美國

證券交易委員會

華盛頓特區20549

表格 10-Q

☒	根據1934年證券交易法第13或15(d)條款的季度報告。

截至2024年6月30日季度結束 2024年9月30日

或

☐	根據1934年證券交易法第13或15(d)條款的過渡報告

到 在權利益分享區間內，

委員會文件編號 001-11350

cto realty growth, inc.

（依憑章程所載的完整登記名稱）


馬里蘭州。		59-0483700
(依據所在地或其他管轄區)		(國稅局雇主
的註冊地或組織地點)		識別號碼)

369 N. 紐約大道, 201套房
Winter Park, 佛羅里達		32789
(總部辦公地址)		(郵遞區號)

(386) 274-2202

(註冊人電話號碼，包括區號)

N/A

(如與上次報告不同，列明前名稱、前地址及前財政年度)

根據法案第12(b)條規定註冊的證券：


每個等級的標題：	交易符號	Yes
普通股票， $0.01 每股面值	CTO	紐交所
6.375% A系列累積可贖回債券優先股， $0.01 每股面值	CTO-賓夕法尼亞州	紐交所

請在核選記號區域表明：（1）本登記申請人在過去12個月（或申請人需要提交此項申報的較短期間）內已提交證券交易所法案第13條或第15(d)條要求提交的所有報告，且（2）本申請人在過去90日內已遵守上述提交要求。Yes ☒沒有☐

請用勾選標記表示，登記者是否在過去12個月（或登記者被要求提交此類檔案的較短期間）內，根據第405條S-T法規（本章節第232.405條）要求提交的每個互動數據檔案。Yes ☒沒有☐

請勾選指示登記者是否為大型快速提交人、快速提交人、非快速提交人、較小的報告公司或新興成長型公司。請參閱交易所法規120億2條，了解「大型快速提交人」、「快速提交人」、「較小的報告公司」和「新興成長型公司」的定義。


大型加速報告人	☐	加速彙編申報人	☒

非加速文件提交者	☐	小型報告公司	☐

		新興成長公司	☐

如果一家新興成長型公司，請用勾選標記表示該申報人已選擇不使用根據證交所法案13(a)條款提供的任何新的或修訂過的財務會計準則的延長過渡期。 ☐

檢查是否公司為殼牌公司（依據交易所法規120億2條定義）。是☐沒有☒

截至2024年10月17日 29,976,153 美元每股面值的0.01 的流通股。

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CTO REALTY GROWTH, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


	As of
	(Unaudited) September 30, 2024		December 31, 2023
ASSETS
Real Estate:
Land, at Cost	$	253,742	$	222,232
Building and Improvements, at Cost		691,055		559,389
Other Furnishings and Equipment, at Cost		874		857
Construction in Process, at Cost		4,838		3,997
Total Real Estate, at Cost		950,509		786,475
Less, Accumulated Depreciation		(70,545)		(52,012)
Real Estate—Net		879,964		734,463
Land and Development Costs		300		731
Intangible Lease Assets—Net		107,658		97,109
Investment in Alpine Income Property Trust, Inc.		42,997		39,445
Mitigation Credits		—		1,044
Commercial Loans and Investments		103,014		61,849
Cash and Cash Equivalents		8,172		10,214
Restricted Cash		1,696		7,605
Refundable Income Taxes		18		246
Deferred Income Taxes—Net		2,019		2,009
Other Assets—See Note 11		30,286		34,953
Total Assets	$	1,176,124	$	989,668
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Accounts Payable	$	2,075	$	2,758
Accrued and Other Liabilities—See Note 17		26,401		18,373
Deferred Revenue—See Note 18		6,171		5,200
Intangible Lease Liabilities—Net		18,857		10,441
Long-Term Debt		526,838		495,370
Total Liabilities		580,342		532,142
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, 2024 and 2,978,808 shares issued and outstanding at December 31, 2023		47		30
Common Stock – 500,000,000 shares authorized; $0.01 par value, 29,971,538 shares issued and outstanding at September 30, 2024 and 22,643,034 shares issued and outstanding at December 31, 2023		300		226
Additional Paid-In Capital		334,467		168,435
Retained Earnings		261,373		281,944
Accumulated Other Comprehensive Income (Loss)		(405)		6,891
Total Stockholders’ Equity		595,782		457,526
Total Liabilities and Stockholders’ Equity	$	1,176,124	$	989,668

The accompanying notes are an integral part of these consolidated financial statements.

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CTO REALTY GROWTH, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except share and per share data)


	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2024		2023		2024		2023
Revenues
Income Properties	$	28,528	$	25,183	$	79,029	$	70,373
Management Fee Income		1,124		1,094		3,360		3,294
Interest Income From Commercial Loans and Investments		1,615		1,114		4,407		2,965
Real Estate Operations		538		1,079		1,981		2,602
Total Revenues		31,805		28,470		88,777		79,234
Direct Cost of Revenues
Income Properties		(7,797)		(7,060)		(22,630)		(20,883)
Real Estate Operations		(359)		(152)		(1,437)		(876)
Total Direct Cost of Revenues		(8,156)		(7,212)		(24,067)		(21,759)
General and Administrative Expenses		(4,075)		(3,439)		(11,750)		(10,493)
Provision for Impairment		(538)		(929)		(653)		(1,408)
Depreciation and Amortization		(13,221)		(11,669)		(35,701)		(32,814)
Total Operating Expenses		(25,990)		(23,249)		(72,171)		(66,474)
Gain (Loss) on Disposition of Assets		(855)		2,464		8,308		3,565
Other Gain (Loss)		(855)		2,464		8,308		3,565
Total Operating Income		4,960		7,685		24,914		16,325
Investment and Other Income (Loss)		7,031		1,184		5,201		(1,296)
Interest Expense		(5,632)		(6,318)		(16,765)		(16,161)
Income (Loss) Before Income Tax Benefit (Expense)		6,359		2,551		13,350		(1,132)
Income Tax Benefit (Expense)		(132)		135		(98)		(375)
Net Income (Loss) Attributable to the Company		6,227		2,686		13,252		(1,507)
Distributions to Preferred Stockholders		(1,878)		(1,195)		(4,936)		(3,585)
Net Income (Loss) Attributable to Common Stockholders	$	4,349	$	1,491	$	8,316	$	(5,092)

Per Share Information—See Note 13:
Basic and Diluted Net Income (Loss) Attributable to Common Stockholders	$	0.17	$	0.07	$	0.35	$	(0.23)

Weighted Average Number of Common Shares
Basic		25,445,411		22,484,561		23,601,389		22,556,642
Diluted		25,521,749		22,484,561		23,625,369		22,556,642

The accompanying notes are an integral part of these consolidated financial statements.

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CTO REALTY GROWTH, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, in thousands)


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Net Income (Loss) Attributable to the Company	$	6,227	$	2,686	$	13,252	$	(1,507)
Other Comprehensive Income (Loss):
Cash Flow Hedging Derivative - Interest Rate Swaps		(15,791)		5,901		(7,296)		8,389
Total Other Comprehensive Income (Loss)		(15,791)		5,901		(7,296)		8,389
Total Comprehensive Income (Loss)	$	(9,564)	$	8,587	$	5,956	$	6,882

The accompanying notes are an integral part of these consolidated financial statements.

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CTO REALTY GROWTH, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, in thousands)

For the three months ended September 30, 2024:


	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Stockholders' Equity
Balance July 1, 2024	$	47	$	231	$	207,882	$	268,269	$	15,386	$	491,815
Net Income Attributable to the Company		—		—		—		6,227		—		6,227
Exercise of Stock Options and Stock Issuance to Directors		—		—		89		—		—		89
Stock Issuance, Net of Equity Issuance Costs		—		69		125,835		—		—		125,904
Stock-Based Compensation Expense		—		—		661		—		—		661
Preferred Stock Dividends Declared for the Period		—		—		—		(1,878)		—		(1,878)
Common Stock Dividends Declared for the Period		—		—		—		(11,245)		—		(11,245)
Other Comprehensive Loss		—		—		—		—		(15,791)		(15,791)
Balance September 30, 2024	$	47	$	300	$	334,467	$	261,373	$	(405)	$	595,782

For the three months ended September 30, 2023:


	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Stockholders' Equity
Balance July 1, 2023	$	30	$	227	$	168,103	$	291,958	$	18,249	$	478,567
Net Income Attributable to the Company		—		—		—		2,686		—		2,686
Stock Repurchase		—		—		(87)		—		—		(87)
Exercise of Stock Options and Stock Issuance to Directors		—		—		67		—		—		67
Payment of Equity Issuance Costs		—		—		(8)		—		—		(8)
Stock-Based Compensation Expense		—		—		800		—		—		800
Preferred Stock Dividends Declared for the Period		—		—		—		(1,195)		—		(1,195)
Common Stock Dividends Declared for the Period		—		—		—		(8,660)		—		(8,660)
Other Comprehensive Income		—		—		—		—		5,901		5,901
Balance September 30, 2023	$	30	$	227	$	168,875	$	284,789	$	24,150	$	478,071

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For the nine months ended September 30, 2024:


	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Stockholders' Equity
Balance January 1, 2024	$	30	$	226	$	168,435	$	281,944	$	6,891	$	457,526
Net Income Attributable to the Company		—		—		—		13,252		—		13,252
Stock Repurchase		—		—		(664)		—		—		(664)
Vested Restricted Stock and Performance Shares		—		1		(1,275)		—		—		(1,274)
Exercise of Stock Options and Stock Issuance to Directors		—		—		558		—		—		558
Issuance of Preferred Stock, Net of Underwriting Discount and Expenses		17		—		32,979		—		—		32,996
Stock Issuance, Net of Equity Issuance Costs		—		73		132,127		—		—		132,200
Stock-Based Compensation Expense		—		—		2,307		—		—		2,307
Preferred Stock Dividends Declared for the Period		—		—		—		(4,936)		—		(4,936)
Common Stock Dividends Declared for the Period		—		—		—		(28,887)		—		(28,887)
Other Comprehensive Loss		—		—		—		—		(7,296)		(7,296)
Balance September 30, 2024	$	47	$	300	$	334,467	$	261,373	$	(405)	$	595,782

For the nine months ended September 30, 2023:


	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Stockholders' Equity
Balance January 1, 2023	$	30	$	229	$	172,471	$	316,279	$	15,761	$	504,770
Net Loss Attributable to the Company		—		—		—		(1,507)		—		(1,507)
Stock Repurchase		—		(3)		(5,169)		—		—		(5,172)
Vested Restricted Stock and Performance Shares		—		1		(1,029)		—		—		(1,028)
Exercise of Stock Options and Stock Issuance to Directors		—		—		308		—		—		308
Payment of Equity Issuance Costs		—		—		(130)		—		—		(130)
Stock-Based Compensation Expense		—		—		2,424		—		—		2,424
Preferred Stock Dividends Declared for the Period		—		—		—		(3,585)		—		(3,585)
Common Stock Dividends Declared for the Period		—		—		—		(26,398)		—		(26,398)
Other Comprehensive Income		—		—		—		—		8,389		8,389
Balance September 30, 2023	$	30	$	227	$	168,875	$	284,789	$	24,150	$	478,071

The accompanying notes are an integral part of these consolidated financial statements.

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CTO REALTY GROWTH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


	Nine Months Ended
	September 30, 2024		September 30, 2023
Cash Flow from Operating Activities:
Net Income (Loss) Attributable to the Company	$	13,252	$	(1,507)
Adjustments to Reconcile Net Income (Loss) Attributable to the Company to Net Cash Provided by Operating Activities:
Depreciation and Amortization		35,701		32,814
Amortization of Intangible Liabilities to Income Property Revenue		830		1,793
Amortization of Deferred Financing Costs to Interest Expense		758		724
Amortization of Discount on Convertible Debt		119		119
Gain on Disposition of Real Estate and Intangible Lease Assets and Liabilities		(3,763)		(3,565)
Gain on Disposition of Subsurface Interests		(4,545)		—
Provision for Impairment		653		1,408
Accretion of Commercial Loans and Investments Origination Fees		(129)		(105)
Non-Cash Imputed Interest		(22)		(22)
Deferred Income Taxes		(10)		167
Unrealized Loss (Gain) on Investment Securities		(2,250)		5,663
Extinguishment of Contingent Obligation		—		(2,300)
Non-Cash Compensation		2,887		2,802
Decrease (Increase) in Assets:
Refundable Income Taxes		229		18
Land and Development Costs		2		(13)
Mitigation Credits and Mitigation Credit Rights		1,044		709
Other Assets		(3,985)		(3,792)
Increase (Decrease) in Liabilities:
Accounts Payable		(684)		1,424
Accrued and Other Liabilities		4,775		3,092
Deferred Revenue		971		516
Net Cash Provided By Operating Activities		45,833		39,945
Cash Flow from Investing Activities:
Acquisition of Real Estate and Intangible Lease Assets and Liabilities		(207,757)		(82,810)
Investments in and Improvements to Real Estate		(9,229)		(17,778)
Acquisition of Commercial Loans and Investments		(60,206)		(17,477)
Proceeds from Disposition of Property, Plant, and Equipment, Net and Assets Held for Sale		37,157		21,689
Proceeds from Disposition of Subsurface Interests		4,974		—
Principal Payments Received on Commercial Loans and Investments		18,517		986
Acquisition of Investment Securities		(447)		(2,883)
Proceeds from the Sale of Investment Securities		1,655		—
Net Cash Used In Investing Activities		(215,336)		(98,273)
Cash Flow From Financing Activities:
Proceeds from Long-Term Debt		318,000		132,850
Payments on Long-Term Debt		(286,000)		(30,600)
Cash Paid for Loan Fees		(989)		(132)
Cash Received Exercise of Stock Options and Common Stock Issuance		558		308
Proceeds from Issuance of Preferred Stock, Net of Underwriting Discount and Expenses		32,996		—
Cash Used to Purchase Common and Preferred Stock		(664)		(5,172)
Cash Paid for Vesting of Restricted Stock		(1,274)		(1,028)
Proceeds from (Cash Paid for) Issuance of Common and Preferred Stock, Net		132,200		(130)
Dividends Paid - Preferred Stock		(4,936)		(3,585)
Dividends Paid - Common Stock		(28,339)		(25,744)
Net Cash Provided By Financing Activities		161,552		66,767
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash		(7,951)		8,439
Cash, Cash Equivalents and Restricted Cash, Beginning of Period		17,819		21,194
Cash, Cash Equivalents and Restricted Cash, End of Period	$	9,868	$	29,633

Reconciliation of Cash to the Consolidated Balance Sheets:
Cash and Cash Equivalents	$	8,172	$	7,015
Restricted Cash		1,696		22,618
Total Cash	$	9,868	$	29,633

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interest rate swap was entered into, the Company designated the derivatives as a hedge of the variability of cash flows to be paid related to the recognized long-term debt liabilities.

The Company documented the relationship between the hedging instruments and the hedged item, as well as its risk-management objective and strategy for undertaking the hedge transactions. At the hedges’ inception, the Company assessed whether the derivatives that are used in hedging the transactions are highly effective in offsetting changes in cash flows of the hedged items, and we will continue to do so on a quarterly basis.

Changes in fair value of the hedging instruments that are highly effective and designated and qualified as cash-flow hedges are recorded in other comprehensive income and loss, until earnings are affected by the variability in cash flows of the designated hedged items (see Note 16, “Interest Rate Swaps”).

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial assets and liabilities including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued and other liabilities at September 30, 2024 and December 31, 2023, approximate fair value because of the short maturity of these instruments. The carrying value of the Company’s Credit Facility (hereinafter defined) as of September 30, 2024 and December 31, 2023, approximates current market rates for revolving credit arrangements with similar risks and maturities. The face value of the Company’s fixed rate commercial loans and investments, the 2026 Term Loan (hereinafter defined), the 2027 Term Loan (hereinafter defined), the 2028 Term Loan (hereinafter defined), the 2029 Term Loan (hereinafter defined), mortgage note, and convertible debt held as of September 30, 2024 and December 31, 2023 are measured at fair value based on current market rates for financial instruments with similar risks and maturities (see Note 8, “Fair Value of Financial Instruments”).

Fair Value Measurements

The Company’s estimates of fair value of financial and non-financial assets and liabilities is based on the framework established by U.S. GAAP. The framework specifies a hierarchy of valuation inputs which was established to increase consistency, clarity and comparability in fair value measurements and related disclosures. U.S. GAAP describes a fair value hierarchy based upon three levels of inputs that may be used to measure fair value, two of which are considered observable and one that is considered unobservable. The following describes the three levels:

●

Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities.

●

Level 2 – Valuation is based upon inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

●

Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques.

Recognition of Interest Income from Commercial Loans and Investments

Interest income on commercial loans and investments includes interest payments made by the borrower and the accretion of purchase discounts and loan origination fees, offset by the amortization of loan costs. Interest payments are accrued based on the actual coupon rate and the outstanding principal balance and purchase discounts and loan origination fees are accreted into income using the effective yield method, adjusted for prepayments.

