Any thoughts that those guys might pay off early And/or would you wind up selling any of the structured investments in lieu of stabilized assets?

Yes. I mean they could pay off early. I don't really see them paying off anytime soon. And then we're not really seeing any structured finance investments right now. We're really seeing some good quality sort of core acquisition opportunity. Yes, so they could monetize early if we wanted to or needed to, but I don't see that happening.

And the next question will be coming from the line of Matthew Erdner of JonesTrading.

So it seems like you're still seeing a lot of strength on the leasing side. Could you kind of talk about how those processes go? And then with those kind of 4 that aren't signed yet that have multiple offers or maybe multiple tenants that want to go in, how you guys are kind of evaluating the credit and which tenant you guys want to go in that spot?

Yes. Thanks for the question. I mean, look, we're pleasantly surprised at the strength of leasing and the tenants that we're talking about are kind of household names. So good credits. I think where it becomes a little bit more challenging is we do have other tenants that are interested. And if you split a box and bring in 2 tenants, maybe you make more money, but it costs more money, takes a little longer. So it's kind of high-class problems, but we're really going with more easier sort of solutions with credit, and it will be a little faster. But having said that, nothing happens fast these days. Just a lot of -- these lease negotiations have been taking quite a bit of time as these tenants have a pretty full deck of other leases that they're working on as well. So it's just -- the process is elongated these days, but the good news is we have a lot of good options on the leasing side. And as mentioned, given that out of our vacancy that we're really talking to about almost 70% of it that we're negotiating one form or the other, it's great to see.

Yes, that's great. And then you mentioned the kind of the process with it taking long. And then kind of on that turnover with the 94% to be recognized next year, what do you see as risks that would cause less than 94% to be recognized in '26?

The good news is, as you know, on our acquisitions, we've been buying properties with low embedded lease rates. So the mark-to-market is fairly opportunistic and would be terrific to have happen. So we're not really concerned about lease rollover because it's more opportunity if unexpectedly tenants do not stay in the spaces. So it's nothing that kind of keeps us up at night, if you will.

I got it. And then one last quick one for me. going to the structured investment book on that construction loan, there's only $29 million or $29.6 million in unfunded commitments. There's no other additional unfunded portions on additional loans.

Correct. And if you look at our investor deck, we have a little bit of an updated photo of the Whole Foods anchored site there that we're doing the construction loan at collection, which, as mentioned before, that's almost like a shadow acquisition pipeline for us because we have the right to acquire that and the developer is building to sell. So it would be nice to have that option to buy that and bring that into collection.

And the next question will be coming from the line of John Massocca of B. Riley.

So as I think about the physical occupancy, the decline kind of quarter-over-quarter, is there anything other than maybe some of the moving pieces around the retenanting of the anchor boxes and the Staples to Barnes & Noble conversion that you called out that was driving that? Just any other color there would be helpful.

No. It's really what we've talked about for some time now. It's all the usual suspects as far as that went bankrupt in the industry, Party City, JOANN's, Conn's. So it's really just dealing with big lots, dealing with those -- so nothing out of the ordinary of what's been talked about in the industry.

Was the Staples to Barnes & Noble conversion in those numbers? Or was that a seamless transition or something that's going to occur in like 3Q, 4Q?

Yes. So this quarter, the real driver was JOANN's and Party City. Party City left at the very beginning of the quarter, JOANN's kind of in the middle. The Staples, their lease goes until, I believe it is November. And so that will happen in the fourth quarter, John, where they will vacate. So the dip of 80 bps or so this quarter was largely JOANN's and Party City.

And any kind of temporary loss of rent there as it transitions to Barnes & Noble? Or is that something that -- because of the demand for that space because you had a tenant in place that it should be pretty seamless?

There'll be a little downtime towards the very end of this year or early next year, but it will not be in an extended period of time.

