Q4 2025 CTO Realty Growth Inc Earnings Call

February 20, 2026

Speaker #1: you for standing by. Welcome to the CTO Realty Growth Q4 and year-end 2025 earnings call. At this time, all participants are on the list and only mode.

Speaker #1: After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone; you will then hear an automated message advising your hand is raised.

Speaker #1: And to withdraw your question, please press *11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Jenna McKinney, Director of Finance.

Speaker #1: Please go ahead.

Speaker #2: Good morning, everyone, and thank you for joining us today for the CTO Realty Growth Q4 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, who will be available to answer questions during the call.

Jenna McKinney: Good morning, everyone, and thank you for joining us today for the CTO Realty Growth Q4 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: You can find our SEC reports, earnings release, supplemental, and most recent investor presentation on our website at ctorealty.com. With that, I will turn the call over to John.

Jenna McKinney: 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.

Speaker #3: 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.

John Albright: Thanks, Jenna, and good morning, everyone. We are pleased to report a robust Q4, 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 US, 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 Q4, we signed leases for 189,000sq ft, including 167,000sq ft of comparable leases and a cash rent increase of 31%.

Speaker #3: Our strategic focus on shopping centers located in the higher-growth Southeast and Southwest markets of the US, along with proactive asset management and leasing, is producing strong results across all areas of our business.

Speaker #3: 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%.

Speaker #3: For the full year, we signed leases for a record 671,000 square feet, including 592,000 square feet of comparable leases and a cash rent increase of 24%.

John Albright: For the full year, we signed leases for a record 671,000 sq ft, including 592,000 sq ft 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 Q4, we signed a lease with a national investment-grade retailer at Marketplace at Seminole Towne Center for 48,000 sq ft. This single lease consolidated the 34,000 sq ft formerly occupied by Big Lots, 9,000 sq ft of small shop space, and 5,000 sq ft of new expansion space. Further, this lease brought us to 7 resolved anchor spaces in 2025, totaling 177,000 sq ft.

Speaker #3: 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 Marketplace of Seminole, Town Center for 48,000 square feet.

Speaker #3: 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.

Speaker #3: Further, this lease brought us to seven resolved anchor spaces in 2025, totaling 177,000 square feet. Additionally, we are in active negotiations for the three remaining anchor spaces and the Value City at Carolina Pavilion.

John Albright: Additionally, we are in active negotiations for the 3 remaining anchor spaces and 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: More broadly, as of year-end, our signed not open pipeline stands at $6.1 million, representing approximately 5.8% of annual cash-based rents. We believe this pipeline positioned us for meaningful earnings growth as reflected in our outlook.

John Albright: We believe this pipeline positioned 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 Centre, 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 sq ft of operating space that is currently 92% occupied, plus 62,000 sq ft of unfinished shell space, primarily on the second level, presenting future leasing opportunity. Pompano Citi Centre is anchored by Burlington, TJ Maxx, Nordstrom Rack, Ross Dress for Less, and J.C. Penney. Further, the property enjoys a prime location at a high traffic intersection, offering great visibility and access.

Speaker #3: 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 City Center, an open-air retail center located on 35 acres in the Pompano Beach submarket of Fort Lauderdale, Florida, for $65.2 million.

Speaker #3: The property consists of 509,000 square feet of operating space that is currently 92% occupied, plus 62,000 square feet of unfinished shell space, primarily on the second level, presenting future leasing opportunity.

Speaker #3: Pompano City Center is anchored by Burlington, TJ 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.

Speaker #3: 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 with a weighted average initial cash yield of 9%.

John Albright: 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 at a cash exit cap of low 5%.

Speaker #3: 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.

Speaker #3: 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%.

Speaker #3: While the lease-up of this shopping center took longer than anticipated, we are pleased with the ultimate outcome and the ability to creatively recycle the proceeds into higher-yielding acquisitions.

