CTO Realty Growth, Inc. (CTO): 5 FORCES Analysis [Nov-2025 Updated]

You're looking for a clear-eyed assessment of CTO Realty Growth, Inc.'s competitive moat right now, and honestly, the late 2025 picture is compelling, showing a company successfully navigating a tricky rate environment. We've seen their portfolio hit a tight 94.2% leased as of Q3 2025, and the leasing momentum is real, with comparable spreads jumping 21.7% year-to-date, which definitely pushes back on customer leverage. Still, the rivalry with giants like Regency Centers is intense, and capital providers hold moderate power, so it's not all smooth sailing. Dive into the full Five Forces breakdown below to see exactly where the pressure points are-from manageable e-commerce threats to the high barriers keeping new entrants out-and what this means for their next move.

CTO Realty Growth, Inc. (CTO) - Porter's Five Forces: Bargaining power of suppliers

When you look at the suppliers for CTO Realty Growth, Inc. (CTO), you're really looking at who provides the capital to run and grow the business, and who provides the physical inputs like land and services. For a REIT focused on acquiring and operating shopping centers, managing these relationships is key to maintaining attractive returns.

Capital providers hold moderate power due to the interest rate environment. While rates can shift quickly, CTO Realty Growth, Inc. took decisive action in the third quarter of 2025 to lock in favorable terms, effectively mitigating some of that supplier leverage. This move suggests a proactive stance against potential future rate volatility from lenders.

CTO Realty Growth, Inc. secured a $150.0 million in new term loan financings in Q3 2025. This financing was structured as a new $125.0 million term loan due September 2030 and a $25.0 million upsizing of an existing term loan due September 2029. The initial fixed interest rate for both loans was approximately 4.2%, achieved by applying existing SOFR swap agreements. This strategic borrowing was used to retire a $65.0 million term loan that was due in March 2026, which significantly de-risked the near-term maturity schedule. Following this, CTO Realty Growth, Inc. ended Q3 2025 with liquidity of approximately $170.3 million. Honestly, locking in that rate when you did was smart; it gives you certainty. Here's the quick math on the debt management:

When we look at the operational inputs, construction and maintenance services are highly fragmented, limiting their leverage over CTO Realty Growth, Inc. This fragmentation means there are many providers for routine property upkeep and necessary capital improvements, giving CTO options and pricing flexibility. You're not locked into one specialized vendor for every repair.

Land acquisition, however, presents a different dynamic. CTO Realty Growth, Inc. focuses its portfolio on high-growth Sun Belt markets, such as those in the Southeast and Southwest United States. This focus means competition for prime, well-located, in-fill retail land is intense, which naturally increases the bargaining power of land sellers. For example, CTO Realty Growth, Inc. recently purchased 10 acres of raw land next to The Collection in Atlanta, indicating they are actively competing for these scarce assets in desirable locations. This competitive environment for acquisition targets directly translates to higher costs or less favorable terms from land suppliers.

Key operational supplier metrics and actions for CTO Realty Growth, Inc. include:

• Year-to-date comparable leases at +21.7% cash rent spreads.
• Signed-Not-Open (SNO) pipeline reached $5.5 million of annual cash base rent.
• Net debt/Pro Forma Adj. EBITDA improved to 6.7x from 6.9x in Q2 2025.
• The company owns approximately 5.2 million square feet of retail properties.
• Leased occupancy rate stood at 94.2% as of Q3 2025.

CTO Realty Growth, Inc. (CTO) - Porter's Five Forces: Bargaining power of customers

You're looking at the leverage customers-the tenants-have over CTO Realty Growth, Inc. (CTO) right now. Historically, anchor tenants in large retail spaces definitely hold leverage because their square footage is significant, and for CTO Realty Growth, moving them out means a big, costly vacancy. Switching costs for a large tenant can be high, but the power dynamic is clearly shifting in favor of CTO Realty Growth due to strong market demand and successful execution on leasing up legacy vacancies.

The evidence for reduced customer power is in the numbers showing robust demand across the portfolio. For the nine months ending September 30, 2025, CTO Realty Growth signed comparable leases-those on spaces previously occupied-that showed a weighted average base rent spread of 21.7% year-to-date. This strong mark-to-market performance suggests tenants are paying significantly more to occupy CTO Realty Growth's space than the previous occupants were.

This improved negotiating position is further solidified by the high overall portfolio health. As of the third quarter of 2025, CTO Realty Growth's portfolio was highly leased at 94.2%. When occupancy is this high, the remaining available space, especially the large anchor boxes, becomes a premium asset, which naturally reduces the bargaining power of the few remaining prospective tenants.

The most direct counter to anchor tenant leverage is the projected rent upside from re-leasing the vacant anchor spaces. CTO Realty Growth management has stated they remain on target to achieve a positive cash leasing spread of 40% to 60% across these 10 anchor spaces. To put that in perspective, the previous in-place base rent of $2.8 million on those spaces is projected to increase to between $4.0 million and $4.5 million upon re-leasing, representing that 40-60% mark-to-market opportunity. That kind of rent growth severely limits a prospective anchor tenant's ability to negotiate down terms.

