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CTO Realty Growth to Report Q3 Earnings: What's in Store?
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CTO Realty Growth, Inc. (CTO - Free Report) is slated to report third-quarter 2024 results on Oct. 24, after the closing bell. In anticipation of the announcement, industry analysts and investors are eager to assess the company's performance and prospects in the current economic climate.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
In the last reported quarter, this Winter Park, FL-based retail real estate investment trust (REIT) reported adjusted funds from operations (AFFO) per share of 48 cents, in line with the Zacks Consensus Estimate. Results reflected healthy leasing activity and a year-over-year improvement in Same-Property NOI. However, high interest expenses during the quarter acted as a dampener.
Over the trailing four quarters, the company’s AFFO per share exceeded the Zacks Consensus Estimate on all occasions, with the average beat being 25%. This is depicted in the graph below:
In this article, we will dive deep into the U.S. retail real estate market environment and the company's fundamentals and analyze the factors that may have contributed to its third-quarter 2024 performance.
US Retail Real Estate Market in Q3
Per a Cushman & Wakefield (CWK - Free Report) report, there has been a pullback in net absorption for U.S. shopping centers, resulting in a slight negative shift in the third quarter. With absorption falling down, rent growth continued to moderate in the quarter. However, with new constructions remaining subdued, the national vacancy rate remained near a historic low of 5.4%.
The third quarter witnessed a negative net absorption in the U.S. shopping center, totaling 0.26 million square feet (msf). The decrease was due to a negative net absorption of 1.8 msf observed in the south region of the country.
The asking rents for U.S. shopping centers increased 3.4% year over year to $24.54 per square foot in the third quarter.
New construction activity remains subdued, and 2024 is expected to be the weakest year for new construction on record. As of the third quarter of 2024, there are 11.1 msf under construction within a market that has an inventory of 4.31 billion square feet, resulting in virtually no supply risk.
Factors at Play
CTO Realty is expected to have benefited from its portfolio of high-quality retail-based properties, primarily positioned in higher growth markets in the United States. Given a healthy retail real estate environment in the third quarter, the company is likely to have witnessed decent demand for its properties, boosting its quarterly performance.
Due to strong demographics and the prime location of its properties, the company has consistently upheld a high occupancy rate over the years. CTO's diverse mix of retail tenants is anticipated to have contributed to stable rental income during the third quarter.
The company’s top line is expected to have improved due to these tailwinds. The Zacks Consensus Estimate for CTO’s third-quarter revenues is pegged at $30.15 million, which indicates an increase of 5.9% from the year-ago quarter’s reported figure.
The consensus estimate for management fee income stands at $1.13 million, suggesting a marginal rise from $1.09 million reported in the year-ago quarter.
However, higher e-commerce adoption and elevated interest expenses are expected to cast a pall on its quarterly performance to some extent.
The company’s activities during the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for quarterly AFFO per share has remained unrevised at 48 cents over the past month. The figure implies an in-line performance compared with the prior-year quarter’s reported number.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict a surprise in terms of AFFO per share for CTO Realty this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an FFO beat, which is not the case here.
CTO Realty currently has an Earnings ESP of -2.08% and carries a Zacks Rank of 4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are two other stocks from the broader REIT sector — Digital Realty Trust (DLR - Free Report) and Ventas (VTR - Free Report) — you may want to consider as our model shows that these, too, have the right combination of elements to report a surprise this quarter.
Ventas, slated to release quarterly numbers on Oct. 30, has an Earnings ESP of +0.97% and carries a Zacks Rank of 2 at present.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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CTO Realty Growth to Report Q3 Earnings: What's in Store?
CTO Realty Growth, Inc. (CTO - Free Report) is slated to report third-quarter 2024 results on Oct. 24, after the closing bell. In anticipation of the announcement, industry analysts and investors are eager to assess the company's performance and prospects in the current economic climate.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
In the last reported quarter, this Winter Park, FL-based retail real estate investment trust (REIT) reported adjusted funds from operations (AFFO) per share of 48 cents, in line with the Zacks Consensus Estimate. Results reflected healthy leasing activity and a year-over-year improvement in Same-Property NOI. However, high interest expenses during the quarter acted as a dampener.
Over the trailing four quarters, the company’s AFFO per share exceeded the Zacks Consensus Estimate on all occasions, with the average beat being 25%. This is depicted in the graph below:
CTO Realty Growth, Inc. Price and EPS Surprise
CTO Realty Growth, Inc. price-eps-surprise | CTO Realty Growth, Inc. Quote
In this article, we will dive deep into the U.S. retail real estate market environment and the company's fundamentals and analyze the factors that may have contributed to its third-quarter 2024 performance.
US Retail Real Estate Market in Q3
Per a Cushman & Wakefield (CWK - Free Report) report, there has been a pullback in net absorption for U.S. shopping centers, resulting in a slight negative shift in the third quarter. With absorption falling down, rent growth continued to moderate in the quarter. However, with new constructions remaining subdued, the national vacancy rate remained near a historic low of 5.4%.
The third quarter witnessed a negative net absorption in the U.S. shopping center, totaling 0.26 million square feet (msf). The decrease was due to a negative net absorption of 1.8 msf observed in the south region of the country.
The asking rents for U.S. shopping centers increased 3.4% year over year to $24.54 per square foot in the third quarter.
New construction activity remains subdued, and 2024 is expected to be the weakest year for new construction on record. As of the third quarter of 2024, there are 11.1 msf under construction within a market that has an inventory of 4.31 billion square feet, resulting in virtually no supply risk.
Factors at Play
CTO Realty is expected to have benefited from its portfolio of high-quality retail-based properties, primarily positioned in higher growth markets in the United States. Given a healthy retail real estate environment in the third quarter, the company is likely to have witnessed decent demand for its properties, boosting its quarterly performance.
Due to strong demographics and the prime location of its properties, the company has consistently upheld a high occupancy rate over the years. CTO's diverse mix of retail tenants is anticipated to have contributed to stable rental income during the third quarter.
The company’s top line is expected to have improved due to these tailwinds. The Zacks Consensus Estimate for CTO’s third-quarter revenues is pegged at $30.15 million, which indicates an increase of 5.9% from the year-ago quarter’s reported figure.
The consensus estimate for management fee income stands at $1.13 million, suggesting a marginal rise from $1.09 million reported in the year-ago quarter.
However, higher e-commerce adoption and elevated interest expenses are expected to cast a pall on its quarterly performance to some extent.
The company’s activities during the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for quarterly AFFO per share has remained unrevised at 48 cents over the past month. The figure implies an in-line performance compared with the prior-year quarter’s reported number.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict a surprise in terms of AFFO per share for CTO Realty this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an FFO beat, which is not the case here.
CTO Realty currently has an Earnings ESP of -2.08% and carries a Zacks Rank of 4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are two other stocks from the broader REIT sector — Digital Realty Trust (DLR - Free Report) and Ventas (VTR - Free Report) — you may want to consider as our model shows that these, too, have the right combination of elements to report a surprise this quarter.
Digital Realty, scheduled to report quarterly numbers on Oct. 24, has an Earnings ESP of +1.36% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ventas, slated to release quarterly numbers on Oct. 30, has an Earnings ESP of +0.97% and carries a Zacks Rank of 2 at present.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.