Mitigation Credits

Mitigation credits are stated at historical cost. As these assets are sold, the related revenues and cost of sales are reported as revenues from, and direct costs of, real estate operations, respectively, in the consolidated statements of operations. As of September 30, 2024, the Company had disposed of all of its remaining mitigation credits.

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Sales of Real Estate

When income properties are disposed of, the related cost basis of the real estate, intangible lease assets, and intangible lease liabilities, net of accumulated depreciation and/or amortization, and any accrued straight-line rental income balance for the underlying operating leases are removed, and gains or losses from the dispositions are reflected in net income within gain (loss) on disposition of assets. In accordance with the FASB guidance, gains or losses on sales of real estate are generally recognized using the full accrual method.

Gains and losses on land sales, in addition to the sale of Subsurface Interests and mitigation credits, are accounted for as required by FASB ASC Topic 606, Revenue from Contracts with Customers. The Company recognizes revenue from such sales when the Company transfers the promised goods in the contract based on the transaction price allocated to the performance obligations within the contract. As market information becomes available, the underlying cost basis is analyzed and recorded at the lower of cost or market.

Income Taxes

The Company elected to be taxed as a REIT for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”) commencing with its taxable year ended December 31, 2020. The Company believes that, commencing with such taxable year, it has been organized and has operated in such a manner as to qualify for taxation as a REIT under the U.S. federal income tax laws. The Company intends to continue to operate in such a manner. As a REIT, the Company will be subject to U.S. federal and state income taxation at corporate rates on its net taxable income; the Company, however, may claim a deduction for the amount of dividends paid to its stockholders. Amounts distributed as dividends by the Company will be subject to taxation at the stockholder level only. While the Company must distribute at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, to qualify as a REIT, the Company intends to distribute all of its net taxable income. The Company is allowed certain other non-cash deductions or adjustments, such as depreciation expense, when computing its REIT taxable income and distribution requirement. These deductions permit the Company to reduce its dividend payout requirement under U.S. federal income tax laws. Certain states may impose minimum franchise taxes. To comply with certain REIT requirements, the Company holds certain of its non-REIT assets and operations through TRSs and subsidiaries of TRSs, which are subject to applicable U.S. federal, state and local corporate income tax on their taxable income. For the taxable year ended December 31, 2023, the Company held a total of two TRSs, each subject to taxation and the separate filing of its corporate income tax returns. As of January 1, 2024, the Company consolidated its TRSs into one TRS subject to taxation and the filing of a single corporate income tax return.

The Company uses the asset and liability method to account for income taxes for the Company’s TRS. Deferred income taxes result primarily from the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes (see Note 20, “Income Taxes”). In June 2006, the FASB issued additional guidance, which clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements included in income taxes. The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The interpretation also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, and disclosure and transition. In accordance with FASB guidance included in income taxes, the Company has analyzed its various federal and state filing positions and believes that its income tax filing positions and deductions are well documented and supported. Additionally, the Company believes that its accruals for tax liabilities are adequate. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to the FASB guidance.

Recently Issued Accounting Standards

Segment Reporting. In November 2023, the FASB issued ASU 2023-07 which enhances segment disclosure requirements for entities required to report segment information in accordance with FASB ASC 280, Segment Reporting. The amendments in this update are effective for annual reporting periods beginning after December 15, 2023.

Income Taxes. In December 2023, the FASB issued ASU 2023-09 which enhances income tax disclosure requirements in accordance with FASB ASC 740, Income Taxes. The amendments in this update are effective for annual reporting periods beginning after December 15, 2023.

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NOTE 3. INCOME PROPERTIES

Leasing revenue consists of long-term rental revenue from retail, office, and commercial income properties, which is recognized as earned, using the straight-line method over the life of each lease. Lease payments below include straight-line base rental revenue as well as the non-cash accretion of above and below market lease amortization. The variable lease payments are primarily comprised of percentage rents, reimbursements from tenants for common area maintenance, insurance, real estate taxes, other operating expenses, and termination fee payments.

The components of leasing revenue are as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Leasing Revenue
Lease Payments	$	21,143	$	19,547	$	58,841	$	55,187
Variable Lease Payments		7,385		5,636		20,188		15,186
Total Leasing Revenue	$	28,528	$	25,183	$	79,029	$	70,373

Minimum future base rental receipts under non-cancelable operating leases, excluding percentage rent and other lease payments that are not fixed and determinable, having remaining terms in excess of one year subsequent to September 30, 2024, are summarized as follows (in thousands):


Year Ending December 31,	Amounts
Remainder of 2024	$	22,910
2025		87,000
2026		78,802
2027		66,802
2028		54,079
2029		40,515
2030 and Thereafter (Cumulative)		106,608
Total	$	456,716

2024 Acquisitions. During the nine months ended September 30, 2024, the Company acquired four multi-tenant income properties, one vacant land parcel within an existing multi-tenant property, and one building within an existing multi-tenant income property for an aggregate purchase price of $210.0 million, or a total acquisition cost of $207.8 million, as follows:

●

A portfolio of three open-air shopping centers ( the “Three Property Portfolio”) for a gross purchase price of $137.5 million, less certain purchase credits, for a total acquisition cost of $135.1 million. The Three Property Portfolio consists of Carolina Pavilion in Charlotte, North Carolina; Millenia Crossing in Orlando, Florida; and Lake Brandon Village in Tampa, Florida. Carolina Pavilion comprises approximately 686,000 square feet, was 93% occupied, and had a weighted average remaining lease term of 5.9 years at acquisition. Millenia Crossing comprises approximately 100,000 square feet, was 96% occupied, and had a remaining lease term of 6.1 years at acquisition. Lake Brandon Village comprises approximately 102,000 square feet, was 100% occupied, and had a remaining lease term of 7.4 years at acquisition.

●

The Marketplace at Seminole Towne Center, a multi-tenant income property located in Sanford, Florida, for a purchase price of $68.7 million, or a total acquisition cost of $68.8 million including capitalized acquisition costs. The Marketplace at Seminole Towne Center comprises 315,066 square feet, was 98% occupied at acquisition, and had a weighted average remaining lease term of 4.7 years at acquisition.

●

One property, totaling 4,000 square feet, within the 28,100 square foot retail portion of Phase II of The Exchange at Gwinnett located in Buford, Georgia for an aggregate purchase price of $2.3 million including capitalized acquisition costs. The weighted average remaining lease term at acquisition is 10.0 years. As a result of this acquisition, the Company has acquired the entire retail portion of Phase II of the Exchange at Gwinnett. The Company previously purchased the Sprouts-anchored Phase I portion of The Exchange at Gwinnett in December 2021.

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●

A vacant land parcel, for future development, within the previously acquired West Broad Village property, located in the Short Pump submarket of Richmond, Virginia, for a purchase price of $1.5 million including capitalized acquisition costs.

Of the aggregate $207.8 million total acquisition cost, $42.5 million was allocated to land, $144.5 million was allocated to buildings and improvements, and $32.3 million was allocated to intangible assets pertaining to the in-place lease value, leasing costs, and above market lease value and $11.5 million was allocated to intangible liabilities for the below market lease value. The amortization period for the intangible assets and liabilities was 5.8 years at acquisition.

2024 Dispositions. During the nine months ended September 30, 2024, the Company sold two income properties for an aggregate sales price of $38.0 million and aggregate gains on sales of $3.8 million. The sales consisted of (i) one mixed use income property in downtown Santa Fe, New Mexico for $20.0 million, resulting in a gain of $4.6 million, and (ii) one multi-tenant income property located in West Jordan, Utah for $18.0 million resulting in a loss on sale of $0.8 million.

2023 Acquisitions. During the nine months ended September 30, 2023, the Company acquired four buildings within an existing multi-tenant income property, one multi-tenant income property, and one vacant land parcel adjacent to an existing multi-tenant property for an aggregate purchase price of $80.0 million, or a total acquisition cost of $80.3 million, as follows:

●

Four properties, totaling 24,100 square feet, within the 28,100 square foot retail portion of Phase II of The Exchange at Gwinnett located in Buford, Georgia for an aggregate purchase price of $14.6 million, or a total acquisition cost of $14.7 million including capitalized acquisition costs. The four properties are leased to six different tenants and had a weighted average remaining lease term of 9.9 years at acquisition. The Company previously purchased the Sprouts-anchored Phase I portion of The Exchange at Gwinnett in December 2021.

●

The Plaza at Rockwall, a multi-tenant income property located in Rockwall, Texas for a purchase price of $61.2 million, or a total acquisition cost of $61.3 million including capitalized acquisition costs. The Plaza at Rockwall comprises 446,500 square feet, was 95% occupied at acquisition, and had a weighted average remaining lease term of 4.2 years at acquisition.

●

A vacant land parcel adjacent to the previously acquired Collection at Forsyth property, located in the Forsyth County submarket of Atlanta, Georgia, for a purchase price of $4.3 million.

Of the aggregate $80.3 million total acquisition cost, $21.2 million was allocated to land, $53.6 million was allocated to buildings and improvements, and $8.7 million was allocated to intangible assets pertaining to the in-place lease value, leasing costs, and above market lease value and $3.2 million was allocated to intangible liabilities for the below market lease value. The amortization period for the intangible assets and liabilities was 5.6 years at acquisition.

2023 Dispositions. During the nine months ended September 30, 2023, the Company sold three income properties for an aggregate sales price of $22.9 million and aggregate gains on sales of $3.3 million. The sales consisted of (i) an outparcel of the multi-tenant property known as Eastern Commons, located in Henderson, Nevada, for $2.1 million, resulting in a gain of $0.8 million, (ii) an outparcel of the multi-tenant property known as Crossroads Towne Center, located in Chandler, Arizona, for $2.3 million, resulting in a gain of $1.2 million, and (iii) a single tenant office property located in Reston, Virginia leased to General Dynamics for $18.5 million, resulting in a gain of $1.3 million.

NOTE 4. COMMERCIAL LOANS AND INVESTMENTS

Our investments in commercial loans or similarly structured investments, such as preferred equity, mezzanine loans or other subordinated debt, have been and are expected to continue to be secured by real estate or the borrower’s pledge of its ownership interest in the entity that owns the real estate. The investments are associated with commercial real estate located in the United States and its territories, and are current or performing with either a fixed or floating rate. Some of these loans may be syndicated in either a pari-passu or senior/subordinated structure. Commercial first mortgage loans generally provide for a higher recovery rate due to their senior position in the underlying collateral. Commercial mezzanine loans are typically secured by a pledge of the borrower’s equity ownership in the underlying commercial real estate. Unlike a mortgage, a mezzanine loan is not secured by a lien on the property. An investor’s rights in a mezzanine loan are usually governed by an intercreditor agreement that provides holders with the rights to cure defaults and exercise control on certain decisions of any senior debt secured by the same commercial property.

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2024 Activity. On February 2, 2024, the borrower under the construction loan originated in January 2022 and secured by the property and improvements constructed thereon for the second phase of The Exchange at Gwinnett project located in Buford, Georgia repaid the principal balance of $1.9 million, leaving no remaining balance outstanding as of September 30, 2024. There is no remaining commitment to the borrower as of September 30, 2024.

On March 26, 2024, the Company originated a construction loan secured by the property and improvements to be constructed thereon consisting of seven outparcel locations, known as the Hypoluxo Project, located in Lake Worth, Florida for $10.0 million. On September 25, 2024, the Company signed an amendment with the borrower of the Hypoluxo project, reducing the total funding obligation to $5.6 million and adjusting the maturity date to June 1, 2025. The construction loan continues to bear a fixed interest rate of 11.0% and requires interest only payments prior to maturity. As of September 30, 2024, the Company has fully funded this obligation.

On April 18,2024, the borrower on the mortgage loan secured by the Sabal Pavilion property, as described below, repaid the mortgage loan, at a $0.2 million discount, for proceeds to the Company of $15.2 million.

On July 11, 2024, the Company funded $10.0 million into an escrow account, which escrow closed on August 1, 2024 in exchange for 10,000 shares of 14.000% Series A preferred stock, with a $0.01 par value per share, of a subsidiary of a publicly-traded hospitality, entertainment and real-estate company (the “Series A Preferred Investment”). In connection with the investment, the Company received an origination fee of 1.0% or $0.1 million. The investment is not redeemable prior to July 11, 2029, except upon the occurrence of certain specified events. In connection with the investment, the Company received an origination fee of 1.0% or $0.1 million. The investment is not redeemable prior to July 11, 2029, except upon the occurrence of certain specified events. The Company determined, pursuant to FASB ASC Topic 810, Consolidation, that we do not have a variable interest in the entity underlying the Series A Preferred Investment; accordingly, FASB Topic ASC 320, Investments-Debt Securities, was applied and the investment was recorded in the consolidated balance sheets as a commercial loan investment at the time of acquisition.

On September 27, 2024, the Company originated a $43.8 million first mortgage loan secured by the Rivana at Innovation Station property located in Herndon, Virginia. The loan is interest-only with a term of two years with a fixed interest rate of 11.0%. The Company received an origination fee of 1.25% or $0.5 million.

2023 Activity. On February 21, 2023, the borrower of the mortgage note secured by the 4311 Maple Avenue property located in Dallas, Texas repaid the principal balance of $0.4 million, leaving no remaining balance outstanding as of March 31, 2023.

On March 1, 2023, the Company originated a $15.0 million first mortgage loan secured by the Founders Square property located in Dallas, Texas. The loan is interest-only with a term of three years with a fixed interest rate of 8.75%. The Company received an origination fee of 1.0% or $0.15 million.

During the nine months ended September 30, 2023, the Company funded $2.2 million to the borrower and received $0.6 million in principal repayments under the construction loan originated in January 2022 and secured by the property and improvements to be constructed thereon for the second phase of The Exchange at Gwinnett project located in Buford, Georgia. As of September 30, 2023, there is no remaining commitment to the borrower.

On December 20, 2023, simultaneous with the sale of the property, the Company originated a $15.4 million first mortgage loan secured by the Sabal Pavilion property located in Tampa, Florida. The loan was interest-only with a term of nine months with a fixed interest rate of 7.50%. During the nine months ended September 30, 2024, the borrower repaid the mortgage loan, at a $0.2 million discount, for proceeds to the Company of $15.2 million.

Watters Creek Investment. On April 7, 2022, the Company entered into a preferred equity agreement to provide $30.0 million of funding towards the total investment in Watters Creek at Montgomery Farm, a grocery-anchored, mixed-use property located in Allen, Texas (the “Watters Creek Investment”). The Watters Creek Investment matures on April 6, 2025, has two one-year extension options, bears a fixed interest rate of 8.50% at the time of acquisition with increases during the initial term as well as the option terms, and requires payments of interest only prior to maturity. At closing, an origination fee of $0.15 million was received by the Company. The Watters Creek Investment represents $30.0 million, or approximately 23%, of funding towards the total investment in Watters Creek at Montgomery Farm, a grocery-anchored, mixed-use property located in Allen, Texas (the “Watters Creek Property”). The remaining funding is comprised of a combination of third-party sponsorship equity and a secured first mortgage.

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The Company’s variable interest in the entity underlying the Watters Creek Investment is primarily due to the inherent credit risk associated with the $30.0 million fixed-return preferred investment. The day-to-day operations, including asset management and leasing, of the Watters Creek Property are managed by an unrelated third-party. Pursuant to FASB ASC Topic 810, Consolidation, the Company determined we are not the primary beneficiary of the entity underlying the Watters Creek Investment; accordingly, the entity was not consolidated. The investment was recorded in the consolidated balance sheets as a commercial loan investment at the time of acquisition. The significant factors related to this determination included, but were not limited to, the Company not having the power to direct the activities of the entity underlying the Watters Creek Investment due to (i) the day-to-day operations being managed by an unrelated third-party and (ii) the Company’s position as minority lender with fixed returns and maturity dates for the repayment of the $30.0 million preferred investment.