John Albright: While the lease-up of this shopping center took longer than anticipated, we are pleased with the ultimate outcome and the ability to creatively recycle the proceeds into higher-yielding acquisitions. This transaction demonstrates our team's ability to execute value add strategies at properties, re-tenanting, 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 sq ft shopping center located in Texas for approximately $83 million. We look forward to announcing the closing of this acquisition in Q1 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.

Speaker #3: This transaction demonstrates our team's ability to execute value-add strategies at properties, retaining increasing occupancy and bringing rents up to market. As we look ahead, I do want to note a near-term anticipated acquisition.

Speaker #3: 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.

Speaker #3: 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 creatively recycling the proceeds to further drive earnings.

Speaker #3: 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 six outparcels for development and are in various stages of negotiations with tenants, ranging from preliminary to detailed lease negotiations.

John Albright: 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 six outparcels for development and are in various stages of negotiations with tenants, ranging from preliminary to detailed lease negotiations. Three of the six outparcels are for larger boxes and uses we expect to drive significant foot traffic to the respective centers. While each specific opportunity is unique, in general, they average about $5 million of investment capital and low double-digit yields. 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're even more excited about the future of CTO.

Speaker #3: Three of the six out parcels are for larger boxes and uses we expect to drive significant foot traffic to the respective centers. While each specific opportunity is unique, in general they average about $5 million of investment capital and low double-digit yield.

Speaker #3: 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.

Speaker #3: 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 and the right markets, along with the proactive leasing and asset management.

John Albright: We're beginning to reap the benefits of our strategic business plan, focusing on the right assets and 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.

Speaker #3: I am 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.

Speaker #3: And with that, I will now hand the call over to Phil.

Speaker #4: 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.

Philip Mays: 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 dollar increase compared to the $14.2 million dollars 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 dollar increase compared to $47.9 million dollars reported in the comparable prior year.

Speaker #4: For the fourth quarter, Core FFO was $15.8 million, a $1.6 million increase compared to the $14.2 million reported in the comparable quarter of the prior year.

Speaker #4: 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.

Speaker #4: 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.

Speaker #4: 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 a reduction in leverage that took place late in 2024, when we reduced net debt to EBITDA by approximately a full turn.

Philip Mays: 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 term. With regards to Same-Property NOI, total Same-Property NOI, including our four noncore properties, increased 1.1% for Q4. 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.

Speaker #4: With regards to same property in Hawaii, total same property in Hawaii, including our four non-core properties, increased 1.1% for the fourth quarter. Same property in Hawaii for our non-core 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.

Speaker #4: 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.

Philip Mays: 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 Q4. This growth was driven by leasing activity across our portfolio and a reduction in maintenance costs related to a property enhancement project completed in Q4 of 2024. For context, shopping center properties represent 93% of total Same-Property NOI for Q4.

Speaker #4: Further, we currently expect the state of New Mexico to begin paying cash rent in the latter half of 2026. Notably, same property in Hawaii for our shopping centers increased 4.3% in the fourth quarter.

Speaker #4: This growth was driven by leasing activity across our portfolio and a reduction in maintenance costs related to property enhancement project completed in the fourth quarter of 2024.

Speaker #4: For context, shopping center properties represent 93% of total same property in Hawaii for the fourth quarter. However, given the relatively small nominal size of our same property in Hawaii just 200,000 dollars impacts quarterly growth by approximately 100 basis points and one tenant vacating together with the seasonal impact of percentage rent at a non-core property can obscure the same property in Hawaii trend at our shopping centers.

Philip Mays: 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 2026 and reduce the balance on our revolving credit facility to provide enhanced liquidity.

Speaker #4: 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 start 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.

Speaker #4: 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.

Speaker #4: Notably, we now only have $17.8 million of debt maturing in 2026. Also, as previously disclosed earlier 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.

Philip Mays: Notably, we now only have $17.8 million of debt maturing in 2026. Also, as previously disclosed, early in Q4, 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.

Speaker #4: Regarding liquidity, we end 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.

Speaker #4: 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.

