Participants

Lisa Vorakoun; Senior Vice President & Chief Accounting Officer; CTO Realty Growth Inc

John Albright; President, Chief Executive Officer; CTO Realty Growth Inc

Gevolve Meta; Analyst; Alliance Global Partners

Robert Stevenson; Analyst; Janney Montgomery Scott LLC

RJ Milligan; Analyst; Raymond James

Matthew Erdner; Analyst; Jones Trading

John Mascota; Analyst; B. Riley Securities

Presentation

Operator

Good day and thank you for standing by, and welcome to the CTO Q1 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session to ask a question. During the session, you will need to press star one one on your telephone. You will then hear an automated message. Advising your hand is raised. To withdraw your question, please press star one one. Again.
Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Lisa American. Please go ahead.

Lisa Vorakoun

Good morning, everyone, and thank you for joining us today for the CTO Realty Growth First Quarter 2024 operating results conference call. With me today is our CEO and President, John Albright.
Before we begin, I'd like to remind everyone that many of our comments today are considered forward-looking statements under federal securities law. The Company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we undertake no duty to update these statements. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the Company's Form 10-K Form 10 Q and other SEC filings. You can find our SEC reports, earnings release supplemental and most recent investor presentation on our website at CTL. Reed.com. And now I'll turn it over to John for his prepared remarks.

John Albright

Thanks, Lisa, and good morning, everyone, and thank you for joining us. I'd like to start off by thanking our former CFO, Matt Partridge for his many contributions to our company. We wish him well with his new opportunity. We've been engaged a national search for to assist us in identifying our new CFO that started interviewing candidates.
Today, I will provide a brief overview of our first quarter results, discuss the continued strength we're seeing in the leasing front and highlight our recent transactions starting with our operating business. We had yet another successful quarter of leasing exit activity. In the first quarter, we signed over 100,000 square feet of new leases, renewals, options and extensions at an average rent of 27 12 per square foot. That's over 200,000 square feet of leasing activity. In the past, the leasing activity was relatively widespread and included the signing of a replacement of Regal Cinemas at Beaver Creek crossing at Apex, North Carolina. The new 45,000 square foot lease is with a well-known successful regional fitness operator the rent is meaningfully higher than the rent under the existing Regal lease. Given the reduced rent in place associated with the bankruptcy of Regal, the fitness operator tenant is tentatively scheduled to open for business in mid 2025. Comparable growth in new cash base rents versus expiring rents stood at an impressive 68%, which includes the significant impact of the Regal replacement tenants. We anticipate this activity will help push same-store NOI in 2024 and even more so in late 2025 when we get the full benefit of our rent commencement under some of the larger leases signed on acquired vacancy. Given our recent leasing activity are signed but not opened, pipeline now represents 3.5% of perspective, occupancy pickup in our 5% of our existing quarter and cash flow base rents. We ended the quarter with a strong increase in occupancy, finishing at 92.6%, an increase of 2.3% from year-end 2023. Additionally, our lease occupancy increased by 1% from year-end 2023 to 94.3% Turning to our investments for the quarter, we acquired the final property within the Sprouts grocery-anchored exchange that going to be for Georgia for $2.3 million. Additionally, as announced in March, we purchased marketplace a seminal Town Center in the same for submarket of Orlando, Florida for $68.7 million. The multi-tenanted retail power center is over 315,000 square feet located on 41 acres along I-4 just over 20 miles northeast of downtown Orlando. The property is 98% leased and is anchored by Burlington Marshall's market, Petco, Ross Dress for Less Old Navy, Ulta Beauty and Five Below with this acquisition, the Orlando Metroplex, which has seen tremendous growth over the past few years is now in our top five markets, representing over 8% of our in-place cash base. Rent in Florida has moved into our top three states with over 17% of our annual cash base rent. Additionally, we originated $10 million our first mortgage loan on a retail development in West Palm Beach, Florida at a fixed interest rate, 11%, of which $6.7 million was funded during the first quarter.
On the disposition front, we are pleased to complete the sale of our mixed use property in Santa Fe, New Mexico for $20 million an exit cap rate of 8.2% and a gain of $4.6 million.
From a capital recycling perspective, we will continue to prioritize selling smaller non-core assets for redeployment into attractive investment opportunities. At the quarter end, the company issued just over $1.7 million shares of our 6.38% preferred stock for net proceeds of $33 million with the net proceeds from this issuance in the $15 million early prepayment of this Sable Pavilion seller financing loan, we were able to pay down all of our floating rate debt under our credit facility subsequent to the quarter end. This gives us ample liquidity to pursue larger format retail center acquisitions in what we believe is a very favorable environment with limited buyer competition.
With that, I'd like to hand the call back over to Lisa.