The Company’s commercial loans and investments were comprised of the following at September 30, 2024 (in thousands):


Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon Rate
Preferred Investment – Watters Creek – Allen, TX	April 2022	April 2025	$	30,000	$	30,000	$	29,974	9.00%
Mortgage Note – Founders Square – Dallas, TX	March 2023	March 2026		15,000		15,000		14,930	8.75%
Promissory Note – Main Street – Daytona Beach, FL	June 2023	May 2033		400		400		400	7.00%
Construction Loan - Hypoluxo - Lake Worth, FL	March 2024	June 2025		5,638		5,638		5,575	11.00%
Series A Preferred Investment	July 2024	July 2029		10,000		10,000		9,904	14.00%
Mortgage Note - Rivana - Herndon, VA	September 2024	September 2026		43,818		43,818		43,280	11.00%
			$	104,856	$	104,856	$	104,063
CECL Reserve								(1,049)
Total Commercial Loans and Investments							$	103,014

The Company’s commercial loans and investments were comprised of the following at December 31, 2023 (in thousands):


Description	Date of Investment	Maturity Date	Original Face Amount		Current Face Amount		Carrying Value		Coupon Rate
Construction Loan – The Exchange At Gwinnett – Buford, GA	January 2022	January 2024	$	8,700	$	1,857	$	1,854	7.25%
Preferred Investment – Watters Creek – Allen, TX	April 2022	April 2025		30,000		30,000		29,937	8.75%
Mortgage Note – Founders Square – Dallas, TX	March 2023	March 2026		15,000		15,000		14,892	8.75%
Promissory Note – Main Street – Daytona Beach, FL	June 2023	May 2033		400		400		400	7.00%
Mortgage Note – Sabal Pavilion – Tampa, FL	December 2023	June 2024		15,400		15,400		15,393	7.50%
			$	69,500	$	62,657	$	62,476
CECL Reserve								(627)
Total Commercial Loans and Investments							$	61,849

The carrying value of the commercial loans and investments portfolio at September 30, 2024 and December 31, 2023 consisted of the following (in thousands):


	As of
	September 30, 2024		December 31, 2023
Current Face Amount	$	104,856	$	62,657
Unaccreted Origination Fees		(793)		(181)
CECL Reserve		(1,049)		(627)
Total Commercial Loans and Investments	$	103,014	$	61,849

NOTE 5. MANAGEMENT SERVICES BUSINESS

The Company’s management fee income is within the scope of FASB ASC Topic 606, Revenue from Contracts with Customers. Management fee income is recognized as revenue over time, over the period the services are performed.

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Alpine Income Property Trust. Pursuant to the Company’s management agreement with PINE, the Company generates a base management fee equal to 0.375% per quarter of PINE’s total equity (as defined in the management agreement and based on a 1.5% annual rate), calculated and payable in cash, quarterly in arrears. The Company also has an opportunity to achieve additional cash flows as manager of PINE pursuant to an annual incentive fee based on PINE’s total stockholder return exceeding an 8% cumulative annual hurdle rate (the “Outperformance Amount”) subject to a high-water mark price. PINE would pay the Company an incentive fee with respect to each annual measurement period in an amount equal to the greater of (i) $0.00 and (ii) the product of (a) 15% multiplied by (b) the Outperformance Amount multiplied by (c) the weighted average shares. No incentive fee was earned for the year ended December 31, 2023.

The Company earned management fee revenue from PINE for each of the three month periods ended September 30, 2024 and 2023 of $1.1 million. During the nine months ended September 30, 2024 and 2023, the Company earned management fee revenue from PINE totaling $3.1 million and $3.3 million, respectively. Dividend income for the three months ended September 30, 2024 and 2023 totaled $0.7 and $0.6 million, respectively. Dividend income for each of the nine months ended September 30, 2024 and 2023 totaled $1.9 million. Management fee revenue from PINE, included in management services, and dividend income, included in investment and other income (loss), are reflected in the accompanying consolidated statements of operations.

The following table represents amounts due from PINE as of September 30, 2024 and December 31, 2023 which are included in other assets on the consolidated balance sheets (in thousands):


	As of
Description	September 30, 2024		December 31, 2023
Management Services Fee due From PINE	$	1,052	$	1,062
Dividend Receivable		343		337
Other		(33)		(4)
Total	$	1,362	$	1,395

On November 26, 2019, as part of PINE’s IPO, the Company sold PINE 15 properties for aggregate cash consideration of $125.9 million. In connection with the IPO, the Company contributed to the PINE Operating Partnership five properties in exchange for an aggregate of 1,223,854 OP Units, which had an initial value of $23.3 million. Additionally, on November 26, 2019, the Company purchased 394,737 shares of PINE common stock for a total purchase price of $7.5 million in a private placement and 421,053 shares of PINE common stock in the IPO for a total purchase price of $8.0 million.

On October 26, 2021, the Board authorized the purchase by the Company of up to $5.0 million in shares of common stock of PINE (the “Prior PINE Share Purchase Authorization”). Pursuant to the Prior PINE Share Purchase Authorization, during the year ended December 31, 2022, CTO purchased 155,665 shares of PINE common stock in the open market for $2.7 million, or an average price per share of $17.57. Pursuant to the Prior PINE Share Purchase Authorization, during the year ended December 31, 2021, the Company purchased 8,088 shares of PINE common stock on the open market for a total of $0.1 million, or an average price of $17.65 per share.

On February 16, 2023, the Board cancelled the Prior PINE Share Purchase Authorization and authorized the purchase by the Company of up to $2.1 million in shares of common stock of PINE (the “February 2023 PINE Share Purchase Authorization”). Pursuant to the February 2023 PINE Share Purchase Authorization, during the nine months ended September 30, 2023, the Company purchased 129,271 shares of PINE common stock on the open market for a total of $2.1 million, or an average price of $16.21 per share, which completed the February 2023 PINE Share Purchase Authorization.

On December 12, 2023, the Board authorized the purchase by the Company of up to $2.0 million in shares of common stock of PINE (the “December 2023 PINE Share Purchase Authorization”). No purchases of PINE common stock were made pursuant to the December 2023 PINE Share Purchase Authorization during the three months ended December 31, 2023. Pursuant to the December 2023 PINE Share Purchase Authorization, during the nine months ended September 30, 2024, the Company purchased 29,807 shares of PINE common stock on the open market for a total of $0.4 million, or an average price of $14.97 per share.

As of September 30, 2024, CTO owns, in the aggregate, 1,223,854 OP Units and 1,138,621 shares of PINE common stock, representing an investment totaling $43.0 million, or 15.3% of PINE’s outstanding equity.

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Portfolio Management Agreement. On December 4, 2023, the Company entered into an asset management agreement with a third party to manage a portfolio of multi-tenant and single-tenant assets (the “Portfolio Management Agreement”). Although the Company has no direct relationship with the third party, PINE is a lender to the third-party pursuant to a mortgage note originated by PINE which is secured by the portfolio. The Company receives (or expects to receive) asset management fees, disposition management fees, leasing commissions, and other fees related to the Company’s management and administration of the portfolio pursuant to the Portfolio Management Agreement. The Company also entered into a revenue sharing agreement with PINE whereby PINE will receive the portion of fees earned by the Company under the Portfolio Management Agreement which are attributable to the single tenant properties within the portfolio. During the three and nine months ended September 30, 2024, the Company recognized less than $0.1 million and $0.2 million of revenue, respectively, pursuant to the Portfolio Management Agreement, which is included in management fee income on the Company’s consolidated statement of operations.

Asset Management Agreement. On February 16, 2024, the Company entered into the Subsurface Management Agreement with a third party in conjunction with the sale of the Company’s remaining Subsurface Interests as further described in Note 6, “Real Estate Operations” below. The Company is expected to receive management and other fees pursuant to the Subsurface Management Agreement. During the three and nine months ended September 30, 2024, the Company recognized less than $0.1 million and $0.1 million of revenue, respectively, pursuant to the Subsurface Management Agreement, which is included in management fee income on the Company’s consolidated statement of operations.

NOTE 6. REAL ESTATE OPERATIONS

Real Estate Operations

Land and development costs at September 30, 2024 and December 31, 2023 were as follows (in thousands):


	As of
	September 30, 2024		December 31, 2023
Land and Development Costs	$	300	$	358
Subsurface Interests		—		373
Total Land and Development Costs	$	300	$	731

Subsurface Interests. As of December 31, 2023, the Company owned 352,000 acres of Subsurface Interests. The Company sold its remaining acres of Subsurface Interests during the nine months ended September 30, 2024 for $5.0 million, or a gain on sale of $4.5 million.

The Company historically leased certain of the Subsurface Interests to mineral exploration firms for exploration. The Company’s subsurface historical operations consisted of revenue from the leasing of exploration rights and in some instances, additional revenues from royalties applicable to production from the leased acreage, which revenues are included within real estate operations in the consolidated statements of operations. There were no sales of subsurface oil, gas, and mineral rights during the nine months ended September 30, 2024. During the three and nine months ended September 30, 2023, the Company sold subsurface oil, gas, and mineral rights of 465 acres for a sales price of $0.6 million and 3,481 acres for a sales price of $1.0 million, respectively.

The Company historically released surface entry rights or other rights upon request of a surface owner for a negotiated release fee typically based on a percentage of the surface value. Cash payments for the release of surface entry rights totaled $0.1 million and $0.5 million in the nine months ended September 30, 2024 and 2023, respectively.

Mitigation Credits. During the nine months ended September 30, 2024, the Company sold its remaining mitigation credits. As of December 31, 2023, the Company owned mitigation credits with an aggregate cost basis of $1.0 million.

Revenues and the cost of sales of mitigation credit sales are reported as revenues from, and direct costs of, real estate operations, respectively, in the consolidated statements of operations. During the nine months ended September 30, 2024, 14.99 mitigation credits were sold for $1.8 million, resulting in a gain on sale of $0.5 million. During the nine months ended September 30, 2023, 9.45 mitigation credits were sold for $1.1 million, resulting in a gain on sale of $0.3 million.

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NOTE 7. INVESTMENT SECURITIES

As of September 30, 2024, the Company owns, in the aggregate and on a fully diluted basis, 2.36 million shares of PINE, or 15.3% of PINE’s total shares outstanding for an investment value of $43.0 million, which total includes 1.2 million OP Units, or 7.9%, which the Company received in exchange for the contribution of certain income properties to the PINE Operating Partnership, in addition to 1,138,621 shares of common stock owned by the Company, or 7.4%. The Company has elected the fair value option related to the aggregate investment in securities of PINE pursuant to ASC 825, otherwise such investments would have been accounted for under the equity method. For detailed financial information regarding PINE, please refer to its financial statements, which are publicly available on the website of the Securities and Exchange Commission at http://www.sec.gov under the ticker symbol “PINE.”

The Company calculates the unrealized gain or loss based on the closing stock price of PINE at each respective balance sheet date. The unrealized, non-cash gains and losses resulting from the changes in the closing stock price of PINE are included in investment and other loss in the accompanying consolidated statements of operations.

The Company’s available-for-sale securities as of September 30, 2024 and December 31, 2023 are summarized below (in thousands):


	Cost		Unrealized Gains in Investment Income		Unrealized Losses in Investment Income		Estimated Fair Value (Level 1 Inputs)
September 30, 2024
Common Stock	$	20,929	$	—	$	(206)	$	20,723
Operating Units		23,253		—		(979)		22,274
Total Equity Securities		44,182		—		(1,185)		42,997
Total Available-for-Sale Securities	$	44,182	$	—	$	(1,185)	$	42,997

December 31, 2023
Common Stock	$	20,482	$	—	$	(1,732)	$	18,750
Operating Units		23,253		—		(2,558)		20,695
Total Equity Securities		43,735		—		(4,290)		39,445
Total Available-for-Sale Securities	$	43,735	$	—	$	(4,290)	$	39,445

NOTE 8. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents the carrying value and estimated fair value of the Company’s financial instruments not carried at fair value on the consolidated balance sheets at September 30, 2024 and December 31, 2023 (in thousands):


	September 30, 2024				December 31, 2023
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Cash and Cash Equivalents - Level 1	$	8,172	$	8,172	$	10,214	$	10,214
Restricted Cash - Level 1	$	1,696	$	1,696	$	7,605	$	7,605
Commercial Loans and Investments - Level 2	$	103,014	$	106,799	$	61,849	$	63,261
Long-Term Debt - Level 2	$	526,838	$	510,842	$	495,370	$	473,807

To determine estimated fair values of the financial instruments listed above, market rates of interest, which include credit assumptions, were used to discount contractual cash flows. The estimated fair values are not necessarily indicative of the amount the Company could realize on disposition of the financial instruments. The use of different market assumptions or estimation methodologies could have a material effect on the estimated fair value amounts.

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The following table presents the fair value of assets measured on a recurring basis by level as of September 30, 2024 and December 31, 2023 (in thousands). See Note 16, “Interest Rate Swaps” for further disclosure related to the Company’s interest rate swaps.


			Fair Value at Reporting Date Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2024
Cash Flow Hedge - 2026 Term Loan Interest Rate Swaps	$	902	$	—	$	902	$	—
Cash Flow Hedge - 2027 Term Loan Interest Rate Swaps	$	2,984	$	—	$	2,984	$	—
Cash Flow Hedge - 2028 Term Loan Interest Rate Swaps	$	(3,034)	$	—	$	(3,034)	$	—
Cash Flow Hedge - 2029 Term Loan Interest Rate Swaps	$	(337)	$	—	$	(337)	$	—
Cash Flow Hedge - Credit Facility Interest Rate Swaps	$	(920)	$	—	$	(920)	$	—
Investment Securities	$	42,997	$	42,997	$	—	$	—
December 31, 2023
Cash Flow Hedge - 2026 Term Loan Interest Rate Swaps	$	2,813	$	—	$	2,813	$	—
Cash Flow Hedge - 2027 Term Loan Interest Rate Swaps	$	5,759	$	—	$	5,759	$	—
Cash Flow Hedge - 2028 Term Loan Interest Rate Swaps	$	(1,994)	$	—	$	(1,994)	$	—
Cash Flow Hedge - Credit Facility Interest Rate Swaps	$	313	$	—	$	313	$	—
Investment Securities	$	39,445	$	39,445	$	—	$	—

NOTE 9. INTANGIBLE ASSETS AND LIABILITIES

Intangible assets and liabilities consist of the value of above-market and below-market leases, the value of in-place leases, and the value of leasing costs, based in each case on their fair values. Intangible assets and liabilities consisted of the following as of September 30, 2024 and December 31, 2023 (in thousands):


	As of
	September 30, 2024		December 31, 2023
Intangible Lease Assets:
Value of In-Place Leases	$	110,027	$	90,246
Value of Above Market In-Place Leases		32,587		31,533
Value of Intangible Leasing Costs		28,847		24,974
Sub-total Intangible Lease Assets		171,461		146,753
Accumulated Amortization		(63,803)		(49,644)
Sub-total Intangible Lease Assets—Net		107,658		97,109
Intangible Lease Liabilities:
Value of Below Market In-Place Leases		(25,898)		(14,848)
Sub-total Intangible Lease Liabilities		(25,898)		(14,848)
Accumulated Amortization		7,041		4,407
Sub-total Intangible Lease Liabilities—Net		(18,857)		(10,441)
Total Intangible Assets and Liabilities—Net	$	88,801	$	86,668

The following table reflects the net amortization of intangible assets and liabilities during the three and nine months ended September 30, 2024 and 2023 (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Amortization Expense	$	5,188	$	4,837	$	14,532	$	13,724
Accretion to Income Properties Revenue		112		487		830		1,793
Net Amortization of Intangible Assets and Liabilities	$	5,300	$	5,324	$	15,362	$	15,517

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The estimated future amortization expense (income) related to net intangible assets and liabilities is as follows (in thousands):


Year Ending December 31,	Future Amortization Amount		Future Accretion to Income Property Revenue		Net Future Amortization of Intangible Assets and Liabilities
Remainder of 2024	$	5,635	$	29	$	5,664
2025		20,704		(29)		20,675
2026		19,834		(116)		19,718
2027		17,083		(859)		16,224
2028		13,307		(814)		12,493
2029		4,867		305		5,172
2030 and Thereafter		7,361		1,494		8,855
Total	$	88,791	$	10	$	88,801

As of September 30, 2024, the weighted average amortization period of total intangible assets and liabilities was 7.0 years and 5.4 years, respectively.

NOTE 10. PROVISION FOR IMPAIRMENT

Income Properties. The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The fair value of long-lived assets required to be assessed for impairment is determined on a non-recurring basis using Level 3 inputs in the fair value hierarchy. These Level 3 inputs may include, but are not limited to, executed purchase and sale agreements on specific properties, third party valuations, discounted cash flow models, and other model-based techniques.

There were no impairment charges on the Company’s income property portfolio during the three or nine months ended September 30, 2024.

During the three and nine months ended September 30, 2023, the Company recorded a $0.9 million impairment charge on the sale of the Westcliff Property. The purchase and sale agreement for the Company’s sale of the Westcliff Property was executed on July 28, 2023. The impairment charge of $0.9 million represents the sales price, less the book value of the asset as of September 30, 2023, less costs to sell. The sale of the Westcliff Property closed on October 12, 2023.

Commercial Loans and Investments. Pursuant to ASC 326, Financial Instruments - Credit Losses, the Company measures and records a provision for current expected credit losses (“CECL”) each time a new investment is made or a loan is repaid, as well as if changes to estimates occur during a quarterly measurement period. We are unable to use historical data to estimate expected credit losses, as we have incurred no losses to date. Management utilizes a loss-rate method and considers macroeconomic factors to estimate its CECL allowance, which is calculated based on the amortized cost basis of the commercial loans.

During the nine months ended September 30, 2024, the Company recorded a $0.7 million impairment charge, comprised of a $0.2 million charge related to the discount provided to the borrower on their early repayment of the Sabal Pavilion loan, as described in Note 4, “Commercial Loans and Investments”, and a $0.5 million increase in our CECL allowance due to a net increase in principal outstanding. During the nine months ended September 30, 2023, the Company recorded a $0.5 million impairment charge, representing the provision for credit losses related to our commercial loans and investments.