Speaker #4: From a leverage perspective, we ended the fourth quarter with net debt to EBITDA of 6.4 times, an improvement from 6.7 times at the end of the third quarter.

Philip Mays: From a leverage perspective, we ended Q4 with net debt to EBITDA of 6.4 times, an improvement from 6.7 times at the end of Q3. 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.

Speaker #4: 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 de-leveraging from the sell of select assets as well as rent commencing from our signed not open pipeline.

Speaker #4: 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.

Speaker #4: Key assumptions reflected in our initial guidance include investment volume including structured investments of 100 million dollars to 200 million dollars at a weighted average initial yield between 8% and 8.5%.

Philip Mays: Key assumptions reflected in our initial guidance include investment volume, including structured investments of $100 to 200 million at a weighted average initial yield between 8% and 8.5%. Same-Property NOI growth for shopping centers of 3.5% to 4.5%, and general administrative expenses of $19.5 to 20 million.

Speaker #4: Same property in Hawaii growth for shopping centers of 3.5% to 4.5%, and general administrative expenses of $19.5 million to $20 million. One last note, the cadence of our same property in Hawaii growth will improve over the year as tenants included in our signed-not-open pipeline take possession of their space and commence paying rent.

Philip Mays: ...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.

Speaker #4: And with that, operator, please open the line for questions.

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. The first question comes from Jane Cornwright with Cantor Fitzgerald. Your line is open.

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. The first question comes from Jay Kornreich with Cantor Fitzgerald. Your line is open.

Speaker #5: Thank you. As a reminder, to ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. The first question comes from Jane Cornright with Canaccord Genuity.

Speaker #5: Your line is open.

Speaker #6: Hey, good morning. Thank you. First, I just wanted to ask about backfilling the 10 vacant anchor centers. Could you just give us, you know, the color as to the timing of how, you know, rent from those already signed leases starts to get paid in 2026 and then for the three leases that have yet to be signed?

Jane Cornwright: Hey, good morning. Thank you. First, I just wanted to ask about backfilling the 10 vacant anchor centers. Could you just give us, you know, the color as to the timing of how, you know, 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?

Jay Kornreich: Hey, good morning. Thank you. First, I just wanted to ask about backfilling the 10 vacant anchor centers. Could you just give us, you know, the color as to the timing of how, you know, 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?

Speaker #6: Any thoughts as to timing for that, and if that can also, I guess, hit the upper end of that 40 to 60 percent increase in leasing spreads you forecasted?

Speaker #7: Yeah, thanks. I'll kind of answer, sort of, you know, the ones that we're still working on. You know, we are in a fortunate situation with regards to, you know, the vacancies that are left, where we have multiple tenants vying 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.

John Albright: Yeah, thanks. I'll kind of answer sort of, you know, the ones that we're still working on. You know, we have a fortunate situation with regards to, you know, the vacancies that are left, where we have multiple tenants vying 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, you know, there's 2 boxes there. And so I would, I would suspect that that's going to get resolved here in the next, you know, 6 months for sure. And then as we talked about before, you know, these things, these tenants take, you know, a year at least to kind of get into operation.

Speaker #7: So, we're trying to move around the chess pieces, and that's more talking about Carolina Pavilion. You know, there are two boxes there, and so I would suspect that that's going to get resolved here in the next, you know, six months for sure.

Speaker #7: And then, as we talked about before, you know, these things, these tenants take, you know, a year at least to kind of get into operation.

Speaker #7: But I'll let Phil talk about the others that we've signed up.

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

Speaker #8: Yeah, 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.

Philip Mays: Yeah, Jay, on the ones that have already been completed, as far as contributing to the fourth quarter, it's really just the 2 Boot Barns, one at Rockwall and one at Price that got open really quick. We did get Slick City moved into Carolina, but it was very, very late in the year, didn't contribute much this year. And then just going forward, it'll ramp up about half in 2026, and then they'll all be online in 2027.

Speaker #8: 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, didn't contribute much this year.

