CTO Realty Swings to $23.9M Loss on Debt Extinguishment

Ticker: CTO-PA · Form: 10-Q · Filed: Oct 28, 2025 · CIK: 23795

Sentiment: bearish

Topics: REIT, Real Estate, Debt Extinguishment, Net Loss, Revenue Growth, Financial Risk, Commercial Properties

Related Tickers: CTO, PINE

TL;DR

**CTO's massive debt extinguishment loss makes it a risky bet despite revenue growth; steer clear until the balance sheet stabilizes.**

AI Summary

CTO Realty Growth, Inc. reported a significant net loss attributable to common stockholders of $23.877 million for the nine months ended September 30, 2025, a stark contrast to the net income of $8.316 million for the same period in 2024. This decline was primarily driven by a substantial loss on extinguishment of debt totaling $20.449 million in 2025, compared to zero in 2024. Total revenues increased to $111.206 million for the nine months ended September 30, 2025, up from $88.777 million in 2024, with income properties revenue rising from $79.029 million to $98.486 million. Interest income from commercial loans and investments also saw a notable increase, from $4.407 million to $9.119 million. Despite revenue growth, total operating expenses climbed to $86.909 million from $72.171 million, largely due to increased depreciation and amortization, which rose from $35.701 million to $44.587 million. The company's long-term debt, net, increased from $518.993 million at December 31, 2024, to $604.163 million at September 30, 2025, reflecting increased leverage. Cash and cash equivalents slightly increased to $9.281 million from $9.017 million over the same period.

Why It Matters

CTO Realty Growth's substantial net loss, primarily due to a $20.449 million debt extinguishment, signals increased financial risk and impacts investor confidence. While revenue growth in income properties and commercial loans is positive, the rising long-term debt and operating expenses could pressure future profitability and dividend sustainability. This financial maneuver suggests a strategic shift in debt management, but its immediate impact is a significant hit to earnings, potentially making CTO-PA less attractive compared to peers with more stable earnings. Employees and customers might see this as a necessary restructuring, but investors will scrutinize the long-term benefits versus the short-term costs.

Risk Assessment

Risk Level: high — The company reported a net loss attributable to common stockholders of $23.877 million for the nine months ended September 30, 2025, primarily due to a $20.449 million loss on extinguishment of debt. This significant loss, coupled with an increase in long-term debt from $518.993 million to $604.163 million, indicates heightened financial leverage and potential instability.

Analyst Insight

Investors should exercise caution and thoroughly evaluate CTO Realty Growth's debt management strategy. Consider holding off on new investments until the impact of the debt extinguishment is fully absorbed and the company demonstrates a clear path to sustained profitability and reduced leverage.

Financial Highlights

debt To Equity
1.19
revenue
$111.206M
operating Margin
N/A
total Assets
$1.222B
total Debt
$604.163M
net Income
-$23.877M
eps
-$0.73
gross Margin
N/A
cash Position
$9.281M
revenue Growth
+25.3%

Revenue Breakdown

SegmentRevenueGrowth
Income Properties$98.486M+24.6%
Management Fee Income$3.601M+7.2%
Interest Income From Commercial Loans and Investments$9.119M+106.9%
Real Estate Operations$0.00-100.0%

Key Numbers

Key Players & Entities

FAQ

What caused CTO Realty Growth's net loss in Q3 2025?

CTO Realty Growth, Inc. reported a net loss attributable to common stockholders of $23.877 million for the nine months ended September 30, 2025. This was primarily due to a significant loss on extinguishment of debt totaling $20.449 million during the period.

How did CTO Realty Growth's revenue perform in the nine months ended September 30, 2025?

CTO Realty Growth's total revenues increased to $111.206 million for the nine months ended September 30, 2025, up from $88.777 million for the same period in 2024. Income properties revenue specifically rose from $79.029 million to $98.486 million.

What is the current long-term debt position of CTO Realty Growth?

As of September 30, 2025, CTO Realty Growth's long-term debt, net, stood at $604.163 million. This represents an increase from $518.993 million reported at December 31, 2024.

How did operating expenses change for CTO Realty Growth in Q3 2025?

Total operating expenses for CTO Realty Growth increased to $86.909 million for the nine months ended September 30, 2025, compared to $72.171 million for the same period in 2024. A significant contributor to this increase was depreciation and amortization, which rose from $35.701 million to $44.587 million.

What is CTO Realty Growth's investment in Alpine Income Property Trust, Inc.?

As of September 30, 2025, CTO Realty Growth's investment in Alpine Income Property Trust, Inc. (PINE) had a fair value of $35.0 million, representing 16.1% of PINE's outstanding equity. This investment generates income through dividends from PINE.