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NOTE 11. OTHER ASSETS

Other assets consisted of the following as of September 30, 2024 and December 31, 2023 (in thousands):


	As of
	September 30, 2024		December 31, 2023
Income Property Tenant Receivables, Net of Allowance for Doubtful Accounts ⁽¹⁾	$	5,072	$	4,568
Income Property Straight-line Rent Adjustment		7,269		6,033
Income Property Leasing Commissions and Costs, Net		6,544		4,943
Operating Leases - Right-of-Use Asset		333		422
Golf Rounds Surcharge		—		102
Cash Flow Hedge - Interest Rate Swap		6,599		11,770
Infrastructure Reimbursement Receivables		590		568
Prepaid Expenses, Deposits, and Other		1,264		3,514
Due from Alpine Income Property Trust, Inc.		1,362		1,395
Financing Costs, Net of Accumulated Amortization		1,253		1,638
Total Other Assets	$	30,286	$	34,953

⁽¹⁾	Allowance for doubtful accounts was $2.2 million and $1.7 million as of September 30, 2024 and December 31, 2023, respectively.

Infrastructure Reimbursement Receivables. As of September 30, 2024 and December 31, 2023, the infrastructure reimbursement receivables were all related to two land sale transactions which closed in the fourth quarter of 2015 within the Tomoka Town Center.

NOTE 12. EQUITY

SHELF REGISTRATION

On April 1, 2021, the Company filed a shelf registration statement on Form S-3, relating to the registration and potential issuance of its common stock, preferred stock, debt securities, warrants, rights, and units with a maximum aggregate offering price of up to $350.0 million (the “2021 Registration Statement”). The Securities and Exchange Commission declared the 2021 Registration Statement effective on April 19, 2021.

On October 11, 2022, the Company filed a new shelf registration statement on Form S-3, relating to the registration and potential issuance of its common stock, preferred stock, debt securities, warrants, rights, and units with a maximum aggregate offering price of up to $500.0 million (the “2022 Registration Statement”). The Securities and Exchange Commission declared the 2022 Registration Statement effective on October 26, 2022. The 2021 Registration Statement was terminated concurrently with the effectiveness of the 2022 Registration Statement.

EQUITY OFFERING

On December 5, 2022, the Company completed a follow-on public offering of 3,450,000 shares of common stock, which included the full exercise of the underwriters’ option to purchase an additional 450,000 shares of common stock. Upon closing, the Company issued 3,450,000 shares and received net proceeds of $62.4 million, after deducting the underwriting discount and expenses.

ATM PROGRAM

On April 30, 2021, the Company implemented a $150.0 million “at-the-market” equity offering program (the “2021 ATM Program”) pursuant to which the Company sold shares of the Company’s common stock. During the year ended December 31, 2022, the Company sold 961,261 shares under the 2021 ATM Program for gross proceeds of $21.1 million at a weighted average price of $21.99 per share, generating net proceeds of $20.8 million after deducting transaction fees totaling less than $0.3 million. The Company was not active under the 2021 ATM Program during the year ended December 31, 2021. The 2021 ATM Program was terminated in connection with the establishment of the 2022 ATM Program (hereinafter defined).

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On October 28, 2022, the Company implemented a $150.0 million “at-the-market” equity offering program (the “2022 ATM Program”) pursuant to which the Company may sell, from time to time, shares of the Company’s common stock. During the year ended December 31, 2022, the Company sold 604,765 shares under the 2022 ATM Program for gross proceeds of $12.3 million at a weighted average price of $20.29 per share, generating net proceeds of $12.1 million after deducting transaction fees totaling $0.2 million. The Company was not active under the 2022 ATM Program during the year ended December 31, 2023. During the nine months ended September 30, 2024, the Company sold 7,226,192 shares under the 2022 ATM Program for gross proceeds of $134.2 million at a weighted average price of $18.57 per share, generating net proceeds of $132.2 million after deducting transaction fees of $2.0 million. As of September 30, 2024, $3.6 million of availability remained under the 2022 ATM Program.

PREFERRED STOCK

On June 28, 2021, the Company priced a public offering of 3,000,000 shares of its 6.375% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”) at a public offering price of $25.00 per share. The offering closed on July 6, 2021 and generated total net proceeds to the Company of $72.4 million, after deducting the underwriting

discount and expenses.

On April 4, 2024, the Company priced a public offering of 1,500,000 additional shares of the Series A Preferred Stock, liquidation preference $25.00 per share, at a public offering price of $20.00 per share. The Company also granted the underwriters a 30-day option to purchase up to an additional 225,000 shares of the Series A Preferred Stock to cover over-allotments, which the underwriters exercised with respect to 218,417 shares on April 9, 2024. Upon closing on April 11, 2024, 1,718,417 shares of the Series A Preferred Stock (including the 218,417 shares of Series A Preferred Stock issued pursuant to the underwriters’ option) were issued generating net proceeds of $33.1 million, after deducting the underwriting discount and offering expenses payable by the Company.

On August 23, 2024, the Company implemented a $24.5 million “at-the-market” preferred stock equity offering program (the “2024 Preferred Stock ATM Program”) pursuant to which the Company may sell, from time to time, shares of the Company’s 6.375% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share, with a liquidation preference of $25.00 per share. During the nine months ended September 30, 2024, the Company sold 15,844 shares under the 2024 Preferred Stock ATM Program generating net proceeds of $0.4 million at a weighted average price of $23.22 per share after deducting transaction fees of less than $0.1 million. As of September 30, 2024, $24.1 million of availability remained under the 2024 Preferred Stock ATM Program.

The Series A Preferred Stock ranks senior to the Company’s common stock with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Company. The Series A Preferred Stock has no maturity date and will remain outstanding unless redeemed.

The Series A Preferred Stock is not redeemable by the Company prior to July 6, 2026 except under limited circumstances intended to preserve the Company’s qualification as a REIT for U.S. federal income tax purposes or upon the occurrence of a change of control, as defined in the Articles Supplementary designating the Series A Preferred Stock (the “Articles Supplementary”). Upon such change in control, the Company may redeem, at its election, the Series A Preferred Stock at a redemption price of $25.00 per share plus any accumulated and unpaid dividends up to, but excluding the date of redemption, and in limited circumstances, the holders of preferred stock shares may convert some or all of their Series A Preferred Stock into shares of the Company’s common stock at conversion rates set forth in the Articles Supplementary.

See Note 14, “Share Repurchases” for the Company’s Series A Preferred Stock repurchase activity.

DIVIDENDS

The Company elected to be taxed as a REIT for U.S. federal income tax purposes under the Code commencing with its taxable year ended December 31, 2020. In order to maintain its qualification as a REIT, the Company must annually distribute, at a minimum, an amount equal to 90% of its taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, and must distribute 100% of its taxable income (including net capital gains) to eliminate U.S. federal income taxes payable by the Company. Because taxable income differs from cash flow from operations due to non-cash revenues and expenses (such as depreciation and other items), in certain circumstances, the

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Company may generate operating cash flow in excess of its dividends, or alternatively, may elect to make dividend payments in excess of operating cash flows.

The following table outlines dividends declared and paid for each issuance of CTO’s stock during the three and nine months ended September 30, 2024 and 2023 (in thousands, except per share data):


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Series A Preferred Stock
Dividends	$	1,878	$	1,195	$	4,936	$	3,585
Per Share	$	0.40	$	0.40	$	1.20	$	1.20

Common Stock
Dividends	$	11,030	$	8,544	$	28,339	$	25,744
Per Share	$	0.38	$	0.38	$	1.14	$	1.14

NOTE 13. COMMON STOCK AND EARNINGS PER SHARE

Basic earnings per common share is computed by dividing net income (loss) attributable to common stockholders during the period by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is based on the assumption of the vesting of restricted stock at the beginning of each period using the treasury stock method at average cost for the periods. Effective as of January 1, 2022, diluted earnings per common share also reflects the 2025 Notes (hereinafter defined) on an if-converted basis.

The following is a reconciliation of basic and diluted earnings per common share for each of the periods presented (in thousands, except share and per share data):


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Basic and Diluted Earnings:
Net Income (Loss) Attributable to Common Stockholders, Used in Basic EPS	$	4,349	$	1,491	$	8,316	$	(5,092)
Add Back: Effect of Dilutive Interest Related to 2025 Notes ⁽¹⁾		—		—		—		—
Net Income (Loss) Attributable to Common Stockholders, Used in Diluted EPS	$	4,349	$	1,491	$	8,316	$	(5,092)

Basic and Diluted Shares:
Weighted Average Shares Outstanding, Basic		25,445,411		22,484,561		23,601,389		22,556,642
Common Shares Applicable to Unvested Restricted Stock Using the Treasury Stock Method		76,338		—		23,980		—
Common Shares Applicable to Dilutive Effect of 2025 Notes ⁽²⁾		—		—		—		—
Weighted Average Shares Outstanding, Diluted		25,521,749		22,484,561		23,625,369		22,556,642

Per Share Information:
Net Income (Loss) Attributable to Common Stockholders
Basic and Diluted	$	0.17	$	0.07	$	0.35	$	(0.23)

⁽¹⁾

As applicable, includes interest expense, amortization of discount, amortization of fees, and other changes in net income or loss that would result from the assumed conversion of the 2025 Convertible Senior Notes effective January 1, 2022 due to the implementation of ASU 2020-06 which requires presentation on an if-converted basis. For the three and nine months ended September 30, 2024, a total of $0.5 million and $1.6 million of interest was not included, respectively, as the impact of the 2025 Notes, if-converted, would have been antidilutive to net income attributable to common stockholders for the respective periods. For the three and nine months ended September 30, 2023, a total of $0.5 million and $1.6 million

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of interest was not included, respectively, as the impact of the 2025 Notes, if-converted, would have been antidilutive to net income (loss) attributable to common stockholders for the respective periods.

⁽²⁾

A total of 3.7 million and 3.6 million shares representing the dilutive impact of the 2025 Notes, upon adoption of ASU 2020-06 effective January 1, 2022, were not included in the computation of diluted net income per share attributable to common stockholders for the three and nine months ended September 30, 2024, respectively, because they were antidilutive to net income attributable to common stockholders for the respective periods. A total of 3.4 million and 3.3 million shares, representing the dilutive impact of the 2025 Notes, upon adoption of ASU 2020-06 effective January 1, 2022, were not included in the computation of diluted net income (loss) attributable to common stockholders for each of the three and nine month periods ended September 30, 2023, respectively, because they were antidilutive to net income (loss) attributable to common stockholders for the respective periods.

There were 76,338 and 23,980 potentially dilutive shares related to the Company’s restricted stock for the three and nine months ended September 30, 2024. There were no potentially dilutive securities for the three and nine months ended September 30, 2023 related to the Company’s stock options and restricted stock. The effect of 36,307 dilutive restricted stock units were not included for the nine months ended September 30, 2023, as the effect would be anti-dilutive.

NOTE 14. SHARE REPURCHASES

COMMON STOCK REPURCHASE PROGRAM

In February 2020, the Company’s Board approved a $10.0 million common stock repurchase program (the “$10.0 Million Common Stock Repurchase Program”). During the year ended December 31, 2020, the Company repurchased 265,695 shares of its common stock on the open market for a total cost of $4.1 million, or an average price per share of $15.43. During the year ended December 31, 2021, the Company repurchased 121,659 shares of its common stock on the open market for a total cost of $2.2 million, or an average price per share of $18.16. During the year ended December 31, 2022, the Company repurchased 145,724 shares of its common stock on the open market for a total cost of $2.8 million, or an average price per share of $19.15. No repurchases were made pursuant to the $10.0 Million Common Stock Repurchase Program during the year ended December 31, 2023.

On February 16, 2023, the Company’s Board of Directors approved a common stock repurchase program (the “February 2023 $5.0 Million Common Stock Repurchase Program”), which eliminated the unutilized portion of the $10.0 Million Common Stock Repurchase Program. Pursuant to the February 2023 $5.0 Million Common Stock Repurchase Program, the Company was authorized to repurchase shares of its common stock for a total purchase price of up to $5.0 million. During the three months ended March 31, 2023, the Company repurchased 303,354 shares of its common stock on the open market for a total cost of $5.0 million, or an average price per share of $16.48, pursuant to the February 2023 $5.0 Million Common Stock Repurchase Program. Accordingly, as of March 31, 2023, no shares of the Company’s common stock remained available for repurchase under the February 2023 $5.0 Million Common Stock Repurchase Program.

On April 25, 2023, the Company’s Board of Directors approved a common stock repurchase program, (the “April 2023 $5.0 Million Common Stock Repurchase Program”). Pursuant to the April 2023 $5.0 Million Common Stock Repurchase Program, the Company was authorized to repurchase shares of its common stock for a total purchase price of up to $5.0 million. During the year ended December 31, 2023, the Company repurchased 62,015 shares of its common stock on the open market for a total cost of $1.0 million, or an average price per share of $15.72. The April 2023 $5.0 Million Common Stock Repurchase Program was terminated in connection with the establishment of the December 2023 $5.0 Million Common Stock Repurchase Program (hereinafter defined).

On December 12, 2023, the Company’s Board of Directors approved a common stock repurchase program, which is expected to be in effect until the approved dollar amount has been used to repurchase shares (the “December 2023 $5.0 Million Common Stock Repurchase Program”). Pursuant to the December 2023 $5.0 Million Common Stock Repurchase Program, the Company may repurchase shares of its common stock for a total purchase price of up to $5.0 million. Shares may be purchased under the December 2023 $5.0 Million Common Stock Repurchase Program in open market transactions, including through block purchases, through privately negotiated transactions or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The December 2023 $5.0 Million Common Stock Repurchase Program does not obligate the Company to acquire any particular amount of shares of its common stock and may be modified or suspended. During the nine months ended September 30, 2024, the Company repurchased 40,726 shares of its common stock on the open market for a total cost of $0.7 million, or an average price per share of $16.28, pursuant to the December 2023 $5.0 Million Common Stock Repurchase Program, leaving $4.3 million remaining of the December 2023 $5.0 Million Common Stock Repurchase Program as of September 30, 2024.

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SERIES A PREFERRED STOCK REPURCHASE PROGRAM

On February 16, 2023, the Company’s Board of Directors approved a Series A Preferred Stock repurchase program, which is expected to be in effect until the approved dollar amount has been used to repurchase shares (the “Series A Preferred Stock Repurchase Program”). Pursuant to the Series A Preferred Stock Repurchase Program, the Company may repurchase shares of its Series A Preferred Stock for a total purchase price of up to $3.0 million. Shares may be purchased under the Series A Preferred Stock Repurchase Program in open market transactions, including through block purchases, through privately negotiated transactions or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 under the Exchange Act. The Series A Preferred Stock Repurchase Program does not obligate the Company to acquire any particular amount of shares of its Series A Preferred Stock and may be modified or suspended. The Company did not purchase any shares of its Series A Preferred Stock under the Series A Preferred Stock Repurchase Program during the nine months ended September 30, 2024. During the nine months ended September 30, 2023, the Company repurchased 6,794 shares of Series A Preferred Stock on the open market for a total cost of $0.1 million, or an average price per share of $18.55.

NOTE 15. LONG-TERM DEBT

As of September 30, 2024, the Company’s outstanding indebtedness, at face value, was as follows (in thousands):


	Face Value Debt		Maturity Date	Interest Rate		Wtd. Avg. Rate as of September 30, 2024
Credit Facility ⁽¹⁾	$	95,000	January 2027		SOFR + 0.10% + [1.25% - 2.20%]		5.82%
2026 Term Loan ⁽²⁾		65,000	March 2026		SOFR + 0.10% + [1.25% - 2.20%]		2.72%
2027 Term Loan ⁽³⁾		100,000	January 2027		SOFR + 0.10% + [1.25% - 2.20%]		2.80%
2028 Term Loan ⁽⁴⁾		100,000	January 2028		SOFR + 0.10% + [1.20% - 2.15%]		5.18%
2029 Term Loan ⁽⁵⁾		100,000	September 2029		SOFR + 0.10% + [1.20% - 2.15%]		4.68%
3.875% Convertible Senior Notes due 2025		51,034	April 2025		3.875%		3.88%
Mortgage Note Payable		17,800	August 2026		4.060%		4.06%
Total Long-Term Face Value Debt	$	528,834					4.28%

⁽¹⁾

Prior to September 30, 2024, the Company utilized interest rate swaps on $150.0 million of the Credit Facility balance to fix SOFR and achieve a weighted average fixed swap rate of 3.47% plus the 10 bps SOFR adjustment plus the applicable spread. Effective September 30, 2024, the Company redesignated $100.0 million of interest rate swaps to the 2029 Term Loan. Accordingly, as of September 30, 2024, the Company utilized interest rate swaps on $50.0 million of the Credit Facility balance to fix SOFR and achieve a weighted average fixed swap rate of 3.85% plus the 10 bps SOFR adjustment plus the applicable spread.