Speaker #8: And then, just going forward, it'll ramp up about half in '26, and then they'll all be online in '27.

Speaker #6: Okay, appreciate that. And then just one follow-up, I guess, you know, looking at the office property in New Mexico, which now has this new lease work gap 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?

Jane Cornwright: Okay, appreciate that. And then just one follow-up. I guess, you know, 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?

Jay Kornreich: Okay, appreciate that. And then just one follow-up. I guess, you know, 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?

Speaker #7: Yeah, so you know, we're definitely in a fortunate position that now that we have, you know, the state of New Mexico taking half the building and Fidelity in the other half, we certainly have a marketable asset right now.

John Albright: Yeah. So, you know, we're definitely in a fortunate position that now that we have, you know, the State of New Mexico taking half the building and Fidelity another 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 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, you know, reinvest those proceeds into, you know, an open-air center or a larger open-air center.

Speaker #7: So we are in early discussions with groups that have an interest in buying it. But as as we get closer to state of New Mexico's rent commencement, it's kind of really we're going to have higher values to us.

Speaker #7: So we're we're being patient with it knowing that we have that opportunity and and alternatively to your question, we would look to, you know, reinvest those proceeds into an open-air center, a larger open-air center, and if we find a a great candidate acquisition opportunity, we may speed up the process of selling that that building in New Mexico.

John Albright: If we, you know, find a great candidate acquisition opportunity, we may speed up the process of selling, you know, that building in New Mexico.

Speaker #6: Okay, thanks very much.

Jane Cornwright: Okay, thanks very much.

Jay Kornreich: Okay, thanks very much.

Speaker #7: Sure.

John Albright: Sure.

Speaker #5: Thank you. And our next question is going to come from Craig Cusara with Lucid. Your line's open.

Operator: Thank you. Our next question is going to come from Craig Kucera with Lucid. Your line's open.

Speaker #9: Hey, good morning, guys. I want to talk about Pompano City Center. There was a mention of, you know, some potential mark-to-market lease-up opportunity there.

Craig Kucera: Hey, good morning, guys. I want to talk about Pompano Citi Centre. There was a mention of, you know, some potential mark-to-market lease-up opportunity there. Can you give us some color on what you think that might be?

Speaker #9: Can you give us some color on what you think that might be?

Speaker #7: Well, it's really—I mean, look, JCPenney is the largest tenant, and they literally pay nothing. And so, if that company were ever to really go under or give back space, or, you know, most likely it's something where we buy out their space, you know, that's a huge opportunity at that property.

John Albright: Well, it's really, I mean, look, look, J.C. Penney is the largest tenant, and they literally pay nothing. And so if, if that company were ever to really, you know, go under or give back space or, you know, most likely, it's something where we buy out their space, you know, that's a huge opportunity, at that property. But, but really, the, the real opportunity is, Craig, the lease up. There's a fair amount of vacancy, and we're very active right now in, in with LOIs going out to, prospective tenants. We're - it's really, you know, turning this around, creating the excitement, the activity, and, and we're doing that. So we're, we're really very optimistic about, about Pompano.

Speaker #7: But really, Craig, the real opportunities are in the lease-up. There's a fair amount of vacancy, and we're very active right now with LOIs going out to prospective tenants.

Speaker #7: It's really turning this around, creating the excitement, the activity in and we're doing that. So we're we're really very optimistic about about Pompano. So but but there's it's more about lease-up than than taking a old tenant and and bringing in a new tenant at a higher rent.

John Albright: So, but it's more about lease up than taking an old tenant and bringing in a new tenant at a higher rent. But certainly, the largest one, by far, J.C. Penney, is that opportunity down the road.

Speaker #7: But certainly the largest one by far, JCPenney, is that opportunity down the road.

Speaker #9: Right, that could that could be pretty significant if if they're paying nothing. You know, changing gears, you know, it was a very strong leasing quarter.