Lisa Vorakoun

Thanks, John. As of the end of the quarter, our income property portfolio consisted of 20 properties comprised of approximately $3.9 million square feet of rentable space located in eight states and 11 markets. The geographic makeup of our portfolio includes top-performing markets such as Atlanta, Dallas, Richmond, Orlando and Jacksonville. As we've mentioned in the past, these markets have demonstrated outstanding potential for growth and are delivering extensive employment and population expansion, which bodes well for our tenants and the underlying value of our properties. From a tenant makeup perspective, our top retail tenants consist of well-known operators such as Best Buy Ross Whole Foods, T.J. Maxx, Dick's Sporting Goods, Darden Restaurants and Publix. As John previously mentioned, at quarter end, occupancy was 93% and our leased occupancy was 94% with 95% of our portfolio's annualized cash base rents coming from retail and mixed-use properties and the majority of those rents coming from grocery anchored lifestyle and power center assets.
The overarching fundamentals for real estate are strong and these properties continue to benefit from outsized tenant demand and limited supply.
Jumping into our earnings results for the quarter, our earnings for the first quarter of 2024 exceeded expectations, with core FFO per share coming in at $0.48 per share, representing a 23% increase compared to the first quarter of 2023. First Quarter 2024 AFFO was $0.52 per share, representing a 21% increase over the first quarter of 2023 First Quarter 2020 for core FFO and AFFO as compared to the first quarter of 2023 benefited from a full quarter's impact of our second quarter 2023 acquisition, which included Plaza at Rockwall and outparcels at the exchange at Gwinnett as well as the partial quarter impact of marketplace at seminal Town Center offset by asset dispositions in the same period for FFO and AFFO also benefited from rent commencements at several properties. Our same-property NOI increased by 6% compared to the first quarter of 2023, which increase was largely due to the lease-up of several properties, including the collection of foresight and West Broad Village, as well as increased percentage rents at several properties. We do anticipate our same-property NOI growth will normalize during the remainder of 2024 due to certain one-time benefits included in our first quarter 2024 results, primarily related to finalizing our 2023 CAM reconciliation billings as we announced in February, we distributed a first quarter regular cash dividend of $0.38 per share, resulting in a Q1 2024 AFFO payout ratio of 73% and an attractive current annualized yield of approximately 8.8%.
Turning to our balance sheet. As of the end of the quarter, our total long-term debt outstanding was $543 million. Net debt to total enterprise value was just over 53%, and our net debt to EBITDA was 7.6 times.
While we ended the quarter with total cash and restricted cash of nearly $15 million and had $59.5 million of floating rate debt on our revolving credit facility. As John mentioned earlier, in April, we were able to pay down our revolver balance and we currently have no floating rate debt outstanding on the revolver.
On the capital markets front, during the first quarter we repurchased nearly 41,000 shares of our common stock in the open market for approximately $700,000 at an average price of $16.28 per share we also issued over 125,000 shares of common stock through our ATM program for a total net proceeds of $2.1 million at an average issuance price of $17.5 per share.
And finally, as a part of the earnings release yesterday, we increased our full year 2024 core FFO and AFFO earnings guidance to take into account our first quarter results and go-forward expectation. Our 2024 core FFO and AFFO guidance both increased by $0.04 per share. We also reduced our disposition guidance to a range of $50 million to $75 million for the balance of the year.
And with that, I'll turn the call back to the operator to open the line up for questions and answers.

Question and Answer Session

Operator

Thank you. As a reminder, if you would like to ask a question, please press star one one on your telephone. We also ask that you wait for your name and company to be announced before you proceed with your question one moment while we compile the Q&A roster.
[Gevolve Meta] Alliance Global Partners. Your line is open.

Gevolve Meta

Good morning.
Thanks. I wanted to ask you on your Orlando acquisition.
Hoping to get some more color on any value-add opportunities in that property and maybe some color on the mark-to-market rent upside?