⁽²⁾ The Company utilized interest rate swaps on the $65.0 million 2026 Term Loan balance to fix SOFR and achieve a weighted average fixed swap rate of 1.27% plus the 10 bps SOFR adjustment plus the applicable spread.

⁽³⁾	The Company utilized interest rate swaps on the $100.0 million 2027 Term Loan balance to fix SOFR and achieve a fixed swap rate of 1.35% plus the 10 bps SOFR adjustment plus the applicable spread.

⁽⁴⁾	The Company utilized interest rate swaps on the $100.0 million 2028 Term Loan balance to fix SOFR and achieve a weighted average fixed swap rate of 3.78% plus the 10 bps SOFR adjustment plus the applicable spread.

⁽⁵⁾	The Company utilized interest rate swaps on the $100.0 million 2029 Term Loan balance to fix SOFR and achieve a weighted average fixed swap rate of 3.28% plus the 10 bps SOFR adjustment plus the applicable spread.

Credit Facility. The Credit Facility, with Bank of Montreal (“BMO”) as the administrative agent for the lenders thereunder, is unsecured with regard to our income property portfolio but is guaranteed by certain wholly owned subsidiaries of the Company. The Credit Facility bank group is led by BMO and also includes Truist Bank and Wells Fargo. On September 7, 2017, the Company executed the second amendment and restatement of the Credit Facility (the “2017 Amended Credit Facility” and, as amended, the “Credit Agreement”). As a result of the March 2021 Revolver Amendment and the Eighth Amendment, both as defined below, The Huntington National Bank, PNC Bank, National Association, and Regions Bank, were added as lenders to the Company’s Credit Facility.

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On May 24, 2019, the Company executed the second amendment to the 2017 Amended Credit Facility (the “May 2019 Revolver Amendment”). As a result of the May 2019 Revolver Amendment, the Credit Facility had a total borrowing capacity of $200.0 million with the ability to increase that capacity up to $300.0 million during the term, subject to lender approval. The Credit Facility provides the lenders with a security interest in the equity of the Company subsidiaries that own the properties included in the borrowing base. The indebtedness outstanding under the Credit Facility accrues interest at a rate ranging from SOFR plus 0.10% plus 125 basis points to SOFR plus 0.10% plus 220 basis points based on the total balance outstanding under the Credit Facility as a percentage of the total asset value of the Company, as defined in the 2017 Amended Credit Facility, as amended by the Eighth Amendment. The Credit Facility also accrues a fee of 15 to 25 basis points for any unused portion of the borrowing capacity based on whether the unused portion is greater or less than 50% of the total borrowing capacity. Pursuant to the Eighth Amendment, the Credit Facility matures on January 31, 2027, with the ability to extend the term for 1 year.

On November 26, 2019, the Company entered into the third amendment to the 2017 Amended Credit Facility (the “November 2019 Revolver Amendment”), which further amends the 2017 Amended Credit Facility. The November 2019 Revolver Amendment included, among other things, an adjustment of certain financial maintenance covenants, including a temporary reduction of the minimum fixed charge coverage ratio to allow the Company to redeploy the proceeds received from the sale of certain income properties to PINE, and an increase in the maximum amount the Company may invest in stock and stock equivalents of real estate investment trusts to allow the Company to invest in PINE’s common stock and OP Units.

On July 1, 2020, the Company entered into the fourth amendment to the 2017 Amended Credit Facility (the “July 2020 Revolver Amendment”) whereby the tangible net worth covenant was adjusted to be more reflective of market terms. The July 2020 Revolver Amendment was effective as of March 31, 2020.

On November 12, 2020, the Company entered into the fifth amendment to the 2017 Amended Credit Facility (the “November 2020 Revolver Amendment”). The November 2020 Revolver Amendment provided that, among other things, (i) the Company must comply with certain adjusted additional financial maintenance requirements, including (x) a new restricted payments covenant which limits the type and amount of cash distributions that may be made by the Company and (y) an adjusted fix charges ratio, which now excludes certain onetime expenses for purposes of calculation and (ii) the Company must, from and after the date that the Company elects to qualify as a REIT, maintain its status as a REIT.

On March 10, 2021, the Company entered into the sixth amendment to the 2017 Amended Credit Facility (the “March 2021 Revolver Amendment”). The March 2021 Revolver Amendment included, among other things, (i) increase of the revolving credit commitment from $200.0 million to $210.0 million, (ii) addition of a term loan in the aggregate amount of $50.0 million (the “2026 Term Loan”), (iii) updates to certain financing rate provisions provided therein, and (iv) joinder of The Huntington National Bank as a 2026 Term Loan lender and Credit Facility lender. The March 2021 Revolver Amendment also includes accordion options that allow the Company to request additional 2026 Term Loan lender commitments up to a total of $150.0 million and additional Credit Facility lender commitments up to a total of $300.0 million. During the six months ended June 30, 2021, the Company exercised the 2026 Term Loan accordion option for $15.0 million, increasing total lender commitments to $65.0 million.

On November 5, 2021, the Company entered into the seventh amendment to the 2017 Amended Credit Facility (the “November 2021 Revolver Amendment”). The November 2021 Revolver Amendment included, among other things, (i) addition of a term loan in the aggregate amount of $100.0 million (the “2027 Term Loan”) and (ii) joinder of KeyBank National Association, Raymond James Bank, and Synovus Bank as 2027 Term Loan lenders. The November 2021 Revolver Amendment also includes an accordion option that allows the Company to request additional term loan lender commitments up to a total of $400.0 million in the aggregate.

On September 20, 2022, the Company entered into the eighth amendment to the 2017 Amended Credit Facility (the “Eighth Amendment”), which includes among other things: (i) the origination of a term loan, in the amount of $100.0 million (the “2028 Term Loan”), (ii) the increase of the revolving credit commitment from up to $210.0 million to up to $300.0 million, (iii) an accordion option that allows the Company to request additional revolving loan commitments and additional term loan commitments, provided, (a) the aggregate amount of revolving loan commitments shall not exceed $750,000,000 and (b) the aggregate amount of term loan commitments shall not exceed $500,000,000, (iv) an extension of the maturity date to January 31, 2027, (v) a sustainability-linked pricing component pursuant to which the Company will receive interest rate reductions based on its performance against certain sustainability performance targets, (vi) the release of the Pledge Collateral, as defined in the Eighth Amendment, and (vii) the joinder of PNC Bank, National

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Association (“PNC”) as a Term Loan Lender, as defined in the Credit Agreement, and PNC and Regions Bank as Revolving Lenders, as defined in the Credit Agreement.

On December 20, 2023, the Company entered into the ninth amendment to the 2017 Amended Credit Facility (the “Ninth Amendment”), which revises certain non-monetary limitations as described in more detail in the Ninth Amendment.

At September 30, 2024, the current commitment level under the Credit Facility was $300.0 million, and the undrawn commitment under the Credit Facility totaled $205.0 million. As of September 30, 2024, the Credit Facility had a $95.0 million balance outstanding.

The Credit Facility is subject to customary restrictive covenants including, but not limited to, limitations on the Company’s ability to: (a) incur indebtedness; (b) make certain investments; (c) incur certain liens; (d) engage in certain affiliate transactions; and (e) engage in certain major transactions such as mergers. In addition, the Company is subject to various financial maintenance covenants including, but not limited to, a maximum indebtedness ratio, a maximum secured indebtedness ratio, and a minimum fixed charge coverage ratio. The Credit Facility also contains affirmative covenants and events of default including, but not limited to, a cross default to the Company’s other indebtedness and upon the occurrence of a change in control. The Company’s failure to comply with these covenants or the occurrence of an event of default could result in acceleration of the Company’s debt and other financial obligations under the Credit Facility.

2029 Term Loan. On September 30, 2024, the Company and certain subsidiaries of the Company entered into a credit agreement with KeyBank National Association, as administrative agent, and certain other lenders named therein, for a term loan (the “2029 Term Loan”) in an aggregate principal amount of $100.0 million with a maturity of five years. The 2029 Term Loan bears interest at SOFR plus a spread based on the Company’s leverage ratio. The Company applied existing SOFR swap agreements, previously used to fix the interest rate on $100.0 million of borrowings under the Company’s revolving credit facility, to the 2029 Term Loan resulting in an initial effective fixed interest rate on the 2029 Term Loan of 4.68%.

Mortgage Notes Payable. On March 3, 2022, in connection with the acquisition of Price Plaza Shopping Center, the Company assumed an existing $17.8 million secured fixed-rate mortgage note payable, which bears interest at a fixed rate of 4.06% and matures in August 2026.

Convertible Debt. The Company had an initial aggregate principal amount of $75.0 million of 3.875% Convertible Notes (the “2025 Notes”). During the year ended December 31, 2020, the Company repurchased $12.5 million aggregate principal amount of 2025 Notes at a $2.6 million discount, resulting in a gain on extinguishment of debt of $1.1 million. During the year ended December 31, 2021, the Company repurchased $11.4 million aggregate principal amount of 2025 Notes at a $1.6 million premium, resulting in a loss on extinguishment of debt of $2.9 million. Following these repurchases, $51.0 million aggregate principal amount of the 2025 Notes remains outstanding at September 30, 2024.

On February 16, 2023, the Company’s Board of Directors approved a 2025 Notes repurchase program, which is expected to be in effect until the approved dollar amount has been used to repurchase 2025 Notes (the “2025 Notes Repurchase Program”). Pursuant to the 2025 Notes Repurchase Program, the Company may repurchase, in one or more transactions, 2025 Notes in the aggregate principal amount of not more than $4.74 million. The 2025 Notes Repurchase Program does not obligate the Company to acquire any particular amount of 2025 Notes and may be modified or suspended. The Company was not active under the 2025 Notes Repurchase Program during the nine months ended September 30, 2024 and 2023.

The 2025 Notes represent senior unsecured obligations of the Company and pay interest semi-annually in arrears on each April 15th and October 15th, commencing on April 15, 2020, at a rate of 3.875% per annum. The 2025 Notes mature on April 15, 2025 and may not be redeemed by the Company prior to the maturity date. The conversion rate for the 2025 Notes was initially 12.7910 shares of the Company’s common stock per $1,000 of principal of the 2025 Notes (equivalent to an initial conversion price of $78.18 per share of the Company’s common stock). The initial conversion price of the 2025 Notes represented a premium of 20% to the $65.15 closing sale price of the Company’s common stock on the NYSE American on January 29, 2020. If the Company’s Board increases the quarterly dividend above the $0.13 per share in place at issuance, the conversion rate is adjusted with each such increase in the quarterly dividend amount. After the third quarter 2024 dividend, the conversion rate is equal to 71.3007 shares of common stock for each $1,000 principal amount of 2025 Notes, which represents an adjusted conversion price of $14.03 per share of common stock. At the maturity date, the Company is required to settle the 2025 Notes in cash. Should certain corporate transactions or events occur prior to the

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stated maturity date, the Company will increase the conversion rate for a holder that elects to convert its 2025 Notes in connection with such corporate transaction or event.

The conversion rate is subject to adjustment in certain circumstances. Holders may not surrender their 2025 Notes for conversion prior to January 15, 2025 except upon the occurrence of certain conditions relating to the closing sale price of the Company’s common stock, the trading price per $1,000 principal amount of 2025 Notes, or specified corporate events including a change in control of the Company. The Company may not redeem the 2025 Notes prior to the stated maturity date and no sinking fund is provided for the 2025 Notes. In the event a holder surrenders its 2025 Notes for conversion, the Company may, at its election, settle the conversion in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock. The Company’s ultimate election regarding settlement of 2025 Notes upon any conversion thereof will be made based on a variety of factors, including but not limited to economic and market conditions, and the Company’s liquidity. At time of issuance, in accordance with U.S. GAAP, the 2025 Notes were accounted for as a liability with a separate equity component recorded for the conversion option. The equity component was eliminated on January 1, 2022 with the 2025 Notes Adjustment.

As of September 30, 2024, the unamortized debt discount of our 2025 Notes was $0.1 million, which represents the cash component of the discount.

Long-term debt consisted of the following (in thousands):


	September 30, 2024				December 31, 2023
	Total		Due Within One Year		Total		Due Within One Year
Credit Facility	$	95,000	$	—	$	163,000	$	—
2026 Term Loan		65,000		—		65,000		—
2027 Term Loan		100,000		—		100,000		—
2028 Term Loan		100,000		—		100,000		—
2029 Term Loan		100,000		—		—		—
3.875% Convertible Senior Notes, net of Discount		50,949		—		50,830		—
Mortgage Note Payable		17,800		—		17,800		—
Financing Costs, net of Accumulated Amortization		(1,911)		—		(1,260)		—
Total Long-Term Debt	$	526,838	$	—	$	495,370	$	—

Payments applicable to reduction of principal amounts as of September 30, 2024 will be required as follows (in thousands):


As of September 30, 2024	Amount
Remainder of 2024	$	—
2025		51,034
2026		82,800
2027		195,000
2028		100,000
2029		100,000
2030 and Thereafter		—
Total Long-Term Debt - Face Value	$	528,834

The carrying value of long-term debt as of September 30, 2024 consisted of the following (in thousands):


	Total
Current Face Amount	$	528,834
Unamortized Discount on Convertible Debt		(85)
Financing Costs, net of Accumulated Amortization		(1,911)
Total Long-Term Debt	$	526,838

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In addition to the $1.9 million of financing costs, net of accumulated amortization included in the table above, as of September 30, 2024, the Company also had financing costs, net of accumulated amortization related to the Credit Facility of $1.3 million which is included in other assets on the consolidated balance sheets. These costs are amortized on a straight-line basis over the term of the Credit Facility and are included in interest expense in the Company’s accompanying consolidated statements of operations.

The following table reflects a summary of interest expense incurred and paid during the three and nine months ended September 30, 2024 and 2023 (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Interest Expense	$	5,348	$	6,036	$	15,888	$	15,318
Amortization of Deferred Financing Costs		245		242		758		724
Amortization of Discount on Convertible Notes		39		40		119		119
Total Interest Expense	$	5,632	$	6,318	$	16,765	$	16,161

Total Interest Paid ⁽¹⁾	$	4,986	$	5,589	$	15,640	$	15,178

⁽¹⁾	^{Net of capitalized interest of}^$0.1^{million during the three and nine months ended September 30, 2024 and capitalized interest of}^$0.1^{million and}^$0.2^{million during the three and nine months ended September 30, 2023, respectively.}

The Company was in compliance with all of its debt covenants as of September 30, 2024 and December 31, 2023.

NOTE 16. INTEREST RATE SWAPS

The Company has entered into interest rate swap agreements to hedge against changes in future cash flows resulting from fluctuating interest rates related to the below noted borrowings. The interest rate agreements were 100% effective during the three and nine months ended September 30, 2024 and 2023. Accordingly, the changes in fair value on the interest rate swaps have been classified in accumulated other comprehensive income. The fair value of the interest rate swap agreements are included in other assets and accrued and other liabilities, respectively, on the consolidated balance sheets. Information related to the Company’s interest rate swap agreements as of September 30, 2024 is presented below (in thousands):


Hedged Item ⁽¹⁾	Effective Date	Maturity Date	Rate	Amount		Fair Value as of September 30, 2024
2026 Term Loan	3/29/2024	3/10/2026	1.44% + 0.10% + applicable spread	$	50,000	$	1,495
2026 Term Loan	8/31/2021	3/10/2026	0.70% + 0.10% + applicable spread	$	15,000	$	605
2026 Term Loan⁽²⁾	3/10/2026	3/10/2031	3.80% + 0.10% + applicable spread	$	40,000	$	(1,198)
2027 Term Loan	3/29/2024	1/31/2027	1.35% + 0.10% + applicable spread	$	100,000	$	4,499
2027 Term Loan⁽²⁾	1/31/2027	1/30/2032	3.75% + 0.10% + applicable spread	$	60,000	$	(1,515)
2028 Term Loan	9/30/2022	1/31/2028	3.78% + 0.10% + applicable spread	$	50,000	$	(836)
2028 Term Loan	9/30/2022	1/31/2028	3.78% + 0.10% + applicable spread	$	50,000	$	(843)
2028 Term Loan ⁽²⁾	1/31/2028	1/31/2033	3.81% + 0.10% + applicable spread	$	60,000	$	(1,356)
2029 Term Loan⁽³⁾	1/31/2023	1/31/2030	3.27% + 0.10% + applicable spread	$	50,000	$	(140)
2029 Term Loan⁽³⁾	1/31/2023	1/31/2030	3.26% + 0.10% + applicable spread	$	33,000	$	(79)
2029 Term Loan⁽³⁾	1/31/2023	1/31/2030	3.36% + 0.10% + applicable spread	$	17,000	$	(118)
Credit Facility	2/1/2024	1/31/2028	3.85% + 0.10% + applicable spread	$	50,000	$	(919)

⁽¹⁾	On September 30, 2022, the Company converted its existing interest rate swaps from 1-month LIBOR to SOFR.