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

Speaker #9: You know, obviously a lot going on at Seminole Town Center. But outside of that, were there, you know, just kind of a flavor of the market, are you seeing any particular categories that are, you know, really creating or you're finding demand in your shopping centers for?

Speaker #7: It's it's really the, you know, the the strong national brands that, you know, are still very interested in spaces. If you have them, you know, the the TJ Maxx's of the world, you know, they they're the Ross and and so forth.

John Albright: It's really the, you know, the strong national brands that, you know, are still very interested in spaces if you have them. You know, the TJ Maxx's of the world, you know, they're the Ross and so forth. You know, so, I mean, you're actually seeing more development occur in different markets because those tenants, you know, 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, you know, the driver's seat.

Speaker #7: You know, so, I mean, you're actually seeing more development occur in different markets because those tenants, you know, are doing very well in this economy.

Speaker #7: As we read the national headlines, and so they're looking for store expansion. So if you have a a big box and a good market and a good center, you really are in, you know, the driver's seat.

Speaker #9: Great. I saw you extended and increased the Ravonna loan and extended Founders. Have you gotten any indication from Waters that they'll extend, or do you expect that to be repaid in the second quarter?

Craig Kucera: ... Great. I saw you extended and increased the Rivanna loan and extended founders. Have you gotten any indication from Waters that they'll extend, or do you expect that to be repaid in the second quarter?

Speaker #7: Yeah, unfortunately, we expect that to be repaid. We were hoping that it wouldn't, but it looks like it will. So we'll be on the hunt to replace that.

John Albright: Yeah, unfortunately, we expect that to be repaid. We were hoping that it wouldn't, but it looks like it will. So we'll be on the hunt to replace that.

Speaker #9: Got it. And I saw that Ravonna paid down a portion of their balance, but you anticipate them drawing down the remaining $25 million or so available on that loan in 2026?

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

Speaker #7: Yeah, they they have some basically users for some of the the site, and they need to do site work and, you know, put in the roads and all that kind of stuff, utilities.

John Albright: Yeah, they have some basically users for some of the site, and they need to do site work, and, you know, put in the roads and all that kind of stuff, utilities. And so it's really master development work. And so, yeah, we expect that to be used to improve that site.

Speaker #7: And so, it's really master development work. And so, yeah, we expect that to be used to improve that site.

Speaker #9: Okay, great. And just just one more for me. Phil, this is on the ABR recognition timing on the sign not open. Can you give us any more granularity?

Craig Kucera: Okay, great. Just, just one more from me. Phil, this is on the ABR recognition timing on the signed not open. Can you give us any more granularity, you know, certainly relative to 2026? You know, is this like we should we assume something ratable? And as far as 2027, is that also, you know, throughout 2027, I would imagine, or any additional granularity would be helpful for modeling purposes.

Speaker #9: You know, certainly relative to 2026, you know, is this like we you know, 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?

Philip Mays: Yeah, ratable is pretty close. You know, it may ramp up a little more towards the latter half of the year in 2026, but if you're doing it ratable or a little bit stacked towards the latter part of the year, you're gonna be pretty close. And same for 2027, from what we can see now.

Speaker #9: Yeah, ratable is pretty close. You know, it may ramp up a little more towards the latter half of the year in 2026, 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.

Speaker #9: 27. From what we can see now,

Speaker #7: You would say the same for '27 as well?

Craig Kucera: You would say the same for 27 as well?

Speaker #9: Yeah, from what we can see now, yeah.

Philip Mays: Yeah, from what we can see now, yeah.

Speaker #7: Okay. All right, perfect. Thank you. I appreciate it.

Craig Kucera: Okay. All right, perfect. Thank you. Appreciate it.

Speaker #5: Thank you. And our next question is going to come from John Masaka with B. Riley. Your line is open.

Operator: Thank you. Our next question is gonna come from John Massocca with B. Riley. Your line is open.

Speaker #10: Good morning.

John Massocca: Good morning.

Speaker #7: Morning.

John Albright: Morning.