Here's a quick look at the leasing execution that is driving this shift:

• Portfolio leased as of Q3 2025: 94.2%
• Year-to-date comparable lease spread (9 months ended 9/30/2025): 21.7%
• Q3 2025 comparable lease spread: 10.3%
• Projected anchor re-leasing spread: 40% to 60%
• Signed-not-open (SNO) pipeline value (as of 10/28/2025): $5.5 million in annual cash base rent

The power dynamic is clearly moving away from the customer because CTO Realty Growth is successfully monetizing embedded value, which is the opposite of what a customer with high bargaining power can force. The leasing spreads are concrete proof that demand is strong enough to command premium pricing.

The current environment suggests that for CTO Realty Growth, the threat from customer bargaining power is mitigated by high demand and successful repositioning efforts. You see this in the fact that they are actively negotiating the final four vacant anchor spaces, expecting significant rent bumps when those deals close.

• Anchor re-leasing targets a 40% to 60% rent increase, overpowering tenant negotiation leverage.
• Overall portfolio occupancy is very high at 94.2% as of Q3 2025, limiting tenant options.
• Year-to-date comparable leasing shows strong market demand with a 21.7% rent spread.

CTO Realty Growth, Inc. (CTO) - Porter's Five Forces: Competitive rivalry

Competitive rivalry for CTO Realty Growth, Inc. is a defining characteristic of its operating environment, driven by the nature of its specialized, high-growth market focus. This rivalry is not just about price; it's about securing and optimizing premier real estate assets in a highly sought-after geographic area.

High rivalry exists with larger, national retail REITs like Regency Centers and Federal Realty.

CTO Realty Growth, Inc. competes directly against much larger, established players who possess greater financial scale and market presence. For instance, Federal Realty Investment Trust (FRT) reported FFO per share of $1.77 for the third quarter of 2025 and raised its full-year 2025 recurring FFO guidance to a range of $7.05 to $7.11 per share. This scale allows these larger competitors to pursue larger, more complex transactions and potentially absorb short-term market fluctuations better than a smaller entity like CTO Realty Growth, Inc.

CTO's Core FFO multiple of 9.4x is below the peer average of 12.3x, indicating a competitive valuation landscape.

The market is clearly assigning a lower valuation multiple to CTO Realty Growth, Inc. compared to what the outline suggests is the peer average. As of late 2025, CTO Realty Growth, Inc. trades at a forward Price-to-FFO (P/FFO) multiple of approximately 10.31x. Another analyst view placed its multiple at 8.76x times the midpoint of its fiscal 2025 FFO guidance range. To put this in context with the broader REIT market as of November 2025, large-cap REITs trade at a 2026 FFO multiple of 16x, while small-cap REITs average 12.7x. The valuation disparity suggests investors perceive higher risk or lower growth certainty in CTO Realty Growth, Inc. relative to its larger peers, which is a direct result of intense rivalry and size differences.

Competition is intense for acquiring high-quality retail assets in high-growth Sun Belt metros.

CTO Realty Growth, Inc.'s strategy centers on properties in the Southeast and Southwest, the so-called Sun Belt states, which are experiencing strong population and household income growth-the average household income in CTO Realty Growth, Inc.'s markets was $141K in 2024 compared to the US average of $113K. This desirable asset class draws significant capital, making acquisition competition fierce. The intensity is reflected in the strong leasing spreads CTO Realty Growth, Inc. is achieving, such as signing leases at a 37.2% positive cash rent spread in the first quarter of 2025. However, this high demand inflates asset pricing, meaning the capital required to deploy for growth is higher due to rivalry from well-capitalized competitors.

The company's smaller size, with a $522 million market cap, restricts capital market scale advantages.

CTO Realty Growth, Inc.'s smaller scale inherently limits its competitive advantages in capital markets. As of November 2025, the company's market capitalization was reported at $556.48 million, aligning closely with the $522 million figure you noted. This size contrasts sharply with peers; for example, Welltower's market cap was listed at $135.39 billion. This difference means CTO Realty Growth, Inc. may face higher relative borrowing costs and less favorable terms when accessing debt or equity markets compared to the giants in the space. The company's ability to execute large, transformative acquisitions is constrained by this capital market disadvantage.

Here are the key comparative metrics:

The pressure from larger rivals means CTO Realty Growth, Inc. must execute flawlessly on its niche strategy to justify its current valuation and avoid further multiple compression. Finance: review Q4 2025 debt maturity schedule against current liquidity of $138.4 million as of March 31, 2025.

CTO Realty Growth, Inc. (CTO) - Porter's Five Forces: Threat of substitutes

You're looking at the digital shift, and honestly, it's the biggest headwind for any physical retail landlord. E-commerce is the primary substitute for traditional goods sold in shopping centers. However, CTO Realty Growth, Inc. has built its defense around tenants that sell experiences or necessities, which are much harder to replace with a click.

The portfolio's composition reflects this strategy. For instance, as of the first quarter of 2025, the mix showed that casual dining accounted for 13% of Annual Base Rent (ABR), and entertainment made up 8% of ABR. These categories require a physical presence and drive traffic that benefits the entire center, making them inherently less substitutable by online channels.