What are the primary business segments of CTO Realty Growth?

CTO Realty Growth operates in four primary business segments: income properties, management services, commercial loans and investments, and real estate operations. These segments are reviewed by the chief executive officer for performance evaluation and resource allocation.

What is the impact of the loss on extinguishment of debt on CTO Realty Growth's common stockholders?

The $20.449 million loss on extinguishment of debt significantly contributed to the net loss attributable to common stockholders of $23.877 million for the nine months ended September 30, 2025. This resulted in a basic and diluted net loss per common share of $0.74, compared to a net income per share of $0.35 in the prior year.

How much cash did CTO Realty Growth generate from operating activities?

For the nine months ended September 30, 2025, CTO Realty Growth generated $57.738 million in net cash provided by operating activities. This is an increase from $45.833 million for the same period in 2024.

What was the change in CTO Realty Growth's total assets?

CTO Realty Growth's total assets increased to $1,222,353 thousand as of September 30, 2025, from $1,181,644 thousand as of December 31, 2024. This growth was primarily driven by an increase in real estate, net, from $901,338 thousand to $944,159 thousand.

What is the significance of the increase in weighted average common shares for CTO Realty Growth?

The weighted average number of common shares outstanding for CTO Realty Growth increased to 32,298,304 (basic) for the nine months ended September 30, 2025, from 23,601,389 in 2024. This increase, partly due to stock issuance related to the settlement of 2025 Notes, dilutes earnings per share and impacts per-share metrics.

Risk Factors

Industry Context

CTO Realty Growth, Inc. operates as an equity REIT focused on retail and mixed-use properties in growing markets. The real estate sector, particularly retail, faces ongoing challenges from e-commerce and evolving consumer habits, requiring strategic repositioning and management. The company also engages in commercial lending and management services, diversifying its revenue streams beyond direct property ownership.

Regulatory Implications

As an equity REIT, CTO must adhere to strict distribution requirements (at least 90% of taxable income) to maintain its tax-advantaged status. Any significant operational or financial missteps could jeopardize this status, leading to corporate income tax liabilities. The company's debt levels also subject it to financial covenants and reporting requirements.

What Investors Should Do

  1. Monitor debt reduction strategies.
  2. Analyze the drivers of increased operating expenses.
  3. Evaluate the performance of commercial loans and investments.
  4. Assess the impact of the loss on extinguishment of debt.

Glossary

REIT
Real Estate Investment Trust. A company that owns, operates, or finances income-producing real estate. REITs provide a way for individual investors to earn money from real estate investments without having to buy, manage, or finance properties themselves. (CTO Realty Growth, Inc. is a self-managed equity REIT, meaning its business structure and financial reporting are governed by specific REIT regulations.)
Loss on Extinguishment of Debt
A loss recognized when a company repays or redeems its debt before its scheduled maturity date. This often occurs when interest rates have fallen, and the company refinances its debt at a lower rate, but may also involve fees or penalties. (This was the primary driver of CTO's net loss in the nine months ended September 30, 2025, totaling $20.449 million.)
Depreciation and Amortization
Depreciation is the systematic allocation of the cost of a tangible asset over its useful life. Amortization is similar but applies to intangible assets. Both reduce the book value of assets over time and are recognized as expenses. (These expenses increased significantly for CTO, from $35.701 million to $44.587 million, contributing to higher operating expenses.)
Long-Term Debt—Net
The total amount of money borrowed by a company that is due more than one year from the balance sheet date, net of any unamortized debt issuance costs or premiums/discounts. (CTO's net long-term debt increased substantially to $604.163 million as of September 30, 2025, indicating increased financial leverage.)
Equity REIT
A type of REIT that owns and operates income-producing real estate. Equity REITs generate revenue primarily through rents from their properties. (CTO Realty Growth, Inc. identifies itself as an equity REIT, focusing on retail and mixed-use properties.)

Year-Over-Year Comparison

Compared to the nine months ended September 30, 2024, CTO Realty Growth, Inc. experienced a significant shift from net income ($8.316 million) to a net loss ($23.877 million) for the same period in 2025. This was primarily driven by a $20.449 million loss on extinguishment of debt. While total revenues saw a healthy increase of 25.3% to $111.206 million, fueled by growth in income properties and commercial loan interest income, operating expenses also rose by 20.4% to $86.909 million, largely due to increased depreciation. The company's financial leverage increased, with net long-term debt rising by $85.17 million to $604.163 million.