Speaker #10: So maybe thinking about the Texas acquisition that's in the pipeline, you know, how does that property you think look compared to the portfolio today?

John Massocca: So maybe thinking about the Texas acquisition that's in the pipeline, you know, how does that property, you think, look compared to the portfolio today? And I guess, is it more kind of a value add opportunity in that acquisition as you see it today, or is that gonna 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?

Speaker #10: 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?

Speaker #7: How about if I say all of the above? You know, 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.

John Albright: How about if I say all the above? You know, 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 to that you can get a hold of. So it hits all the boxes, so we're pretty excited about it.

Speaker #7: And there is a little bit of lease-up. And there are some below-market leases, but nothing near-term that you can get a hold of. So, it hits all the boxes.

Speaker #7: So, we're pretty excited about it.

Speaker #9: Okay. And then maybe thinking about acquisition in the pipeline or in the guidance beyond that transaction, and with the, you know, likely repayment of of the One Structure 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?

John Massocca: Okay. And then maybe thinking about acquisitions in the pipeline or in the guidance beyond that transaction, and with the, you know, like, 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?

Speaker #7: We're definitely on the hunt for the larger shopping center purchases. And in the last week, I went to go see two larger ones that we're definitely interested in.

John Albright: We're definitely on the hunt for the larger shopping center purchases, and we've in the last week went to go see, you know, 2 larger ones that we're definitely interested in. I would say that the market, there's not a lot on the market right now. There's a lot of talk about, you know, brokers doing a lot of valuations for sellers, and so we'll see whether that, you know, comes to fruition. But, we're definitely, you know, looking to find, you know, 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 there's slower growth now.

Speaker #7: I would say that the market, there's not a lot on the market right now. There's a lot of talk about, you know, brokers doing a lot of valuations for sellers.

Speaker #7: And so we'll see whether that, you know, comes to fruition. But we're definitely, you know, looking to to find, you know, some some chunkier shopping centers this year.

Speaker #7: As we mentioned before, we still have some recycle opportunities in our portfolio where we've leased up properties and there's slower growth now.

Speaker #7: And if we can move them into, for instance, the Texas acquisition where there's a ramp-up of, you know, cash flow increases and lease-up opportunity, that's kind of where we like to position ourselves.

John Albright: If we can move them into, for instance, the Texas acquisition, where there's a ramp of, you know, cash flow increases and lease-up opportunity, that's kind of where we like to position ourselves.

Speaker #10: And as you think about it, I mean, I know it's bespoke based on whatever asset you decide to sell, but what's kind of the day-one spread in yields between dispositions and acquisitions?

John Massocca: 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, and acquisitions? I mean, you gave acquisition cap rates and guidance, but just kind of curious what the disposition side would be.

Speaker #10: I mean, you gave acquisition cap rates and guidance, but just kind of curious what the disposition side would be.

Speaker #7: I mean, at least 100 basis points, if not more—most likely more.

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

Speaker #10: To the positive?

John Massocca: To the positive?

Speaker #7: Yes.

John Albright: Yes.

Speaker #10: Okay, and then last one for me. CapEx kind of came up a little bit in Q4. Is that kind of a better run-rate level as we look at the portfolio today? Because I know you sold Legacy, which was a little bit more of a CapEx-intensive asset.

John Massocca: Okay. And then last one from me. CapEx kind of came up a little bit in Q4. Is that kind of a better run rate level as we look at the portfolio today? And, you know, because I know you sold Legacy, which is a little more of a CapEx intensive asset. Just kind of curious how we should think about that going forward.

Speaker #10: Just kind of curious how we should think about that going forward.

Speaker #9: Yeah, the fourth quarter was elevated. It did include the large anchor lease at Marketplace at Seminole. That's the one John talked about, where their anchor took the 34,000-square-foot box.