Here's a quick look at the key experience and necessity-driven segments within the tenant base as reported in Q1 2025:

This diversification is key. When you look at the overall portfolio as of Q2 2025, only 69% of ABR came from pure retail tenants, with 27% from mixed-use tenants. The focus isn't just on what is sold, but where the properties are located. CTO Realty Growth, Inc. concentrates its assets in markets that are fundamentally outpacing the rest of the country.

As of Q2 2025, 83% of ABR was sourced from high-growth states like Georgia, Texas, Florida, and North Carolina. Furthermore, 95% of CTO Realty Growth, Inc.'s rent comes from cities ranked in the Urban Land Institute's top 30 markets based on overall real estate prospects. These fast-growing markets support strong in-person demand, which naturally mitigates the digital threat because people are moving to and spending money in these areas.

The threat is defintely manageable through proactive tenant curation. You see this in their recent leasing wins. For example, CTO Realty Growth, Inc. signed a 30,000 square foot, 10-year lease with a co-working operator at the Shops at Legacy, slated to open in 2026. This, along with a 20,000 square foot private social club signed in the third quarter of 2024, shows a clear pivot toward service and experience-based tenancy. Also, over the past two years, they executed nearly 60,000 square feet of smaller shop leases with restaurants and fitness studios.

These actions-securing experiential tenants and placing assets in high-demographic corridors-are the concrete steps CTO Realty Growth, Inc. is taking to ensure physical retail remains relevant.

CTO Realty Growth, Inc. (CTO) - Porter's Five Forces: Threat of new entrants

You're looking at the barriers that keep fresh competition from easily setting up shop against CTO Realty Growth, Inc. (CTO) in the real estate investment trust (REIT) space, especially given the market conditions as of late 2025. The threat of new entrants is generally moderated by several structural factors that favor established players like CTO.

High Capital Requirement Acts as a Significant Barrier to Entry for New REITs

Starting a new, meaningful REIT requires massive upfront capital. In the 2025 environment, with interest rates remaining elevated, the cost of debt is a major hurdle. Higher borrowing costs make it significantly more expensive to finance the acquisition or development of income-producing properties, which is the core business. Development activity has been at a low level because few projects are penciling out with current rents against increased costs. Obtaining debt finance has been challenging for new entities, which definitely slows down the entry of new players. For you, this means the capital structure of a new competitor is immediately suspect.

CTO's Existing Portfolio Provides a Substantial Scale Advantage

CTO Realty Growth, Inc. already operates at a scale that new entrants would struggle to match quickly. As of mid-2025, CTO's income property portfolio spanned approximately 5.3 million square feet. This scale offers advantages in negotiating with major national tenants, securing better terms on property insurance, and spreading fixed overhead costs across a larger asset base. Consider the sheer volume of space CTO manages; a new entrant would need to raise billions just to approach parity, which is a tall order when credit markets are tight.

Here's a snapshot of CTO's financial footing, which speaks to its established position:

Difficulty in Acquiring Large, High-Quality, Already-Leased Assets is a Deterrent

New entrants don't just need capital; they need quality assets that are already producing income. The best properties in CTO's target 'Sun Belt' markets-cities with strong population and income growth-are highly sought after. Acquiring a large, established asset is competitive. For example, CTO acquired Ashley Park, a 559,000-square-foot lifestyle center, for $79.8 million in Q1 2025. That single transaction represents a significant capital deployment that a new player would have to compete for against established REITs with deep relationships and proven execution capabilities. Furthermore, CTO is seeing strong rent upside on re-leasing vacated anchors, with new rents expected to be 40-60% higher than previous in-place rents across 10 properties. This upside makes existing, well-managed portfolios more valuable and harder to buy from current owners.

High Cost of Debt Makes New Development/Acquisition Less Viable for New Players

The current interest rate environment pressures new entrants more than it does established firms with hedged or fixed-rate debt. While CTO executed financing in September 2025 with an initial fixed rate of about 4.2%, a brand-new entity would likely face higher initial borrowing costs or less favorable terms, especially for development loans. The general pressure of elevated interest rates in 2025 makes it difficult for new projects to achieve acceptable returns on cost. New REITs lack the operational history and scale to secure the most competitive debt pricing, meaning their cost of capital is inherently higher than CTO's, which has a net debt to Pro Forma Adjusted EBITDA leverage ratio of 6.7 times as of September 30, 2025.

The barriers boil down to this:

• Capital Depth: Competing with the $1.22 billion in total assets CTO held as of Q3 2025 requires immense financial backing.
• Asset Quality: Access to high-growth markets with average household incomes of $141K in 2024 (compared to the US average of $113K) is restricted.
• Financing Terms: New entrants face higher relative borrowing costs than incumbents who have recently locked in rates like 4.2%.
• Operational Track Record: CTO has demonstrated success in leasing, achieving 21.7% comparable rent growth year-to-date September 30, 2025.

Finance: draft 13-week cash view by Friday.