Okay. And then I know we talked about the Fidelity leasing situation, a decent amount. But just am I right in interpreting that -- and the negotiations are still ongoing, but am I right in interpreting that there could be a potential lease termination fee paid to you as a result of this? And understanding you're trying to dispose of the asset at some point here in the coming quarters, is the rent that you're getting from the building going to be relatively the same once you split it into 2 tenants? Or is there any kind of change in rent around reducing the size for Fidelity and bringing in the state of New Mexico.

Yes. So 2 pieces there. Fidelity will make a payment to us, John. The way the accounting will likely work on that is it will just get blended in with their rent on the half that they maintain and keep for several years. So don't expect to see like a pop to miscellaneous income or anything in the fourth quarter related to a big term fee, and that is not baked into the guidance. It will just generally kind of be the way GAAP will treat that, even though we'll get a nice little cash payment in the fourth quarter, is it will just blend it in with the rent on the remaining space over the remaining term. What was the other part of your question, the second part again?

And just what's kind of the rent going to be going forward post that...

There won't be a roll down in rent there. There'll just maybe be a little bit of downtime, but there will not be a roll down in rent.

And then lastly, on the potential shopping center acquisition you talked about, should we expect term loan financing to kind of come either before or maybe around that transaction? Do you view those kind of as being one in one? Or is that something where you feel comfortable taking more on the line? And I think you said 3Q, 4Q for executing on the term loan. But I just kind of was wondering how related financing might be to closing that transaction.

Yes. I mean the timing may not line up right on top of each other. But based on conversations we've had with our bank group, we don't have any concerns about terming that out. So we'll just want to make sure we get the best execution there that we can get. It would be great to kind of have a similar time line there to keep a little more liquidity on the line, but there could be just a little bit of period of time there where the acquisition comes down before the new term loan and/or disposition gets completed. But there won't be a large gap there.

And this does conclude today's Q&A session, and it concludes today's presentation. Thank you so much for joining. You may all disconnect.

Hello, and welcome to the Annual Meeting of Stockholders of CTO Realty Growth, Inc. Please note that today's meeting is being recorded.

It is now my pleasure to turn this afternoon's meeting over to Laura M. Franklin, Chairman of the Board of CTO Realty Growth. Ms. Franklin, the floor is yours.

Good afternoon, everyone. Pursuant to the company's third amended and restated bylaws, I will preside as Chair of this meeting. I would like to welcome all of you to the 2025 Annual Meeting of Stockholders of CTO Realty growth.

We are conducting this meeting in virtual format only, which will enable stockholders to listen to the proceedings from any computer, tablet or handheld device that has Internet connectivity.

Participants in this meeting from the company include the senior management team and all of the independent directors as well as Computershare Trust Company, the Inspector of Elections and a representative of Grant Thornton, our independent registered public accounting firm.

I understand we have approximately 9 others who are listening to the meeting via the virtual meeting portal. Mr. Daniel Smith, Secretary of the company, will act as Secretary of the meeting.

Now to proceed to the business of the meeting. Mr. Smith will confirm that the notice of this meeting was given to all stockholders as of the record date for the meeting. Dan?

I hereby certify that the stockholder meeting notice regarding the notice of Annual Meeting of Stockholders and availability of the 2025 proxy statement over the Internet was mailed to stockholders of record as of April 17, 2025, and that the mailing was commenced on May 6, 2025.

Additional copies of the proxy statement and a complete list of the stockholders of record as of the record date are available for your inspection and have been properly filed with the minutes of this meeting.

Thank you, Dan. I would now like to introduce Ms. Christine Abbey of Computershare Trust Company, who is participating in this meeting. Computershare has been appointed as Inspector of Elections for the meeting. Ms. Abbey's oath as inspector of elections will be filed with the minutes of the meeting. Ms. Abbey will confirm the presence of a quorum when she completes her tally of stockholders' proxy and ballot.