Philip Mays: Yeah, the Q4 was elevated. It did include, the large anchor lease at Marketplace at Seminole. That's the one John talked about, where the anchor took the 34,000sq ft box, and then also is absorbing 9,000, a small shop, plus 5,000sq ft of expansion. And there was also a restaurant in there, and the restaurants always carry a little heavier TI. So I would say the Q4 is probably a little higher than the run rate going forward. You know, this, those run rates are, you know, for, portfolio our size, are better to look at, you know, on annual, you know, basis because it's just one lease like an anchor, and any one quarter can skew it up significantly.

Speaker #9: 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 restaurant's always carry a little heavier TI.

Speaker #9: So I would say the fourth quarter is probably a little higher than the run rate going forward. You know, those run rates are, you know, for a portfolio our size, are better to look at, you know, on an annual, you know, basis.

Speaker #9: Because it's just one lease life and anchor in any one quarter can skew it up significantly. And I would say just generally the fourth quarter is a little higher than than a good run rate.

Philip Mays: I would say just generally, the Q4 is a little higher than a good run rate.

Speaker #10: Okay. I appreciate that color. That's it for me. Thanks.

John Massocca: Okay. I appreciate that color. That's it for me. Thanks.

Speaker #7: Great. Thank you.

John Albright: Great. Thank you.

Operator: Thank you. And the next question is gonna come from Gaurav Mehta with Alliance Global Partners. Your line's open.

Speaker #5: Thank you. And the next question is going to come from Gaurav Mehta with Alliance Global Partners. Your line is open.

Speaker #11: Yeah, thank you. Good morning. I wanted to follow up on the S&O timing of 47% in 2026. It seems like it's different than the 76% you had in last quarter.

Craig Kucera: Yeah, thank you. Good morning. 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?

Gaurav Mehta: Yeah, thank you. Good morning. 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?

Speaker #11: So, is it like the new leases that came in, or was there any change in the timing?

Philip Mays: ... Yeah, it's, you know, when you look at it from quarter to quarter, there's a lot of moving parts. So there was tenants 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 it was selling that, that drops out of the pipeline. And the amount, you know, 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.

Speaker #9: Yeah, it's, you know, 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?

Speaker #9: 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.

Speaker #9: There was a lot of lease-up at Legacy, as John discussed. That we completed, and it was selling that drops out of the pipeline.

Speaker #9: And the the amount, you know, did not decrease because we signed a lot of new leases, right? So the the the sign-not-open pipeline is still significantly large, even with legacy falling off.

Philip Mays: But that's the change, the biggest driver of that change for 26.

Speaker #9: But that's that's the change the biggest driver of that change for '26.

Speaker #11: 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 the rest of the market.

Gaurav Mehta: 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, 36% than the rest of the market. And just wondering if you could just maybe comment on how you think about allocating in any given market as far as exposure to cash ADR?

Speaker #11: And, and, and 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.

Speaker #7: Yeah. I mean, look, we're we're not looking to add to Atlanta. So you'll probably see Atlanta move down over over time for sure. And so given that our portfolio is 85%, you know, North Carolina, Florida, Texas, Georgia, you know, we certainly have one of the strongest portfolios relative to the the growth of markets where tenants want to be.

John Albright: Yeah, 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%, you know, North Carolina, Florida, Texas, Georgia, you know, 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, you know, our investments in other markets, kind of in that Southeast, Southwest, but, you know, less so in Atlanta.

Speaker #7: And so you'll just see more of, you know, our investments in other markets kind of in that Southeast, Southwest, but, you know, less so in Atlanta.

Speaker #10: All right. Thank you. That's all I had.

Gaurav Mehta: All right. Thank you. That's all I had.

Speaker #7: Great. Thanks.

John Albright: Great. Thanks.

Operator: Thank you. The next question will come from Jason Weaver with Jones Trading. Your line's open.

Speaker #5: Thank you. And the next question will come from Jason. Weaver with Jones Trading. Your line's open.

Speaker #12: Hey, good morning. Thanks for taking my question. Just first of all, when it comes to allocation, can you talk about the relative merits between grocery-anchored, lifestyle, and power centers, and of those, what you're most likely looking to target?

