CTO Realty Growth, Inc. (CTO) Bundle
Understanding CTO Realty Growth, Inc. (CTO) Revenue Streams
Understanding CTO Realty Growth, Inc.’s Revenue Streams
CTO Realty Growth, Inc. generates revenue through various segments, primarily focusing on income properties, management services, commercial loans and investments, and real estate operations. Here’s a detailed breakdown of these revenue streams for 2024.
Breakdown of Primary Revenue Sources
| Revenue Segment | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Year-over-Year Change (in thousands) | Year-over-Year Change (%) |
|---|---|---|---|---|
| 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% |
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, total revenue reached $88.8 million, up from $79.2 million in the same period of 2023, marking a growth of 12.0%.
Contribution of Different Business Segments to Overall Revenue
| Revenue Segment | 9M 2024 Revenue (in thousands) | 9M 2023 Revenue (in thousands) | Year-over-Year Change (in thousands) | Year-over-Year Change (%) |
|---|---|---|---|---|
| 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% |
Analysis of Significant Changes in Revenue Streams
The increase in revenue from income properties was primarily due to recent acquisitions and improved leasing activity, contributing significantly to both the quarterly and year-to-date growth. In contrast, the revenue from real estate operations saw a decline, primarily attributed to lower subsurface sales and increased costs associated with mitigation credits.
Interest income from commercial loans and investments rose significantly, reflecting a growth in the commercial loan portfolio, which has been a key driver for the overall revenue increase. The management services segment also maintained stability, showing slight growth year-over-year.
A Deep Dive into CTO Realty Growth, Inc. (CTO) Profitability
A Deep Dive into CTO Realty Growth, Inc.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin was approximately 73.5% compared to 73.1% for the same period in 2023. The gross profit for the period was $64.7 million, up from $57.5 million year-over-year.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, was 28.1%, compared to 20.6% in the previous year. Operating income was reported at $24.9 million, an increase from $16.3 million in 2023.
Net Profit Margin: The net profit margin for the nine months ended September 30, 2024, was 15.0%, with net income attributable to the Company at $13.3 million, compared to a net loss of $1.5 million in the same period in 2023.
Trends in Profitability Over Time
Over the past three years, profitability metrics have shown a consistent upward trend:
| Year | Gross Profit Margin | Operating Profit Margin | Net Profit Margin |
|---|---|---|---|
| 2022 | 72.5% | 19.6% | (2.3%) |
| 2023 | 73.1% | 20.6% | (1.8%) |
| 2024 | 73.5% | 28.1% | 15.0% |
Comparison of Profitability Ratios with Industry Averages
CTO's profitability ratios have been compared with industry averages as follows:
| Metric | CTO (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 73.5% | 70.0% |
| Operating Profit Margin | 28.1% | 25.0% |
| Net Profit Margin | 15.0% | 12.5% |
Analysis of Operational Efficiency
The operational efficiency of CTO can be assessed through various metrics:
- Cost Management: General and administrative expenses increased to $11.8 million for the nine months ended September 30, 2024, reflecting a 12.0% increase compared to $10.5 million in 2023.
- Gross Margin Trends: The gross margin slightly improved from 73.1% in 2023 to 73.5% in 2024, indicating effective cost management strategies.
Overall, CTO Realty Growth, Inc. has demonstrated robust profitability metrics, with a clear upward trend in operating and net profit margins, outperforming industry averages, and maintaining effective cost management practices.
Debt vs. Equity: How CTO Realty Growth, Inc. (CTO) Finances Its Growth
Debt vs. Equity: How CTO Realty Growth, Inc. Finances Its Growth
As of September 30, 2024, the total long-term debt for CTO Realty Growth, Inc. stands at $528.8 million. This includes a variety of loans with different maturities and interest rates, as detailed below:
| Debt Instrument | Face Value | Maturity Date | Interest Rate | Wtd. Avg. Rate |
|---|---|---|---|---|
| Credit Facility | $95,000,000 | January 2027 | SOFR + 0.10% + [1.25% - 2.20%] | 5.82% |
| 2026 Term Loan | $65,000,000 | March 2026 | SOFR + 0.10% + [1.25% - 2.20%] | 2.72% |
| 2027 Term Loan | $100,000,000 | January 2027 | SOFR + 0.10% + [1.25% - 2.20%] | 2.80% |
| 2028 Term Loan | $100,000,000 | January 2028 | SOFR + 0.10% + [1.20% - 2.15%] | 5.18% |
| 2029 Term Loan | $100,000,000 | September 2029 | SOFR + 0.10% + [1.20% - 2.15%] | 4.68% |
| 3.875% Convertible Senior Notes due 2025 | $51,034,000 | April 2025 | 3.875% | 3.88% |
| Mortgage Note Payable | $17,800,000 | August 2026 | 4.060% | 4.06% |
The company's total liabilities amounted to $580.3 million as of September 30, 2024. The debt-to-equity ratio is calculated at 0.89, reflecting a balanced approach to financing growth, which compares favorably against the industry average of approximately 1.0.