John Albright

Yes. Thanks very much. So there's not a lot of value add. There is fairly stabilized, but what we liked about there was some some vacancy that we think we'll be able to get leased up. But then there some below market, our leases that are really have a lot of opportunity roughly roughly 20 to 40,000 square feet is the below market. And so even though it's starting to stabilize as far as occupancy, there is some future opportunity to drive some and our growth.

Gevolve Meta

Okay.
On the second question on your disposition guidance, that was lower and I'm hoping to get some more color on why that was lower.

John Albright

Yes. We're I mean, we're no longer feel pressed to sell some assets. If we had some acquisition larger acquisition lined up, we would certainly move through some assets we want to sell, but we want to be patient on the sell side. And so we go after doing the preferred raised kind of like either one real real need to kind of push through some dispositions.

Gevolve Meta

Okay.
Thank you.

John Albright

Thank you.

Operator

Thank you. One moment for next questions.
Yes.
Robert Stevenson, Janney Montgomery Scott.

Robert Stevenson

Good morning, guys. John, I guess just continuing on the theme of dispositions, any incremental update on your thinking on the remaining office asset at this point? Is that something that you guys think will transact this year? Or is it looking like more of a 25 or later? How should we be thinking about that at this point?

John Albright

The May early. It doesn't feel like it's going to be this year. We're talking with the tenant, but the tenant is and in no rush right now, the facility is fine for their uses and they have other things that they're working on. So yes, we're not you know, we're kind of need to be in the Q as far as when they can kind of get around to discussions with us. So unless we have like you have, again, a really large acquisition that though we're able to transact on, we're not going to feel like we need to be in a hurry with that, love to take you out there some time because once you see what's going on the area that you have, the property positions only getting better and better with time. So it's a it's kind of like a nice bottle of Bordeaux in the seller. It's only getting better. I know a lot of people, obviously, for rightfully get nervous about office. And that's why we moved through a lot really fast. But but this one, you don't really need to feel like you have exposure.

Robert Stevenson

Okay. And then I think in your prepared comments, you talked about some of the leased but not opened yet. Some portion of the portfolio went to the bulk of those leases commence and start paying rent is that late this year with the biggest financial impact in 25? Or is it really mostly all in 25 that you'll start actually seeing that pop up in the vacancy in the occupancy numbers and then also in in the rental line?

John Albright

Yes, it's mostly the back half of this year. So 2025 is really the year that's going to get a lot of love on on the rate of revenue coming forward, especially the replacement of the Regal. That one's probably mid 2025. But but the rest of the signed, but not open is really the back half of this year.

Robert Stevenson

Okay. And then any on the other side of that coin, any known move-outs at this point of note over the next 18 to 24 months.

John Albright

Now, as you know, we keep on having antennas up for any issues, but so far, all green light.

Robert Stevenson

Okay. And then last one for me after the preferred deal, how are you thinking about incremental use of preferreds going forward? Do you think the cap structure right now is maxed out at this point on preferreds Is there still room for you to be able to do that if the common isn't at a price that's to your liking? How should we be thinking about that and where that sort of fits in your capital stack?

John Albright

Yes. I mean, we feel like we did the appropriate amount. And what what one thing I'd point out is we did the size necessary for the preferred to be index qualified. It has gone into the index. And as you probably noticed, the preferred is just ripped in in price and volume. So that's going to give us a nice tailwind of cost of capital in the future. But know it if we get productive here on some acquisitions, we probably won't lean into that preferred until kind of balancing out the rest of the capital structure.

Robert Stevenson

Okay. That's helpful. Thanks and have a great weekend.

John Albright

Thank you, too.

Operator

RJ Milligan, Raymond James

RJ Milligan

It's actually more than some of Porsche So to clarify, I'm not sure if I missed it, but the big same-store NOI growth in single tenant, is that percentage rents or is that can catch ups? Or is it both?

John Albright

I mean, I'll let Lisa answer that, RJ And hey, our day.

Lisa Vorakoun

Yes.
So really what that is on the single-tenant side is our on our properties. We have in Daytona Beach that we bought in in the back of 2024. We kind of bought those back and rents came onboard in Q3 of 2023. So what you're seeing there is about $140,000 of rent in Q1 2024 when there was none in Q1 of last year. So that's about 15% of that of the 21% increase there.

RJ Milligan

That's helpful. Thank you. And then, John, maybe you could just elaborate a little bit more on the acquisition environment. Obviously, there's been some adjustment in this higher for longer interest rate environment? And just curious what you're seeing out there in terms of sellers and seller expectations?