⁽²⁾	The Company entered into forward swaps to further fix interest rates through periods that the Company reasonably expects to extend its current term loans.

⁽³⁾	Prior to September 30, 2024, these interest rate swaps were assigned to the Credit Facility. Effective September 30, 2024, these hedges were redesignated to the 2029 Term Loan.

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The use of interest rate swap agreements carries risks, including the risk that the counterparties to these agreements are not able to perform. To mitigate this risk, the Company enters into interest rate swap agreements with counterparties with high credit ratings and with major financial institutions with which the Company and its affiliates may also have other financial relationships. The Company does not currently anticipate that any of the counterparties to the Company’s interest rate swap agreements will fail to meet their obligations. As of September 30, 2024, there were no events of default related to the Company’s interest rate swap agreements.

NOTE 17. ACCRUED AND OTHER LIABILITIES

Accrued and other liabilities consisted of the following (in thousands):


	As of
	September 30, 2024		December 31, 2023
Accrued Property Taxes	$	8,044	$	2,090
Reserve for Tenant Improvements		1,386		1,168
Tenant Security Deposits		2,764		2,301
Accrued Construction Costs		691		1,170
Accrued Interest		1,091		773
Environmental Reserve		47		54
Cash Flow Hedge - Interest Rate Swaps		7,004		4,879
Operating Leases - Liability		320		417
Other		5,054		5,521
Total Accrued and Other Liabilities	$	26,401	$	18,373

Reserve for Tenant Improvements. In connection with recent acquisitions, the Company received an aggregate of $6.4 million from the sellers of certain properties for tenant improvement allowances, leasing commissions and other capital improvements. These amounts are included in accrued and other liabilities on the consolidated balance sheets. Through September 30, 2024, payments totaling $5.0 million were made leaving a remaining reserve for tenant improvements of $1.4 million.

NOTE 18. DEFERRED REVENUE

Deferred revenue consisted of the following (in thousands):


	As of
	September 30, 2024		December 31, 2023
Prepaid Rent	$	4,004	$	3,723
Interest Reserve from Commercial Loans and Investments		1,473		744
Tenant Contributions		694		733
Total Deferred Revenue	$	6,171	$	5,200

Interest Reserve from Commercial Loans and Investments. In connection with four of the Company’s commercial loan investments, the borrower has deposited interest and/or real estate tax reserves in accounts held by the Company. Those accounts balances are included in restricted cash on the Company’s consolidated balance sheets with the corresponding liability recorded in deferred revenue as seen above. Pursuant to each respective agreement, interest reserves are either (i) utilized to fund the monthly interest due on the loan or (ii) maintained throughout the term of the loan.

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NOTE 19. STOCK-BASED COMPENSATION

SUMMARY OF STOCK-BASED COMPENSATION

A summary of share activity for all equity classified stock compensation during the nine months ended September 30, 2024 is presented below.


Type of Award	Shares Outstanding at 1/1/2024		Granted Shares		Vested / Exercised Shares		Expired Shares		Forfeited Shares		Shares Outstanding at 9/30/2024
Equity Classified - Performance Share Awards - Peer Group Market Condition Vesting		237,375		100,391		(85,938)		—		(43,825)		208,003
Equity Classified - Three Year Vest Restricted Shares		216,357		107,191		(75,434)		—		(51,045)		197,069
Total Shares		453,732		207,582		(161,372)		—		(94,870)		405,072

Amounts recognized in the financial statements for stock-based compensation are as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Total Cost of Share-Based Plans Charged Against Income	$	750	$	868	$	2,887	$	2,802

EQUITY-CLASSIFIED STOCK COMPENSATION

Performance Share Awards – Peer Group Market Condition Vesting

Performance shares have been granted to certain employees under the 2010 Plan. The performance share awards entitle the recipient to receive, upon the vesting thereof, shares of common stock of the Company equal to between 0% and 150% of the number of performance shares awarded. The number of shares of common stock ultimately received by the award recipient is determined based on the Company’s total stockholder return as compared to the total stockholder return of a certain peer group during a three-year performance period. The Company granted a total of 100,391 performance shares during the nine months ended September 30, 2024.

The Company used a Monte Carlo simulation pricing model to determine the fair value of its awards that are based on market conditions. The determination of the fair value of market condition-based awards is affected by the Company’s stock price as well as assumptions regarding a number of other variables. These variables include expected stock price volatility over the requisite performance term of the awards, the relative performance of the Company’s stock price and stockholder returns to companies in its peer group, annual dividends, and a risk-free interest rate assumption. Compensation cost is recognized regardless of the achievement of the market conditions, provided the requisite service period is met.

As of September 30, 2024, there was $2.0 million of unrecognized compensation cost, adjusted for estimated forfeitures, related to the non-vested performance share awards, which will be recognized over a remaining weighted average period of 1.8 years.

A summary of the activity for these awards during the nine months ended September 30, 2024 is presented below:


Performance Shares With Market Conditions	Shares		Wtd. Avg. Fair Value Per Share
Non-Vested at January 1, 2024		237,375	$	18.08
Granted		100,391	$	15.28
Vested		(85,938)	$	15.99
Expired		—	$	—
Forfeited		(43,825)	$	17.67
Non-Vested at September 30, 2024		208,003	$	17.68

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Restricted Shares

Restricted shares have been granted to certain employees under the 2010 Plan. Certain of the restricted shares vest on each of the first, second, and third anniversaries of January 28 of the applicable year provided the grantee is an employee of the Company on those dates. Certain other restricted share awards, granted on July 1, 2022, vest entirely on the third anniversary of the grant date, or July 1, 2025, provided the grantee is an employee of the Company on that date. In addition, any unvested portion of the restricted shares will vest upon a change in control. The Company granted a total of 107,191 shares of restricted Company common stock during the nine months ended September 30, 2024.

The Company’s determination of the fair value of the restricted stock awards was calculated by multiplying the number of shares issued by the Company’s stock price at the grant date. Compensation cost is recognized on a straight-line basis over the applicable vesting period.

As of September 30, 2024, there was $2.1 million of unrecognized compensation cost, adjusted for estimated forfeitures, related to the non-vested restricted share awards, which will be recognized over a remaining weighted average period of 1.8 years.

A summary of the activity for these awards during the nine months ended September 30, 2024 is presented below:


Non-Vested Restricted Shares	Shares		Wtd. Avg. Fair Value Per Share
Non-Vested at January 1, 2024		216,357	$	19.07
Granted		107,191	$	16.31
Vested		(75,434)	$	17.80
Expired		—	$	—
Forfeited		(51,045)	$	18.77
Non-Vested at September 30, 2024		197,069	$	18.12

NON-EMPLOYEE DIRECTOR STOCK COMPENSATION

Each member of the Company’s Board of Directors has the option to receive his or her annual retainer and meeting fees in shares of Company common stock rather than cash. The number of shares awarded to the directors making such election is calculated quarterly by dividing (i) the sum of (A) the amount of the quarterly retainer payment due to such director plus (B) meeting fees earned by such director during the quarter, by (ii) the trailing 20-day average price of the Company’s common stock as of the last day of the quarter, rounded down to the nearest whole number of shares.

Each non-employee director serving as of the beginning of each calendar year shall receive an annual award of the Company’s common stock. The value of such award totaled $62,500 and $35,000 for the nine months ended September 30, 2024 and 2023, respectively, (the “Annual Award”). The number of shares awarded is calculated based on the trailing 20-day average price of the Company’s common stock as of the date two business days prior to the date of the award, rounded down to the nearest whole number of shares. Non-employee directors do not receive meeting fees, but do receive additional retainers for service on Board committees, as set forth in the Company’s Non-Employee Director Compensation Policy available on the Company’s website (www.ctoreit.com).

During the nine months ended September 30, 2024 and 2023, the expense recognized for the value of the Company’s common stock received by non-employee directors totaled $0.6 million, or 33,629 shares, and $0.4 million, or 21,247 shares, respectively. The expense recognized includes the Annual Award received during the first quarter of each respective year, which totaled $0.3 million and $0.2 million during the nine months ended September 30, 2024 and 2023, respectively.

NOTE 20. INCOME TAXES

The Company elected to be taxed as a REIT for U.S. federal income tax purposes, commencing with its taxable year ended December 31, 2020. The Company believes that, commencing with such taxable year, it has been organized and has operated in such a manner as to qualify for taxation as a REIT under the U.S. federal income tax laws. The Company intends to continue to operate in such a manner. As a REIT, the Company will be subject to U.S. federal and state income

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taxation at corporate rates on its net taxable income; the Company, however, may claim a deduction for the amount of dividends paid to its stockholders. Amounts distributed as dividends by the Company will be subject to taxation at the stockholder level only. While the Company must distribute at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, to qualify as a REIT, the Company intends to distribute all of its net taxable income. The Company is allowed certain other non-cash deductions or adjustments, such as depreciation expense, when computing its REIT taxable income and distribution requirement. These deductions permit the Company to reduce its dividend payout requirement under U.S. federal income tax laws. Certain states may impose minimum franchise taxes. To comply with certain REIT requirements, the Company holds certain of its non-REIT assets and operations through TRSs and subsidiaries of TRSs, which are subject to applicable U.S. federal, state and local corporate income tax on their taxable income. For the taxable year ended December 31, 2023, the Company held a total of two TRSs, each subject to taxation and the separate filing of its corporate income tax returns. As of January 1, 2024, the Company consolidated its TRSs into one TRS subject to taxation and the filing of a single corporate income tax return.

As a result of the Company’s election to be taxed as a REIT, during the year ended December 31, 2020, an $82.5 million deferred tax benefit was recorded to de-recognize the deferred tax assets and liabilities associated with the entities included in the REIT. A significant portion of the deferred tax benefit recognized related to the de-recognition of deferred tax liabilities resulting from Internal Revenue Code Section 1031 like-kind exchanges (“1031 Exchanges”). The Company will be subject to corporate income taxes related to assets held by it that are sold during the 5-year period following the date of conversion to the extent such sold assets had a built-in gain as of January 1, 2020. The Company has disposed of certain, primarily single-tenant, REIT assets after the REIT conversion within the 5-year period. All such sales were completed using 1031 Exchanges or other deferred tax structures to mitigate the built-in gain tax liability of conversion.

NOTE 21. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time, the Company may be a party to certain legal proceedings, incidental to the normal course of its business. While the outcome of the legal proceedings cannot be predicted with certainty, the Company does not expect that these proceedings will have a material effect upon our financial condition or results of operations.

Contractual Commitments – Expenditures

The Company has committed to fund the following capital improvements. The improvements, which are related to several properties, are estimated to be generally completed within twelve months. These commitments, as of September 30, 2024, are as follows (in thousands):


	As of September 30, 2024
Total Commitment ⁽¹⁾	$	22,414
Less Amount Funded		(2,947)
Remaining Commitment	$	19,467

⁽¹⁾ Commitment includes tenant improvements, leasing commissions, rebranding, facility expansion and other capital improvements.

NOTE 22. BUSINESS SEGMENT DATA

The Company operates in four primary business segments: income properties, management services, commercial loans and investments, and real estate operations. Our income property operations consist of income-producing properties, and our business plan is focused on investing in additional income-producing properties. Our income property operations accounted for 89.3% and 89.7% of our identifiable assets as of September 30, 2024 and December 31, 2023, and 89.0% and 88.8% of our consolidated revenues for the nine months ended September 30, 2024 and 2023, respectively. Our management fee income consists primarily of the management fees earned for the management of PINE as well as from the Portfolio Management Agreement and the Subsurface Management Agreement. As of September 30, 2024, our commercial loans and investments portfolio consisted of four commercial loan investments and two preferred equity investments which are classified as commercial loan investments. Our real estate operations consist of revenues generated from the sale of and royalty income related to our interests in subsurface oil, gas, and mineral rights, and the sale of mitigation credits.

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The Company evaluates segment performance based on operating income. The Company’s reportable segments are strategic business units that offer different products. They are managed separately because each segment requires different management techniques, knowledge, and skills.

Information about the Company’s operations in different segments for the three and nine months ended September 30, 2024 and 2023 is as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Revenues:
Income Properties	$	28,528	$	25,183	$	79,029	$	70,373
Management Fee Income		1,124		1,094		3,360		3,294
Interest Income From Commercial Loans and Investments		1,615		1,114		4,407		2,965
Real Estate Operations		538		1,079		1,981		2,602
Total Revenues	$	31,805	$	28,470	$	88,777	$	79,234
Operating Income:
Income Properties	$	20,731	$	18,123	$	56,399	$	49,490
Management Fee Income		1,124		1,094		3,360		3,294
Interest Income From Commercial Loans and Investments		1,615		1,114		4,407		2,965
Real Estate Operations		179		927		544		1,726
General and Corporate Expense		(17,296)		(15,108)		(47,451)		(43,307)
Provision for Impairment		(538)		(929)		(653)		(1,408)
Gain (Loss) on Disposition of Assets		(855)		2,464		8,308		3,565
Total Operating Income	$	4,960	$	7,685	$	24,914	$	16,325
Depreciation and Amortization:
Income Properties	$	13,204	$	11,651	$	35,650	$	32,769
Corporate and Other		17		18		51		45
Total Depreciation and Amortization	$	13,221	$	11,669	$	35,701	$	32,814
Capital Expenditures:
Income Properties	$	138,850	$	11,010	$	216,969	$	100,333
Commercial Loans and Investments		53,176		50		60,206		17,477
Corporate and Other		2		4		17		255
Total Capital Expenditures	$	192,028	$	11,064	$	277,192	$	118,065

Identifiable assets of each segment as of September 30, 2024 and December 31, 2023 are as follows (in thousands):


	As of
	September 30, 2024		December 31, 2023
Identifiable Assets:
Income Properties	$	1,049,915	$	887,345
Management Services		1,371		1,395
Commercial Loans and Investments		103,358		62,099
Real Estate Operations		889		2,343
Corporate and Other		20,591		36,486
Total Assets	$	1,176,124	$	989,668

Operating income represents income from operations before interest expense, investment income, and income taxes. General and corporate expenses are an aggregate of general and administrative expenses and depreciation and amortization expense. Identifiable assets by segment are those assets that are used in the Company’s operations in each segment. Real Estate Operations primarily includes the identifiable assets of the Company’s Subsurface Interests and mitigation credits. Corporate and other assets consist primarily of cash and restricted cash, property, plant, and equipment related to the other operations, as well as the general and corporate operations. The management services and real estate operations segments had no capital expenditures during the nine months ended September 30, 2024 or 2023.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

When we refer to “we,” “us,” “our,” or “the Company,” we mean CTO Realty Growth, Inc. and its consolidated subsidiaries. References to “Notes to Financial Statements” refer to the Notes to the Consolidated Financial Statements of CTO Realty Growth, Inc. included in this Quarterly Report on Form 10-Q.

Forward-Looking Statements

Statements contained in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Also, when the Company uses any of the words “anticipate,” “assume,” “believe,” “estimate,” “expect,” “intend,” or similar expressions, the Company is making forward-looking statements. Management believes the expectations reflected in such forward-looking statements are based upon present expectations and reasonable assumptions. However, the Company’s actual results could differ materially from those set forth in the forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise such forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law. The risks and uncertainties that could cause our actual results to differ materially from those presented in our forward-looking statements, include, but are not limited to, the following:

•

we are subject to risks related to the ownership of commercial real estate that could affect the performance and value of our properties;

•

our business is dependent upon our tenants successfully operating their businesses, and their failure to do so could materially and adversely affect us;

•

competition that traditional retail tenants face from e-commerce retail sales, or the integration of brick and mortar stores with e-commerce retail operators, could adversely affect our business;

•

we operate in a highly competitive market for the acquisition of income properties and more established entities or other investors may be able to compete more effectively for acquisition opportunities than we can;

•we may be unable to successfully execute on asset acquisitions or dispositions;

•

the loss of revenues from our income property portfolio or certain tenants would adversely impact our results of operations and cash flows;

•

our revenues include receipt of management fees and potentially incentive fees derived from our provision of management services to Alpine Income Property Trust, Inc. (“PINE”) and the loss or failure, or decline in the business or assets, of PINE could substantially reduce our revenues;

•

there are various potential conflicts of interest in our relationship with PINE, including that some of our executive officers and/or directors are also officers and/or directors of PINE, which could result in decisions that are not in the best interest of our stockholders;

•

a prolonged downturn in economic conditions could adversely impact our business, particularly with regard to our ability to maintain revenues from our income-producing assets;

•

a part of our investment strategy is focused on investing in commercial loans and investments which may involve credit risk or the risk that our borrowers will fail to pay scheduled contractual payments to us when due;

•

we may suffer losses when a borrower defaults on a loan and the value of the underlying collateral is less than the amount due;

•the Company’s real estate investments are generally illiquid;

•

if we are not successful in utilizing the Section 1031 like-kind exchange structure in deploying the proceeds from dispositions of income properties, or our Section 1031 like-kind exchange transactions are disqualified, we could incur significant taxes and our results of operations and cash flows could be adversely impacted;

•

the Company may be unable to obtain debt or equity capital on favorable terms, if at all, or additional borrowings may impact our liquidity or ability to monetize any assets securing such borrowings;

•

servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to service or pay our debt;

•

our operations and properties could be adversely affected in the event of natural disasters, pandemics, or other significant disruptions;

•

we may encounter environmental problems which require remediation or the incurrence of significant costs to resolve, which could adversely impact our financial condition, results of operations, and cash flows;

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•

failure to remain qualified as real estate investment trust (“REIT”) for U.S. federal income tax purposes would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distribution to stockholders;

•the risk that the REIT requirements could limit our financial flexibility;

•our limited experience operating as a REIT;

•

our ability to pay dividends consistent with the REIT requirements, and expectations as to timing and amounts of such dividends;

•the ability of our board of directors (the “Board”) to revoke our REIT status without stockholder approval;

•our exposure to changes in U.S. federal and state income tax laws, including changes to the REIT requirements;

•

general business and economic conditions, including unstable macroeconomic conditions due to, among other things, political unrest and economic uncertainty due to terrorism or war, inflation, rising interest rates and distress in the banking sector; and

•

an epidemic or pandemic (such as the COVID-19 pandemic), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, may precipitate or materially exacerbate one or more of the above-mentioned and/or other risks and may significantly disrupt or prevent us from operating our business in the ordinary course for an extended period.

