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  "documentTitle": "CTO Realty Growth, Inc. (CTO)",
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  "authorName": "Wolfpack Research",
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  "sourceTypeLabel": "Short seller",
  "presentationDate": "2025-06-25 00:00:00",
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  "notes": "The slide uses excerpts from external Seeking Alpha articles as examples of the 'misleading' narrative being countered.",
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      "text": "Our Analysis of Historical Compensation Indicates CTO Never Would Have Hit Its Threshold for Bonuses If It Had Included Recurring Capex in Its AFFO. Management Has Inflated Its $8 Million Performance Bonuses With Its Made-Up AFFO Metric",
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      "text": "AFFO: $8 million",
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      "text": "Example #1: a Seeking Alpha piece written for a retail audience arguing that CTO is deeply undervalued compared to peers:",
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      "text": "With an annualized dividend of $1.52 per share, the stock yields 7.8%. The good thing is that its AFFO payout ratio for the year was 76%, and the core FFO payout ratio was 80.9%. The forward AFFO and FFO payout ratios at the midpoint are 77.75% and 83%, respectively. Given the relative predictability of REIT cash flows, I'm not worried about dividend safety.",
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      "kind": "paragraph",
      "text": "Given the circumstances, we think CTO knows that their AFFO is misconstrued by investors. We think the reason management is willing to keep misleading retail investors is that it needs dilution to pay its dividends.",
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      "text": "From a comparative valuation criterion, CTO appears to be trading at a significant discount. Its forward P/AFFO multiple of 9x versus the sector median of 14.95x implies that the stock is undervalued relative to its",
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      "kind": "paragraph",
      "text": "We have no question that investors are being tricked by CTO's bullshit AFFO into believing CTO has ample dividend coverage, or that it is undervalued compared to peers.",
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      "text": "The use of non-GAAP metrics is not a license to deceive investors. The SEC will often tell companies to change how they present a given non-GAAP metric or change what they call a given non-GAAP metric if they find it misleading. In some cases, this has even led to enforcement actions.",
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      "text": "As disclosed in CTO's proxy statement, 70% of management's performance bonus is based on their reported AFFO.",
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      "kind": "paragraph",
      "text": "The SEC's existing correspondence with CTO criticized them for the way management was discussing cash flows. We would not be surprised if the SEC eventually insisted that CTO change how it reports its AFFO metric.",
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      "text": "Example #2: another Seeking Alpha author asserts that the dividend is well covered based on the AFFO number provided by the company—unfortunately the dividend is not well covered:",
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      "text": "With an annualized dividend of $1.52 per share, the stock yields 7.8%. The good thing is that its AFFO payout ratio for the year was 76%, and the core FFO payout ratio was 80.9%. The forward AFFO and FFO payout ratios at the midpoint are 77.75% and 83%, respectively. Given the relative predictability of REIT cash flows, I'm not worried about dividend safety. — Seeking Alpha author",
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