Now it is my pleasure to introduce your current Board of Directors, John Albright, George Brokaw; Chris Drew, myself, Laura Franklin, Blake Gable, Chris Haga.

A copy of the agenda for the meeting is available on the virtual meeting portal, along with the list of the rules of conduct for the meeting. By following those rules and procedures, stockholders who logged them with a unique 15-digit control number will have an opportunity to participate in the meeting, and we will be able to handle the business of the meeting efficiently and fairly.

As stated in the rules of conduct, only those stockholders or their representatives who are logged into the virtual meeting with their control number, will have the opportunity to vote their shares and submit questions. As stated in the rules of conduct, we ask that you restrict any questions to the items on the meeting agenda. Please note that any questions submitted during the meeting will be answered later after the formal business portion of the meeting has concluded. Thank you for your cooperation with these rules.

It is now time to begin the formal part of the meeting. As noted in the notice and proxy statement previously furnished to you, the record date for stockholders entitled to vote at the meeting was the close of business on April 17, 2025. We believe that the total number of shares of the company, which are held by holders of record now present at the meeting, either in person or by proxy, is sufficient to declare that we have a quorum. Such determination is subject to verification by the inspector of elections.

The next order of business to come before this meeting is a description of the matters properly brought before today's meeting. Proposals and director nominations from the company's stockholders in order to properly be properly brought before this meeting must have been submitted by January 21, 2025. No stockholder proposals or nominations were properly submitted, which means that the only proposals and nominations properly before this meeting are those submitted by the Board. Voting on the proposals will commence after all of the proposals have been presented.

The first proposal before the stockholders of the company is the election of 6 directors for 1 year terms expiring upon the election and qualification of directors of the company's 2026 Annual Meeting of Stockholders. The Board of Directors of the company has recommended the election of John Albright, George Brokaw, Chris Drew, Laura Franklin, Blake Gable, and Chris Haga to the Board. These 6 individuals are the only persons who have been nominated to stand for election to the 6 positions on our Board of Directors. No other nominations were made in compliance with the company's bylaws. Accordingly, all nominations are closed.

We will now move to proposal 2. The second proposal for the stockholders of the company is the ratification of the appointment by our Audit Committee of Grant Thornton LLP as the company's independent registered public accounting firm for fiscal year 2025, which is described on Page 60 of the proxy statement.

The third proposal before the stockholders of the company is an advisory vote to approve executive compensation described on Page 62 of the proxy statement. The next order of business is a vote on the proposals. It is currently 3:05 p.m., and I declare the voting open. Stockholders who logged in to the virtual meeting portal using the unique 15-digit control number may vote their shares during the meeting.

In addition, prior to today's meeting, voting on the proposals was conducted by proxy via mail, phone and Internet. It is currently 3:06 p.m., and I hereby declare the voting will pause -- excuse me, we'll pause for a minute while the voting is open, and then we'll close the polls.

[Voting]

It is currently 3:07 p.m., and I hereby declare the voting closed. The inspector of election will now count the votes. Will the secretary please report the results of the voting?

We have been informed by the inspector of elections that the ballots have been counted and that the 6 nominees for election to the Board for a 1-year term have all been duly elected.

The appointment of Grant Thornton LLP has been ratified and the advisory vote regarding executive compensation has been in the affirmative.

Consistent with the company's bylaws, no advance notice has been given to the company regarding any other business to be conducted at this meeting. Therefore, no other business will be considered. The official business portion of this meeting is now adjourned.

Before we disperse, however, as is customary, we would like to turn our remaining time over to the company's President and CEO, John Albright, who will now address any questions that have been submitted during the meeting. If you have a question or comment, please follow the instructions on the virtual meeting portal and please follow the rules and procedures of conduct for the meeting that were previously made available to you.

Laura, no questions have been submitted. Hearing that, this concludes the question-and-answer session, and thank you again for your attendance. This concludes the meeting. You may now disconnect.