The Company describes the risks and uncertainties that could cause actual results and events to differ materially in “Risk Factors” (Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023), “Quantitative and Qualitative Disclosures about Market Risk” (Part I, Item 3 of this Quarterly Report on Form 10-Q), and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” (Part I, Item 2 of this Quarterly Report on Form 10-Q).

OVERVIEW

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, 2024, we own and manage, sometimes utilizing third-party property management companies, 22 commercial real estate properties in seven states in the United States, comprising 4.6 million square feet of gross leasable space. In addition to our income property portfolio, as of September 30, 2024, our business included the following:

Management Services: A fee-based management business that is engaged in managing 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 nine months ended September 30, 2024, the Company sold its remaining mitigation credits. These credits were produced by the Company’s formerly owned mitigation bank. During the nine months ended September 30, 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, “Real Estate Operations”. As part of the Subsurface Interests sale, the Company entered into a management agreement with the buyer to provide ongoing management services (the “Subsurface Management Agreement”).

Investment in PINE: Our business also includes our investment in PINE. As of September 30, 2024, the fair value of our investment totaled $43.0 million, or 15.3% of PINE’s outstanding equity, including the units of limited partnership interest (“OP Units”) we hold in Alpine Income Property OP, LP (the “PINE Operating Partnership”), which are redeemable for cash, based upon the value of an equivalent number of shares of PINE common stock at the time of the redemption, or shares of PINE common stock on a one-for-one basis, at PINE’s election. Our investment in PINE generates investment income through the dividends distributed by PINE. In addition to the dividends we receive from PINE, our investment in PINE may benefit from any appreciation in PINE’s stock price, although no assurances can be provided that

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such appreciation will occur, the amount by which our investment will increase in value, or the timing thereof. Any dividends received from PINE are included in investment and other income (loss) on the accompanying consolidated statements of operations.

Our strategy for investing in income-producing properties is focused on factors including, but not limited to, long-term real estate fundamentals and target markets, including markets we believe to be faster growing, business-friendly markets exhibiting accommodative business tax policies, outsized relative job and population growth. We employ a methodology for evaluating targeted investments in income-producing properties which includes an evaluation of: (i) the attributes of the real estate (e.g. location, market demographics, comparable properties in the market, etc.); (ii) an evaluation of the existing tenant(s) (e.g. creditworthiness, property level sales, tenant rent levels compared to the market, etc.); (iii) other market-specific conditions (e.g. tenant industry, job and population growth in the market, local economy, etc.); and (iv) considerations relating to the Company’s business and strategy (e.g. strategic fit of the asset type, property management needs, ability to use a Section 1031 like-kind exchange structure, etc.).

We believe investment in income-producing assets provides attractive opportunities for generally stable cash flows and increased returns over the long run through potential capital appreciation. Our focus on acquiring income-producing investments includes a continual review of our existing income property portfolio to identify opportunities to recycle our capital through the sale of income properties based on, among other possible factors, the current or expected performance of the property and favorable market conditions. During the nine months ended September 30, 2024, the Company sold two income properties for an aggregate sales price of $38.0 million and aggregate gains on sale of $3.8 million. As a result of entering into the Exclusivity and Right of First Offer Agreement with PINE (the “ROFO Agreement”) which generally prevents us from investing in single-tenant net lease income properties, our income property investment strategy is focused on multi-tenant, primarily retail-oriented, properties. We may pursue this strategy by monetizing certain of our single-tenant properties, and should we do so, we would seek to utilize the 1031 like-kind exchange structure to preserve the tax-deferred gain on the original transaction(s) that pertains to the replacement asset.

Our current portfolio of 16 multi-tenant properties generates $85.8 million of revenue from annualized straight-line base lease payments and had a weighted average remaining lease term of 5.0 years as of September 30, 2024. Our current portfolio of 6 single-tenant income properties generates $5.6 million of revenues from annualized straight-line base lease payments and had a weighted average remaining lease term of 5.5 years as of September 30, 2024.

COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

Revenue

Total revenue for the three months ended September 30, 2024 is presented in the following summary and indicates the changes as compared to the three months ended September 30, 2023 (in thousands):


	Three Months Ended
Operating Segment	September 30, 2024		September 30, 2023		$ Variance		% Variance
Income Properties	$	28,528	$	25,183	$	3,345	13.3%
Management Services		1,124		1,094		30	2.7%
Commercial Loans and Investments		1,615		1,114		501	45.0%
Real Estate Operations		538		1,079		(541)	(50.1)%
Total Revenue	$	31,805	$	28,470	$	3,335	11.7%

Total revenue for the three months ended September 30, 2024 increased to $31.8 million, compared to $28.5 million during the three months ended September 30, 2023. The $3.3 million increase in total revenue is primarily attributable to increased income produced by the Company’s recent income property acquisitions versus that of properties disposed of by the Company during the comparative period, as well as more same store revenue from our properties owned during each period. Additionally, revenues from our commercial loans and investments increased, which was offset by reduced revenues from our real estate operations.

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Income Properties

Revenue and operating income from our income property operations totaled $28.5 million and $20.7 million, respectively, during the three months ended September 30, 2024, compared to total revenue and operating income of $25.2 million and $18.1 million, respectively, for the three months ended September 30, 2023. The direct costs of revenues for our income property operations totaled $7.8 million and $7.1 million for the three months ended September 30, 2024 and 2023, respectively. The increase in revenues of $3.3 million, or 13.3%, during the three months ended September 30, 2024 is primarily related to the overall growth and lease up of the Company’s income property portfolio, as well as the timing of acquisitions versus dispositions. The increase in operating income of $2.6 million from our income property operations reflects increased rent revenues related to net investment as well as leasing activity.

Management Services

Revenue from our management services from PINE totaled $1.1 million during the three months ended September 30, 2024 and 2023. Management services during the three months ended September 30, 2024 also included less than $0.1 million of revenue, from each of the asset management agreement with a third party to manage a portfolio of multi-tenant and single-tenant assets (the “Portfolio Management Agreement”) and the Subsurface Management Agreement, with no such revenue recognized during the three months ended September 30, 2023.

Commercial Loans and Investments

Interest income from our commercial loans and investments totaled $1.6 million and $1.1 million during the three months ended September 30, 2024 and 2023, respectively. The increase is primarily due to increased income as a result of the timing of investments made related to new loan originations and structured investments during the nine months ended September 30, 2024.

Real Estate Operations

During the three months ended September 30, 2024 and 2023, operating income from real estate operations was $0.2 million and $0.9 million on revenues totaling $0.5 million and $1.1 million, respectively. During the three months ended September 30, 2024, there were $0.4 million more in mitigation credit sales, increasing mitigation credit cost of sales by $0.3 million, offset by $0.9 million less in subsurface sales as compared to the three months ended September 30, 2023. As of September 30, 2024 no mitigation credits or Subsurface Interests remain to be sold.

General and Administrative Expenses

Total general and administrative expenses for the three months ended September 30, 2024 is presented in the following summary and indicates the changes as compared to the three months ended September 30, 2023 (in thousands):


	Three Months Ended
General and Administrative Expenses	September 30, 2024		September 30, 2023		$ Variance		% Variance
Recurring General and Administrative Expenses	$	3,325	$	2,571	$	754	29.3%
Non-Cash Stock Compensation		750		868		(118)	(13.6)%
Total General and Administrative Expenses	$	4,075	$	3,439	$	636	18.5%

Depreciation and Amortization

Depreciation and amortization totaled $13.2 million and $11.7 million during the three months ended September 30, 2024 and 2023, respectively. The increase of $1.5 million is due to the overall growth in the Company’s income property portfolio.

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COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

Revenue

Total revenue for the nine months ended September 30, 2024 is presented in the following summary and indicates the changes as compared to the nine months ended September 30, 2023 (in thousands):


	Nine Months Ended
Operating Segment	September 30, 2024		September 30, 2023		$ Variance		% Variance
Income Properties	$	79,029	$	70,373	$	8,656	12.3%
Management Services		3,360		3,294		66	2.0%
Commercial Loans and Investments		4,407		2,965		1,442	48.6%
Real Estate Operations		1,981		2,602		(621)	(23.9)%
Total Revenue	$	88,777	$	79,234	$	9,543	12.0%

Total revenue for the nine months ended September 30, 2024 increased to $88.7 million, compared to $79.2 million during the nine months ended September 30, 2023. The $9.5 million increase in total revenue is primarily attributable to increased income produced by the Company’s recent income property acquisitions versus that of properties disposed of by the Company during the comparative period as well as more same store revenue from our properties owned during each period. Additionally, revenues from our commercial loans and investments increased as a result of the growth in the commercial loan and investment portfolio.

Income Properties

Revenue and operating income from our income property operations totaled $79.0 million and $56.4 million, respectively, during the nine months ended September 30, 2024, compared to total revenue and operating income of $70.4 million and $49.5 million, respectively, for the nine months ended September 30, 2023. The direct costs of revenues for our income property operations totaled $22.6 million and $20.9 million for the nine months ended September 30, 2024 and 2023, respectively. The increase in revenues of $8.6 million, or 12.3%, during the nine months ended September 30, 2024 is primarily related to the overall growth and lease up of the Company’s income property portfolio, as well as the timing of acquisitions versus dispositions. The increase in operating income of $6.9 million from our income property operations reflects increased rent revenues related to net investments as well as leasing activity.

Management Services

Revenue from our management services from PINE totaled $3.1 million and $3.3 million during the nine months ended September 30, 2024 and 2023, respectively, which decrease is due to the decrease in PINE’s total equity. Management services during the nine months ended September 30, 2024 also included $0.1 million of revenue, from each of the Portfolio Management Agreement and the Subsurface Management Agreement, with no such revenue recognized during the nine months ended September 30, 2023.

Commercial Loans and Investments

Interest income from our commercial loans and investments totaled $4.4 million and $3.0 million during the nine months ended September 30, 2024 and 2023, respectively. The increase is primarily due to increased income as a result of the timing of investments made related to new loan originations and structured investments during the twelve-month period ended September 30, 2024, partially offset by a reduction in interest income attributable to the repayment of one loan during the nine months ended September 30, 2024.

Real Estate Operations

During the nine months ended September 30, 2024, and 2023, operating income from real estate operations was $0.5 million and $1.7 million on revenues totaling $2.0 million and $2.6 million, respectively. The $1.2 million decrease in operating income is due to $0.7 million more mitigation credit sales during the nine months ended September 30, 2024 having an increased cost basis compared to mitigation credit sales during the nine months ended September 30, 2023,

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offset by $1.4 million less in subsurface sales as compared to the nine months ended September 30, 2023. As of September 30, 2024 no mitigation credits or Subsurface Interests remain to be sold.

General and Administrative Expenses

Total general and administrative expenses for the nine months ended September 30, 2024 is presented in the following summary and indicates the changes as compared to the nine months ended September 30, 2023 (in thousands):


	Nine Months Ended
General and Administrative Expenses	September 30, 2024		September 30, 2023		$ Variance		% Variance
Recurring General and Administrative Expenses	$	8,863	$	7,691	$	1,172	15.2%
Non-Cash Stock Compensation		2,887		2,802		85	3.0%
Total General and Administrative Expenses	$	11,750	$	10,493	$	1,257	12.0%

The primary reason for the increase in total general and administrative expenses is the overall higher employee count as a result of the increased operating activity from the significant increase in managed income property assets, partially offset by reduced executive compensation during the nine months ended September 30, 2024.

Depreciation and Amortization

Depreciation and amortization totaled $35.7 million and $32.8 million during the nine months ended September 30, 2024 and 2023, respectively. The increase of $2.9 million is due to the overall growth in the Company’s income property portfolio.

Gain on Disposition of Assets and Provision for Impairment

Gain on Disposition of Assets. During the nine months ended September 30, 2024, the Company sold two income properties for an aggregate sales price of $38.0 million and aggregate gains on sales of $3.8 million. The sales consisted of (i) one mixed use income property in downtown Santa Fe, New Mexico for $20.0 million, resulting in a gain of $4.6 million, and (ii) one multi-tenant income property located in West Jordan, Utah for $18.0 million resulting in a loss on sale of $0.8 million. Additionally, during the nine months ended September 30, 2024, the Company sold its portfolio of Subsurface Interests for $5.0 million, resulting in a gain of $4.5 million.

During the nine months ended September 30, 2023, the Company sold three income properties for an aggregate sales price of $22.9 million and aggregate gains on sales of $3.3 million. The sales consisted of (i) an outparcel of the multi-tenant property known as Eastern Commons, located in Henderson, Nevada, for $2.1 million, resulting in a gain of $0.8 million, (ii) an outparcel of the multi-tenant property known as Crossroads Towne Center, located in Chandler, Arizona, for $2.3 million, resulting in a gain of $1.2 million, and (iii) a single tenant office property located in Reston, Virginia leased to General Dynamics for $18.5 million, resulting in a gain of $1.3 million.

Provision for Impairment. There were no impairment charges on the Company’s income property portfolio during the nine months ended September 30, 2024. During the three months ended September 30, 2023, the Company recorded a $0.9 million impairment charge on the sale of the Westcliff Property which represents the sales price, less the book value of the asset as of September 30, 2023, less costs to sell.

During the nine months ended September 30, 2024, the Company recorded a $0.7 million impairment charge, comprised of a $0.2 million charge related to the discount provided to the borrower on their early repayment of the Sabal Pavilion loan, as described in Note 4, “Commercial Loans and Investments”, and a $0.5 million increase in our CECL allowance due to a net increase in principal outstanding on the Company’s portfolio of commercial loans and investments. During the nine months ended September 30, 2023, the Company recorded a $0.5 million impairment charge, representing the provision for credit losses related to our commercial loans and investments.

Investment and Other Income (Loss)

During the nine months ended September 30, 2024, the closing stock price of PINE increased by $1.29 per share, with a closing price of $18.20 on September 30, 2024. During the nine months ended September 30, 2023, the closing stock price of PINE decreased by $2.72 per share, with a closing price of $16.36 on September 30, 2023. The change in

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stock price resulted in unrealized non-cash gains (losses) on the Company’s investment in PINE in the amount of $3.1 million and $(6.0) million which is included in investment and other income (loss) in the consolidated statements of operations for the nine months ended September 30, 2024 and 2023, respectively.

The Company earned dividend income from the investment in PINE of $1.9 million during each of the nine months ended September 30, 2024 and 2023.

The Company derecognized a contingent obligation through a $2.3 million increase in investment and other income (loss) during the nine months ended September 30, 2023, pursuant to a lease amendment whereby the Company’s obligation to fund certain tenant improvements was eliminated. The liability was previously included in Accrued and Other Liabilities on the Company’s consolidated balance sheets.

Interest Expense

Interest expense totaled $16.8 million and $16.2 million for the nine months ended September 30, 2024 and 2023, respectively. The increase of $0.6 million is primarily related to increases in the Company’s fixed rates on the 2026 Term Loan and the 2027 Term Loan due to swaps effective on March 29, 2024, which was partially offset by a $0.4 million reduction in interest on the Credit Facility due to a lower average outstanding balance during the nine months ended September 30, 2024, as compared to the same period in 2023.

Net Income (Loss) Attributable to the Company

Net income (loss) attributable to the Company totaled $13.3 million and $(1.5) million during the nine months ended September 30, 2024 and 2023, respectively. The $14.8 million increase in net income is attributable to the factors described above, most notably the $6.5 million increase in investment and other income, as well as an increase in operating income from our income property portfolio as described above.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents totaled $8.2 million at September 30, 2024, while restricted cash totaled $1.7 million, see Note 2, “Summary of Significant Accounting Policies” under the heading Restricted Cash for the Company’s disclosure related to its restricted cash balance at September 30, 2024.