John Albright

Yes. So the good news is we're seeing plenty of opportunities. And so we're kind of being patient and, you know, bidding appropriately for where we think there's value, but there are clearly other buyers out there, but it's really finding given that we're an all-cash buyer, we're seeing a lot of the competition on the buyer side needing financing. So it's really the sellers who they kind of go through the analysis do they want to take a risk going with a buyer that needs financing subject to financing, which that buyer is typically higher than us? Or do they just want to go with an all-cash, more certainty buyer at a lower price. And so it's really waiting for those that have good opportunities for us. So the good news is there's plenty of opportunity out there. So I think sellers are if they're in the market now, it's really part of their plan to sell, whether there's financing that's coming due, whether there's redemption queues in the funds that own these properties or is are just basically partners you're looking for time to sale sort of thing. So So yes, it's a good environment and we're just trying to be patient.

RJ Milligan

Thanks, John. And just to add to that, I'm curious what is the interest rate environment where you think that there's going to be more transactions is its stability in interest rates or is it lower interest rates because obviously this morning we're seeing the 10-year come down and just there's been a lot of sellers who said we think rates are going to come down later. So we're going to stay on the sidelines.
And I'm just curious, are you looking more for stability or just for lower rates again?

John Albright

And I think I think from the sell side, people are not really waiting. If they're in the market now, you know, they're they needed to sell in the next six months or so I think as far as your general question there, I think with stability and kind of knowing that there's going to be some some rate cuts in the future, I think you're going to see more buyers come off the sideline. And so that's not going to be good for us. But I know we're all trying to kind of you get some transactions while they're getting good. So we are surprised to see some transactions happen at cap rates that are, yes, just slightly above the 10 year ago. And so it's just like how does that math ever were, but there are some some some buyer that that's kind of fits in their model. So so I think any kind of stability in the interest rate is really kind of does direct.

Operator

Thanks so much to permit activity in Q1 moment for the next quarter.
Yes.
Matthew Erdner, Jones Trading.

Matthew Erdner

Your line is open for your morning, guys. Thanks for taking the question. Could you talk a little bit about acquisition timing? You know, should we expect that to kind of happen more so in the near term? Or is it back half ended? And then can you also talk about the difference in opportunities that you're seeing between the loans and just overall acquisition or asset acquisitions?
Thanks.

John Albright

Yes, so the acquisitions are more kind of back half of the year. We were hoping to add something in the first half of the year. But didn't work out with regards to loans. There are certainly some some acquisitions that we weren't the winner and we felt like there'd be buyers that we'd need some help on the financing side. So we've we've offered it up, but so far, no takers. But I think we'll we're hopeful that we'll have a little opportunity there as yes, there some really some great basis sort of property value add a lot of heavy lift. So the financing market is not going to be very productive for these buyers and there'll be a pretty big gap in the capital structure, which we hope to fill.

Matthew Erdner

Yes, that's helpful. Thank you, guys.

John Albright

Thank you.

Operator

Thank you. One moment for the next question.
[John Mascota], B. Riley Securities.

John Mascota

Good morning. So kind of quickly on the on the Regal Regal and Regal box, you mentioned those leases, the rents are kind of higher versus what Regal is paying, I guess that you how do they compare to Regal's rents, maybe pre-bankruptcy?

John Albright

Yes. So pre-bankruptcy, it's basically double digit percentage from their previous rent.

John Mascota

It's very helpful. And then and the Lake Worth loan investment or loan?
Yes, Cynthia put in place. Are there any kind of options on that to purchase the property or any kind of other kind of moving pieces that loan besides just you have obviously the interest income and the drawdowns.

John Albright

Yes, there is definitely we do have a right of first refusal if certain cap rates or are above a certain level. So we do have the right to acquire if the yields get to to a level of interest.

John Mascota

Okay.
That's very helpful.
And then last quick detail question. As we think about disposition guidance, I mean, is the seller loan repayment included in that or first of all? Or is that kind of actually just given the actual transaction occurred last year?

John Albright

Yes, it does include that, and that's it for me.

John Mascota

Thank you very much.
Very.

John Albright

Thank you.

Operator

Thank you. This concludes our Q&A session as well.
This concludes the meeting for today. Thank you all for joining. You may disconnect.