Pomerantz Law Firm Files Class Action Against CTO Realty Growth: Allegations of Misleading Statements

Pomerantz Law Firm Takes Action Against CTO Realty Growth, Inc.

The Pomerantz Law Firm has officially filed a class action lawsuit against CTO Realty Growth, Inc., commonly referred to as CTO, along with several of its executives. The case, which is seeking restitution for affected investors, was lodged in the United States District Court for the Middle District of Florida, indicating a serious allegation that could have widespread repercussions for the company and its leadership.

Overview of the Allegations

The lawsuit encompasses claims made by individuals and companies that purchased CTO’s securities during a specified period from February 18, 2021, to June 24, 2025. These investors assert that CTO's officers violated federal securities laws by providing misleading information regarding the company's business practices, overall operations, and compliance protocols.

According to the court documents, CTO, which transitioned into a Real Estate Investment Trust (REIT) in February 2021, made materially false claims about the sustainability of its dividends and the financial health of its flagship properties, particularly regarding Ashford Lane. The lawsuit aims to hold the company accountable for damages incurred by shareholders who relied on these statements.

The Impact of the Wolfpack Report

A pivotal moment occurred on June 25, 2025, when Wolfpack Research released a critical report comparing CTO unfavorably to B. Riley, a company notorious for significant financial losses. This report accused CTO of failing to generate sufficient cash flow to cover its dividends and capital expenditures, raising red flags about the company's financial integrity. Notably, the report detailed allegations that CTO had misleadingly inflated their Adjusted Funds from Operations (AFFO), manipulating the figure in a way that diverged from industry norms.

Wolfpack's findings predictably had immediate impacts, as CTO's stock price plummeted by over 5% following the report’s publication, highlighting investor concerns regarding the company's future stability.

Financial Mechanics and REIT Regulations

REITs, including CTO, are required by the U.S. Securities and Exchange Commission (SEC) to distribute at least 90% of their taxable income as dividends. This structure offers tax advantages for real estate firms but mandates strict adherence to accurate reporting of financial metrics. CTO's past claims about its operational efficiency and dividend sustainability are now under intense scrutiny.

Analysts traditionally utilize AFFO as a measure, believing it better reflects a REIT's capacity to generate wealth for shareholders. The concern lies in CTO’s alleged manipulation of AFFO to paint a rosier picture of financial health and returns, which the lawsuit claims is misleading.

Next Steps for Investors

Investors who purchased CTO securities within the outlined timeframe are urged to consider their options. As the lawsuit progresses, individuals have until October 7, 2025, to seek appointment as Lead Plaintiff in the proceedings, thereby taking an active role in the litigation. A detailed copy of the complaint can be accessed through the law firm’s official website, and potential participants are encouraged to reach out to the Pomerantz team for guidance on how to join the class action.

The Role of Pomerantz Law Firm

Renowned for its successful track record in corporate and securities class actions, Pomerantz Law Firm aims to advocate for investors impacted by alleged securities fraud and corporate misconduct. With offices located across several major cities, including New York, Chicago, and Los Angeles, the firm has been pivotal in securing billions in damages for class members in the past.

As the legal landscape evolves, the implications of this class action against CTO Realty Growth will undoubtedly be significant for investors and stakeholders alike. With growing concerns about financial transparency and corporate governance, this case could set important precedents in the REIT sector.