Filing Stats: 4,604 words · 18 min read · ~15 pages · Grade level 18.4 · Accepted 2025-10-28 16:21:11

Filing Documents

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Consolidated Balance Sheets – September 30, 2025 (Unaudited) and December 31, 2024 3 Consolidated Statements of Operations – Three and Nine months ended September 30, 2025 and 2024 (Unaudited) 4 Consolidated Statements of Comprehensive Income – Three and Nine months ended September 30, 2025 and 2024 (Unaudited) 5 Consolidated Statements of Stockholders' Equity – Three and Nine months ended September 30, 2025 and 2024 (Unaudited) 6 Consolidated Statements of Cash Flows – Nine months ended September 30, 2025 and 2024 (Unaudited) 8

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 10

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 43

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 56

Controls and Procedures

Item 4. Controls and Procedures 56

—OTHER INFORMATION

PART II—OTHER INFORMATION 56

Legal Proceedings

Item 1. Legal Proceedings 56

Risk Factors

Item 1A. Risk Factors 56

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 57

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 57

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 57

Other Information

Item 5. Other Information 57

Exhibits

Item 6. Exhibits 58

SIGNATURES

SIGNATURES 59 2 Table of Contents

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS CTO REALTY GROWTH, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) As of (Unaudited) September 30, 2025 December 31, 2024 ASSETS Real Estate: Land, at Cost $ 280,171 $ 257,748 Building and Improvements, at Cost 766,444 720,480 Other Furnishings and Equipment, at Cost 919 883 Construction in Process, at Cost 5,508 5,091 Total Real Estate, at Cost 1,053,042 984,202 Less, Accumulated Depreciation ( 108,883 ) ( 82,864 ) Real Estate—Net 944,159 901,338 Land and Development Costs 300 300 Intangible Lease Assets—Net 74,552 79,198 Investment in Alpine Income Property Trust, Inc. 35,022 39,666 Commercial Loans and Investments 112,187 105,043 Cash and Cash Equivalents 9,281 9,017 Restricted Cash 8,289 8,344 Refundable Income Taxes - 70 Deferred Income Taxes—Net 2,427 2,467 Other Assets—See Note 11 36,136 36,201 Total Assets $ 1,222,353 $ 1,181,644 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Accounts Payable $ 1,850 $ 3,278 Accrued and Other Liabilities—See Note 17 30,919 21,268 Deferred Revenue—See Note 18 13,361 10,183 Intangible Lease Liabilities—Net 14,780 15,124 Income Taxes Payable 27 — Long-Term Debt—Net 604,163 518,993 Total Liabilities 665,100 568,846 Commitments and Contingencies—See Note 21 Stockholders' Equity: Preferred Stock – 100,000,000 shares authorized; $ 0.01 par value, 6.375 % Series A Cumulative Redeemable Preferred Stock, $ 25.00 Per Share Liquidation Preference, 4,713,069 shares issued and outstanding at September 30, 2025 and 4,713,069 shares issued and outstanding at December 31, 2024 47 47 Common Stock – 500,000,000 shares authorized; $ 0.01 par value, 32,675,700 shares issued and outstanding at September 30, 2025 and 31,673,479 shares issued and outstanding at December 31, 2024 327 317 Additional Paid-In Capital 386,634 367,828 R

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1. DESCRIPTION OF BUSINESS The terms "us," "we," "our," and "the Company" as used in this report refer to CTO Realty Growth, Inc. together with our consolidated subsidiaries. We are a publicly traded, self-managed equity REIT that focuses on the ownership, management, and repositioning of high-quality retail and mixed-use properties located primarily in what we believe to be faster growing, business-friendly markets exhibiting accommodative business tax policies, outsized relative job and population growth, and where retail demand exceeds supply. We have pursued our investment strategy by investing primarily through fee simple ownership of our properties, commercial loans and preferred equity . As of September 30, 2025, we own and manage, sometimes utilizing third-party property management companies, 21 commercial real estate properties in seven states in the United States, comprising 5.2 million square feet of gross leasable space. In addition to our income property portfolio, as of September 30, 2025, our business included the following: Management Services: A fee-based management business that is engaged in managing Alpine Income Property Trust, Inc. ("PINE"), as well as: (i) a portfolio of assets pursuant to the Portfolio Management Agreement (hereinafter defined) and (ii) Subsurface Interests (hereinafter defined) pursuant to the Subsurface Management Agreement (hereinafter defined), as further described in Note 5, "Management Services Business". Commercial Loans and Investments: A portfolio of four commercial loan investments and two preferred equity investments which are classified as commercial loan investments. Real Estate Operations: During the year ended December 31, 2024, the Company sold its portfolio of subsurface mineral interests associated with approximately 352,000 surface acres in 19 counties in the State of Florida ("Subsurface Interests"), as further described in Note 6, "Rea

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