Jason Weaver: Hey, good morning. Thanks for taking my question. 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?

Speaker #7: Yeah. I mean, look, you know, grocers, you know, terrific. But it's a lower yielding kind of product. And a little bit slower growth sort of product.

John Albright: Yeah, I mean, look, you know, grocers, you know, terrific, it's... 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 know, you need more of that security element and everything because you have restaurants, and entertainment and so forth. But, you know, 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. You know, the tenants that are going in those don't need really high TI sort of, you know, finish outs like the lifestyle centers do. But that's sort of, you know, an easy sort of way to think about them.

Speaker #7: And so, and then, lifestyle is fantastic. We've had some great success, but they're a little bit more expensive to operate. You know, you need more of that security element and everything, because you have restaurants and entertainment and so forth.

Speaker #7: But, you know, 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, you know, the tenants that are going in those don't need really high TI sort of, you know, finish-outs like the lifestyle centers do.

Speaker #7: But that's sort of, you know, an easy sort of way to think about them.

Speaker #12: Yeah. And and how are you thinking about the relative availability in the market for what you can what you can deploy to today?

Jason Weaver: Yeah. And how are you thinking about the relative availability in the market for what you can deploy to today?

Speaker #7: Yeah. We're not right now on the the grocer side. You know, we're not, you know, chasing those just because of the yields are are so low.

John Albright: Yeah, we're not right now on the grocer side, you know, we're not, you know, 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've. We're seeing that in our portfolio now, where we may have a large power center, but a grocer, you know, 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 it would have been a very, you know, national grocer that is very beloved in the nation.

Speaker #7: However, we do we're looking at lifestyle and power for sure. And a lot of the the opportunities we're looking at are kind of have that grosser opportunity in the future where grocers would come into those centers.

Speaker #7: We’re seeing that in our portfolio now, where we may have a large power center, but a grocer, you know, is looking at one of the boxes.

Speaker #7: And we've had that happen before, where unfortunately, we couldn't get one of the tenants out—that would have been a very, you know, national grocer that is very beloved in the nation.

Speaker #7: But unfortunately, we couldn't get a bookstore out to accommodate them, if you can imagine. So, so, so we won't be chasing grocers just because of yields—you know, way too low.

John Albright: But unfortunately, we couldn't get a bookstore out to accommodate them, if you can imagine. So we won't be chasing grocers just because the yields, you know, way too low. We don't see a compelling return opportunity there. We do see it in areas where, you know, the lifestyle and power, where the yields are definitely higher and there's not as much capital chasing them.

Speaker #7: We don't see we don't see a compelling return opportunity there. We do see it in in areas where you know, you know, in the lifestyle and power where the yields are definitely higher.

Speaker #7: And there's not as much capital chasing them.

Speaker #12: Great. That's helpful. Thank you. And then maybe it's a little bit early here, but, you know, with 20% of your base rent, 2028 lease is coming off.

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

Speaker #12: Have you started any discussions on what types and sorts of opportunities that might present for FFO growth out in the out years?

Speaker #7: Yeah. I mean, look, you know, that's a the great thing about this this company setup right now is, you know, we've done so much work on on the lease-up.

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

Speaker #7: And kind of the ramp, that in a lot of these tenants or these properties that we bought, you know, their leases are below market.

Speaker #7: And these tenants, you know, are doing well, and so most likely, they're going to exercise renewal options. But if not, you know, there's definitely some mark-to-market opportunity.

Speaker #7: So, we don't really have to do much here to grow our earnings—it's just really letting the portfolio, you know, play out.

Speaker #7: And so the setup's really great. We don't have to do anything special to, you know, have some really interesting growth here.

Speaker #12: Great. Appreciate the color. Thanks, guys.

Jason Weaver: Great. Appreciate the color. Thanks, guys.

Speaker #7: Sure.

John Albright: Sure.

Speaker #5: Thank you. And this does conclude conclude today's Q&A session. And conference call. I want to thank you for participating. And you may now disconnect.

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

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