Our cash flows provided by operating activities totaled $45.8 million during the nine months ended September 30, 2024, as compared to $39.9 million during the nine months ended September 30, 2023, an increase of $5.9 million. The primary reason for the increase is the increased cash flows provided by income properties, which is the result of the overall growth and lease up of the Company’s income property portfolio, as well as increased cash flows from our commercial loans and investments.

Our cash flows used in investing activities totaled $215.3 million during the nine months ended September 30, 2024, as compared to $98.3 million during the nine months ended September 30, 2023, for an increase in cash outflows of $117.0 million. The increase in cash used in investing activities is primarily the result of an increase in acquisition activity of income properties and commercial loans and investments, partially offset by an increase in proceeds from dispositions, for an increase in net cash used of $121.2 million during the nine months ended September 30, 2024 as compared to the same period in 2023.

Our cash flows provided by financing activities totaled $161.6 million for the nine months ended September 30, 2024, compared to $66.8 million for the nine months ended September 30, 2023, an increase in cash inflows of $94.8 million. The increase is primarily due to a $132.3 million increase in proceeds from common and preferred stock issuances under the respective ATM programs, proceeds from preferred equity issuances of $33.0 million, partially offset by a $70.3 million decrease in cash inflows provided by net debt activity during the nine months ended September 30, 2024 as compared to the same period in 2023.

Long-Term Debt. At September 30, 2024, the current commitment level under the Credit Facility was $300.0 million. The undrawn commitment under the Credit Facility totaled $205.0 million. As of September 30, 2024, the Credit Facility had a $95.0 million balance outstanding. See Note 15, “Long-Term Debt” for the Company’s disclosure related to its long-term debt balance at September 30, 2024.

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Acquisitions and Investments. During the nine months ended September 30, 2024, the Company acquired four multi-tenant income properties, one vacant land parcel within an existing multi-tenant property, and one building within an existing multi-tenant income property for an aggregate purchase price of $210.0 million, or a total acquisition cost of $207.8 million. During the nine months ended September 30, 2024, the Company also originated three structured investments consisting of a construction loan, a first mortgage, and a preferred equity investment for an aggregate investment of $63.8 million. During the nine months ended September 30, 2023, the Company acquired four buildings within an existing multi-tenant income property, one multi-tenant income property, and one vacant land parcel adjacent to an existing multi-tenant property for an aggregate purchase price of $80.0 million, or a total acquisition cost of $80.3 million. During the nine months ended September 30, 2023, the Company also originated one structured investment, a first mortgage, in the amount of $15.0 million.

The Company’s guidance for 2024 investments in income-producing properties, including structured investments, ranges from $300.0 million to $350.0 million. We expect to fund future acquisitions utilizing cash on hand, cash from operations, proceeds from the dispositions of income properties through 1031 like-kind exchanges, borrowings on our Credit Facility, if available, and additional financing sources. We expect dispositions of income properties will qualify under the like-kind exchange deferred-tax structure.

Dispositions. During the nine months ended September 30, 2024, the Company sold two income properties for an aggregate sales price of $38.0 million and aggregate gains on sales of $3.8 million. During the nine months ended September 30, 2023, the Company sold three income properties for an aggregate sales price of $22.9 million and aggregate gains on sales of $3.3 million.

ATM Program. During the nine months ended September 30, 2024, the Company sold 7,226,192 shares under the 2022 ATM Program for gross proceeds of $134.2 million at a weighted average price of $18.57 per share, generating net proceeds of $132.2 million after deducting transaction fees of $2.0 million.

Contractual Commitments – Expenditures. The Company has committed to fund the following capital improvements. The improvements, which are related to several properties, are estimated to be generally completed within twelve months. These commitments, as of September 30, 2024, are as follows (in thousands):


	As of September 30, 2024
Total Commitment ⁽¹⁾	$	22,414
Less Amount Funded		(2,947)
Remaining Commitment	$	19,467

⁽¹⁾ Commitment includes tenant improvements, leasing commissions, rebranding, facility expansion and other capital improvements.

Off-Balance Sheet Arrangements. None.

Other Matters. We believe we will have sufficient liquidity to fund our operations, capital requirements, maintenance, and debt service requirements over the next twelve months and into the foreseeable future, with cash on hand, cash flow from our operations, $3.6 million of availability remaining under the 2022 ATM Program, and $205.0 million undrawn commitment under the existing $300.0 million Credit Facility as of September 30, 2024.

Our Board and management consistently review the allocation of capital with the goal of providing the best long-term return for our stockholders. These reviews consider various alternatives, including increasing or decreasing regular dividends, repurchasing the Company’s securities, and retaining funds for reinvestment. Annually, the Board reviews our business plan and corporate strategies, and makes adjustments as circumstances warrant. Management’s focus is to continue our strategy to diversify our portfolio by redeploying proceeds from like-kind exchange transactions and utilizing our Credit Facility to increase our portfolio of income-producing properties, providing stabilized cash flows with strong risk-adjusted returns primarily in larger metropolitan areas and growth markets.

We believe that we currently have a reasonable level of leverage. Our strategy is to utilize leverage, when appropriate and necessary, and proceeds from sales of income properties and the disposition or payoffs on our commercial loans and investments to acquire income properties. We may also acquire or originate commercial loans and investments, invest in

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Reconciliation of Non-U.S. GAAP Measures (in thousands, except share and dividend data):


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Net Income (Loss) Attributable to the Company	$	6,227	$	2,686	$	13,252	$	(1,507)
Add Back: Effect of Dilutive Interest Related to 2025 Notes ⁽¹⁾		—		—		—		—
Net Income (Loss) Attributable to the Company, If-Converted	$	6,227	$	2,686	$	13,252	$	(1,507)
Depreciation and Amortization of Real Estate		13,204		11,651		35,650		32,769
Loss (Gain) on Disposition of Assets, Net of Tax		855		(2,741)		(8,308)		(3,565)
Gain on Disposition of Other Assets		(181)		(926)		(550)		(1,739)
Provision for Impairment		538		929		653		1,408
Realized and Unrealized Loss (Gain) on Investment Securities		(6,244)		(429)		(2,868)		5,663
Extinguishment of Contingent Obligation		—		—		—		(2,300)
Funds from Operations	$	14,399	$	11,170	$	37,829	$	30,729
Distributions to Preferred Stockholders		(1,878)		(1,195)		(4,936)		(3,585)
Funds From Operations Attributable to Common Stockholders	$	12,521	$	9,975	$	32,893	$	27,144
Amortization of Intangibles to Lease Income		112		487		830		1,793
Less: Effect of Dilutive Interest Related to 2025 Notes⁽¹⁾		—		—		—		—
Core Funds From Operations Attributable to Common Stockholders	$	12,633	$	10,462	$	33,723	$	28,937
Adjustments:
Straight-Line Rent Adjustment		(473)		(790)		(1,512)		(919)
COVID-19 Rent Repayments		—		3		—		46
Other Depreciation and Amortization		(3)		24		(10)		(92)
Amortization of Loan Costs, Discount on Convertible Debt, and Capitalized Interest		235		199		752		636
Non-Cash Compensation		750		868		2,887		2,802
Adjusted Funds From Operations Attributable to Common Stockholders	$	13,142	$	10,766	$	35,840	$	31,410

Weighted Average Number of Common Shares:
Basic		25,445,411		22,484,561		23,601,389		22,556,642
Diluted ⁽²⁾		25,521,749		22,484,561		23,625,369		22,556,642

Dividends Declared and Paid - Preferred Stock	$	0.40	$	0.40	$	1.20	$	1.20
Dividends Declared and Paid - Common Stock	$	0.38	$	0.38	$	1.14	$	1.14

(1)

As applicable, includes interest expense, amortization of discount, amortization of fees, and other changes in net income or loss that would result from the assumed conversion of the 2025 Convertible Senior Notes to derive FFO (as defined herein) effective January 1, 2022 due to the implementation of ASU 2020-06 which requires presentation on an if-converted basis. For the three and nine months ended September 30, 2024 and 2023, a total of $0.5 million and $1.6 million of interest was not included, respectively, as the impact of the 2025 Notes, if-converted, would be antidilutive to net income (loss) attributable to common stockholders for the respective periods.

(2)

A total of 3.7 million and 3.6 million shares, representing the dilutive impact of the 2025 Notes, upon adoption of ASU 2020-06 effective January 1, 2022, were not included in the computation of diluted net income per share attributable to common stockholders for the three and nine months ended September 30, 2024, respectively, because they were antidilutive to net income (loss) attributable to common stockholders for the respective periods. A total of 3.4 million and 3.3 million shares, representing the dilutive impact of the 2025 Notes, upon adoption of ASU 2020-06 effective January 1, 2022, were not included in the computation of diluted net income (loss) attributable to common stockholders for each of the three and nine month periods ended September 30, 2023, respectively, because they were antidilutive to net income (loss) attributable to common stockholders for the respective periods.

Table of Contents

Other Data (in thousands, except per share data):


	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
FFO Attributable to Common Stockholders	$	12,521	$	9,975	$	32,893	$	27,144
FFO Attributable to Common Stockholders per Common Share - Diluted ⁽¹⁾	$	0.49	$	0.44	$	1.39	$	1.20

Core FFO Attributable to Common Stockholders	$	12,633	$	10,462	$	33,723	$	28,937
Core FFO Attributable to Common Stockholders per Common Share - Diluted⁽¹⁾	$	0.50	$	0.47	$	1.43	$	1.28

AFFO Attributable to Common Stockholders	$	13,142	$	10,766	$	35,840	$	31,410
AFFO Attributable to Common Stockholders per Common Share - Diluted⁽¹⁾	$	0.51	$	0.48	$	1.52	$	1.39

(1)

The weighted average shares used to compute per share amounts for FFO Attributable to Common Stockholders per Common Share – Diluted, Core FFO Attributable to Common Stockholders per Common Share - Diluted, and AFFO Attributable to Common Stockholders per Common Share - Diluted do not reflect any dilution related to the ultimate settlement of the 2025 Convertible Senior Notes.

CRITICAL ACCOUNTING ESTIMATES

Critical accounting estimates include those estimates made in accordance with U.S. GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the Company’s financial condition or results of operations. Our most significant estimate is as follows:

Purchase Accounting for Acquisitions of Real Estate Subject to a Lease. As required by U.S. GAAP, the fair value of the real estate acquired with in-place leases is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, the value of in-place leases, and the value of leasing costs, based in each case on their relative fair values. In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded as other assets or liabilities based on the present value. The assumptions underlying the allocation of relative fair values are based on market information including, but not limited to: (i) the estimate of replacement cost of improvements under the cost approach, (ii) the estimate of land values based on comparable sales under the sales comparison approach, and (iii) the estimate of future benefits determined by either a reasonable rate of return over a single year’s net cash flow, or a forecast of net cash flows projected over a reasonable investment horizon under the income capitalization approach. The underlying assumptions are subject to uncertainty and thus any changes to the allocation of fair value to each of the various line items within the Company’s consolidated balance sheets could have an impact on the Company’s financial condition as well as results of operations due to resulting changes in depreciation and amortization as a result of the fair value allocation. The acquisitions of real estate subject to this estimate totaled four multi-tenant income properties, one vacant land parcel within an existing multi-tenant property, and one building within an existing multi-tenant income property for an aggregate purchase price of $210.0 million, or a total acquisition cost of $207.8 million, for the nine months ended September 30, 2024, and four buildings within an existing multi-tenant income property, one multi-tenant property, and one vacant land parcel adjacent to an existing multi-tenant property for an aggregate purchase price of $80.0 million, or a total acquisition cost of $80.3 million, for the nine months ended September 30, 2023.

See Note 2, “Summary of Significant Accounting Policies”, for further discussion of the Company’s accounting estimates and policies.


		頁面
		編號
第一部分-財務信息

項目 1. 基本報表

綜合賬目表 - 2024年9月30日（未經審核）及2023年12月31日		3

截至2024年和2023年9月30日三個月和九個月的合併營運報表（未經審計）		4

截至2024年和2023年9月30日三個月和九個月的綜合收益表 - 合併（未經審核）		5

截至2024年和2023年9月30日三個月和九個月的股東權益合併表 - 合併（未經審核）		6

截至2024年9月30日和2023年的綜合現金流量表（未經審核）		8

附註股東權益基本報表（未經審核）		10

項目 2. 管理層對財務狀況和營運結果的討論和分析		39

項目 3. 市場風險的定量和定性披露		52

項目 4. 控制項和程序		52

第二部份──其他資訊		52

項目 1. 法律訴訟		52

項目 1A. 風險因素		52

項目 2. 未註冊的股票出售和款項使用		53

項目 3. 對優先證券的違約		53

項目 4. 礦山安全披露		53

項目5。其他資訊		53

項目6。展品		55

簽名		57


	Nine Months Ended
	September 30, 2024		September 30, 2023
Supplemental Disclosure of Cash Flow Information:
Cash Paid for Taxes, Net of Refunds Received	$	(91)	$	231
Cash Paid for Interest ⁽¹⁾	$	15,640	$	15,178

Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Unrealized Gain (Loss) on Cash Flow Hedges	$	(7,296)	$	8,389
Common Stock Dividends Declared and Unpaid	$	548	$	654


(2.1)*		Purchase and Sale Agreement, dated August 2, 2024, filed as Exhibit 2.1 to the registrant’s current report on Form 8-K filed on August 8, 2024, and incorporated herein by reference.

(3.1)		Articles of Amendment and Restatement of CTO Realty Growth, Inc., as amended by the Articles of Amendment (Name Change), filed as Exhibit 3.1 to the registrant’s current report on Form 8-K12B filed February 1, 2021, and incorporated herein by reference.

(3.2)		Articles Supplementary, designating CTO Realty Growth, Inc.’s 6.375% Series A Cumulative Redeemable Preferred Stock, filed as Exhibit 3.2 to the registrant's Registration Statement on Form 8-A filed July 1, 2021 (File No. 001-11350), and incorporated herein by reference.
(3.3)		Articles Supplementary, designating 3,000,000 additional shares of CTO Realty Growth, Inc.’s 6.375% Series A Cumulative Redeemable Preferred Stock, filed as Exhibit 3.1 to the registrant’s current report on Form 8-K filed April 3, 2024, and incorporated herein by reference.

(3.4)		Third Amended and Restated Bylaws of CTO Realty Growth, Inc., effective as of February 16, 2023, filed as Exhibit 3.1 to the registrant’s current report on Form 8-K filed February 17, 2023, and incorporated herein by reference.

(4.1)		Specimen Common Stock Certificate of CTO Realty Growth, Inc., filed as Exhibit 4.2 to the registrant’s current report on Form 8-K12B filed February 1, 2021, and incorporated herein by reference.

(10.1)		Amendment No. 1 to Management Agreement among Alpine Income Property Trust, Inc., Alpine Income Property OP, LP and Alpine Income Property Manager, LLC, dated July 18, 2024, filed as Exhibit 10.1 to the registrant’s current report on Form 8-K filed July 19, 2024, and incorporated herein by reference.

(10.2)		Credit Agreement between CTO Realty Growth, Inc., the Borrower, the Guarantors party thereto, the Lenders party thereto and KeyBank National Association, as Administrative Agent, dated September 30, 2024, filed herewith.

(10.3)†		Employment Agreement between CTO Realty Growth, Inc. and Lisa M. Vorakoun entered into October 22, 2024, filed herewith.

(10.4)†		Amendment to the Employment Agreement between CTO Realty Growth, Inc. and John P. Albright entered into October 22, 2024, filed herewith.

(10.5)†		Amendment to the Employment Agreement between CTO Realty Growth, Inc. and Steven R. Greathouse entered into October 22, 2024, filed herewith.

(10.6)†		Amendment to the Employment Agreement between CTO Realty Growth, Inc. and Daniel E. Smith entered into October 22, 2024, filed herewith.

Exhibit 31.1		Certification filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2		Certification filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

**Exhibit 32.1		Certification furnished pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

**Exhibit 32.2		Certification furnished pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 101.INS		Inline XBRL Instance Document

Exhibit 101.SCH		Inline XBRL Taxonomy Extension Schema Document

Exhibit 101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

Exhibit 101.DEF		Inline XBRL Taxonomy Definition Linkbase Document

Exhibit 101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

Exhibit 101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

Exhibit 104		Cover Page Interactive Data File (embedded within the Inline XBRL document)


		CTO REALTY GROWTH, INC.
		(Registrant)

October 24, 2024		By:	/s/ John P. Albright
			John P. Albright President and Chief Executive Officer (Principal Executive Officer)

October 24, 2024	By:		/s/ Philip R. Mays
			Philip R. Mays, Senior Vice President,
			Chief Financial Officer and Treasurer
			(Principal Financial Officer)

October 24, 2024		By:	/s/ Lisa M. Vorakoun
			Lisa M. Vorakoun, Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)