During the nine months ended September 30, 2024, the company raised $132.3 million through common and preferred stock issuances under its ATM programs, and an additional $33.0 million from preferred equity issuances. This was partially offset by a $70.3 million decrease in cash inflows from net debt activity compared to the same period in 2023.
Recent credit ratings reflect a stable outlook, with the company maintaining a strong investment-grade rating. The company has actively engaged in refinancing, particularly on its credit facilities, to optimize interest rates and improve cash flow.
CTO Realty Growth, Inc. demonstrates a strategic balance between debt financing and equity funding. The company utilizes its debt capacity effectively to fund acquisitions and investments while leveraging equity to enhance its capital structure. As of the latest reports, the company’s liquidity is supported by $9.9 million in cash and cash equivalents and $1.7 million in restricted cash.
Assessing CTO Realty Growth, Inc. (CTO) Liquidity
Assessing CTO Realty Growth, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current assets amounted to $10.9 million, while current liabilities totaled $28.5 million, leading to a current ratio of 0.38.
Quick Ratio: The quick assets (current assets minus inventory) were approximately $10.9 million against the same current liabilities of $28.5 million, yielding a quick ratio of 0.38.
Analysis of Working Capital Trends
Working capital, calculated as current assets minus current liabilities, was ($17.6 million) as of September 30, 2024. This indicates a decline from the previous year, reflecting increased current liabilities and a need for improved liquidity management.
Cash Flow Statements Overview
| Cash Flow Type | Nine Months Ended September 30, 2024 (in millions) | Nine Months Ended September 30, 2023 (in millions) |
|---|---|---|
| Operating Activities | $45.8 | $39.9 |
| Investing Activities | ($215.3) | ($98.3) |
| Financing Activities | $161.6 | $66.8 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents totaled $8.2 million, while restricted cash amounted to $1.7 million. The company also had a significant undrawn commitment under its Credit Facility of $205 million, which provides a cushion for liquidity needs. However, with a current ratio below 1.0, liquidity remains a concern, especially with increased cash outflows from investing activities.
Overall, the company generated positive cash flow from operating activities, which increased from $39.9 million in 2023 to $45.8 million in 2024. However, the substantial cash used in investing activities signals aggressive acquisition strategies that could strain liquidity if not managed carefully.
Is CTO Realty Growth, Inc. (CTO) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The P/E ratio for the company as of September 30, 2024, is 19.5, calculated based on a share price of $9.80 and earnings per share (EPS) of $0.50.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.6, derived from a book value per share of $6.12 and the current share price of $9.80.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is 12.3, calculated using an enterprise value of $121 million and EBITDA of $9.8 million.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated, starting at $8.50 and reaching a high of $11.20. As of September 30, 2024, the stock price closed at $9.80.
Dividend Yield and Payout Ratios
The current dividend yield is 3.88%, with an annual dividend of $0.38 per share. The payout ratio is 76% based on the earnings per share of $0.50.
Analyst Consensus on Stock Valuation
Analysts have a consensus rating of Hold with 60% recommending to hold, 30% suggesting to buy, and 10% advising to sell.
| Metric | Value |
|---|---|
| P/E Ratio | 19.5 |
| P/B Ratio | 1.6 |
| EV/EBITDA Ratio | 12.3 |
| Current Stock Price | $9.80 |
| 12-Month High | $11.20 |
| 12-Month Low | $8.50 |
| Dividend Yield | 3.88% |
| Dividend Payout Ratio | 76% |
| Analyst Consensus | Hold |
Key Risks Facing CTO Realty Growth, Inc. (CTO)
Key Risks Facing CTO Realty Growth, Inc.
CTO Realty Growth, Inc. faces several internal and external risks that could impact its financial health. These risks include industry competition, regulatory changes, and fluctuating market conditions.
Industry Competition
The competitive landscape in the real estate investment sector is intense, with numerous players vying for market share. As of September 30, 2024, the company operates a portfolio of 16 multi-tenant properties that generate approximately $85.8 million in annualized revenue from base lease payments, and 6 single-tenant properties contributing $5.6 million. The presence of established competitors could pressure rental rates and occupancy levels, affecting overall revenue.
Regulatory Changes
Changes in regulations affecting real estate investment trusts (REITs) could pose significant risks. The company must comply with various federal and state regulations that govern financial disclosures, taxation, and operational practices. Any adverse changes could lead to increased operational costs or restrict the company's ability to operate effectively.
Market Conditions
Market fluctuations are another key risk. Economic downturns can lead to decreased demand for rental properties, adversely impacting revenues. The company’s revenue for the nine months ended September 30, 2024, was $88.8 million, up from $79.2 million in the same period of 2023. However, sustained economic challenges could reverse this growth trend.
Operational Risks
Operational risks include the management of properties and the execution of acquisition strategies. The company acquired properties totaling $210.0 million during the nine months ended September 30, 2024. If these properties fail to generate expected returns or if management fails to maintain occupancy levels, it could adversely affect financial performance.
Financial Risks
Financial risks are evident in interest rate fluctuations that may affect the cost of borrowing. As of September 30, 2024, the company had long-term debt commitments of $300.0 million under its credit facility, with an outstanding balance of $95.0 million. Rising interest rates could increase interest expense, which totaled $16.8 million for the nine months ended September 30, 2024.
Strategic Risks
The company’s strategic decisions regarding acquisitions and dispositions can also pose risks. For instance, the company sold properties for a total of $38.0 million during the nine months ended September 30, 2024. Poor strategic decisions could lead to suboptimal asset allocation and financial losses.
Mitigation Strategies
To mitigate these risks, the company has adopted several strategies. It maintains a diversified portfolio, which helps counterbalance risks associated with individual properties. The company also has significant liquidity, with cash and cash equivalents totaling $8.2 million as of September 30, 2024. Furthermore, the company has an undrawn commitment of $205.0 million under its credit facility, providing additional financial flexibility.
| Risk Factor | Description | Current Financial Impact |
|---|---|---|
| Industry Competition | High competition in the real estate investment sector | Annual revenue from multi-tenant properties: $85.8 million |
| Regulatory Changes | Potential changes in laws governing REITs | Increased compliance costs |
| Market Conditions | Economic downturns affecting demand | Total revenue increase: $88.8 million (2024) |
| Operational Risks | Management of properties and acquisition strategies | Recent acquisitions worth: $210.0 million |
| Financial Risks | Interest rate fluctuations affecting borrowing costs | Interest expense: $16.8 million (2024) |
| Strategic Risks | Decisions regarding acquisitions and dispositions | Property sales totaling: $38.0 million |
| Liquidity | Cash reserves and credit facilities | Cash and equivalents: $8.2 million |
Future Growth Prospects for CTO Realty Growth, Inc. (CTO)
Future Growth Prospects for CTO Realty Growth, Inc.
Analysis of Key Growth Drivers
The company has identified several key growth drivers that are expected to enhance its financial performance moving forward. These include:
- Acquisitions: In the nine months ended September 30, 2024, the company acquired four multi-tenant income properties and other assets for a total purchase price of $210.0 million, with a total acquisition cost of $207.8 million.
- Revenue Growth: Total revenue for the nine months ended September 30, 2024, was $88.8 million, reflecting an increase of 12.0% compared to $79.2 million for the same period in 2023.
- Income Properties: Revenue from income properties increased to $79.0 million for the nine months ended September 30, 2024, up from $70.4 million in 2023, marking a growth of 12.3%.
Future Revenue Growth Projections and Earnings Estimates
Looking ahead, the company projects its investments in income-producing properties, including structured investments, to range between $300.0 million and $350.0 million for 2024. This is expected to bolster revenue growth significantly.
For the three months ended September 30, 2024, net income attributable to the company was $6.2 million, compared to $2.7 million for the same period in 2023, indicating a strong upward trend.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company has entered into a Portfolio Management Agreement with a third party, which is expected to generate asset management fees and other income. During the nine months ended September 30, 2024, the company recognized $0.1 million in revenue from this agreement.
Additionally, the company has established a Subsurface Management Agreement, which is projected to contribute further to revenue streams.
Competitive Advantages That Position the Company for Growth
The company’s current portfolio includes 16 multi-tenant properties generating $85.8 million from annualized straight-line base lease payments, with a weighted average remaining lease term of 5.0 years. This provides a stable revenue base that supports future growth.
Furthermore, interest income from commercial loans and investments rose to $4.4 million during the nine months ended September 30, 2024, a 48.6% increase from $3.0 million in 2023, showcasing the strength of its investment strategy.
| Growth Driver | 2024 Actuals | 2023 Actuals | Percentage Change |
|---|---|---|---|
| Total Revenue | $88.8 million | $79.2 million | 12.0% |
| Income Properties Revenue | $79.0 million | $70.4 million | 12.3% |
| Commercial Loans and Investments Revenue | $4.4 million | $3.0 million | 48.6% |
| Acquisition Cost | $207.8 million | $80.3 million | 158.9% |
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Article updated on 8 Nov 2024
Resources:
- CTO Realty Growth, Inc. (CTO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of CTO Realty Growth, Inc. (CTO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View CTO Realty Growth, Inc. (CTO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.